Scope 3 supply chain decarbonization: A complete guide

Scope 3 decarbonization has gotten a lot of attention recently, and for good reason. As more companies work through Scopes 1 and 2, they’re naturally turning to the indirect emissions across their value chain. 

But it’s not just companies focusing on Scope 3. Regulatory bodies and reporting frameworks are increasingly raising the bar as well. SBTi’s updated Corporate Net-Zero Standard V2.0, released in June 2026, is one clear signal: any company whose supply chain emissions exceed 40% of their footprint is required to set a Scope 3 target. 

While it’s still early, the message is clear: Scope 3 is rising in importance, and expectations are increasing for companies to address it. Here’s how to tackle this notoriously difficult set of emissions. 

Scope 3 emissions are all the indirect emissions that occur throughout your value chain. These emissions are broken up into 15 different categories, including emissions from your suppliers, vendors, products, and even employee activities. 

Scope 3 is important because for many companies, it's one of the largest sources of overall emissions. It's common for Scope 3 to represent two-thirds of an organization's total emissions. 

The bulk of those emissions come from four key categories. Our independent analysis of public emissions disclosure data from CDP found that emissions from Categories 3.1-3.4 alone accounted for 25% of all disclosed emissions across all three scopes. Operational emissions (Scopes 1 and 2 combined) for the same organizations accounted for only 5%. 

Scopes 1 and 2 are relatively straightforward to decarbonize through direct action. Whether it's through electrifying equipment, improving energy efficiency, or ensuring energy comes from renewable sources, all of your Scope 1 and 2 reductions come from projects you control directly. 

Scope 3 reductions are a different story. These emissions sources sit outside your organization, which means you need to depend on suppliers to work with your company and reduce their direct emissions. 

While it's hard to measure and varies per industry, it's estimated that emissions from your supply chain are anywhere from 5.5x to 11x greater than your Scope 1 and 2 emissions combined. 

Supply chain decarbonization requires cooperation with suppliers, granular accounting, and cross-business coordination. These emissions are also spread across 15 different categories, each with unique GHG Protocol reporting requirements. 

There are several common challenges that stall Scope 3 progress, including: 

• Lack of supplier control and influence 

• Limited access to verifiable emissions data 

• High cost of decarbonized inputs 

• Lack of internal ownership or cross-functional alignment 

• Limited in-house experience to interpret standards 

Reporting frameworks like SBTi and regulations like CSRD and new SEC disclosure requirements aim to standardize reporting, but the work is still ongoing. While practical strategies exist to address each of these challenges, complex supply chains can still take years to understand. 

Scope 3 emissions are difficult to manage and reduce, but the writing is on the wall. Regulators and reporting bodies increasingly expect companies to focus on their supply chains and do it in a way that’s transparent and measurable.

The companies that act now can get ahead of regulatory shifts, build more resilient supply chains, secure long-term cost efficiencies, and win customer preferences. Your strategy will need to be tailored to your business, there are a few core elements to any successful strategy.

High-quality primary data

What gets measured gets managed, which is why accurate emissions data is the foundation. Companies need to understand which suppliers contribute most to their footprint and which categories drive the largest emissions.

You can request supplier and partner emissions disclosures through a CDP supply chain membership. This is the world's largest environmental disclosure platform and supplier network. In 2025, CDP members requested emissions data from more than 45.000 suppliers around the world.

To help suppliers make active reductions, you'll likely need a digital platform that can help with supplier engagement. There's a growing market of tools that companies and their suppliers can use for accounting, many of which can turn the raw data into CSRD, SBTi, CDP, and TCFD reports on a quarterly and annual basis.

Engaged suppliers

Small and medium-sized suppliers may want to decarbonize, but many lack the capacity to run one independently. A structured supplier engagement program gives them a clear starting point.

A practical supplier engagement program can:

• Explain what data is required and why

• Segment suppliers by emissions impact and readiness

• Provide reporting guidance and timelines

• Create shared reduction plans for priority suppliers

• Track progress against category-specific targets

Engaging with suppliers ensures better compliance and allows them to improve their own ESG standing.

Access to decarbonization instruments

One of the fastest practical ways to reduce supply chain emissions is to help suppliers reduce their own Scope 2 emissions by switching to renewable energy.

For many smaller suppliers, access is the barrier. They may not have the scale, budget, or market knowledge to procure renewable energy independently. Your supply chain decarbonization program can give them access to energy attribute certificates or other credible options that meet your Scope 3 criteria, which lets suppliers make immediate short-term reductions while they work on long-term solutions.

Strategic procurement

Procurement teams shape many of the decisions that determine supply chain emissions, including which suppliers are selected, how contracts are structured, and whether emissions data is required before purchase decisions are made.

As a buyer, your team can look for suppliers who have active decarbonization plans in place. By establishing clear procurement criteria, you can make your reporting easier and set an industry standard. The UK's National Health Service (NHS), for example, has a Net Zero Supplier Roadmap. Since April 2022, all of the NHS's procurements have a minimum weighting of 10% on social value.

Optimized logistics

Category 4 emissions can often be reduced through operational changes like changing transport mode, consolidating shipments, improving route planning, selecting lower-emission carriers, or using alternative fuels where available.

Reporting requirements vary by region and are always evolving, but the direction globally is clear: Scope 3 reporting standards are getting more sophisticated, and the criteria for what constitutes credible disclosure are getting stricter.

The GHG Protocol

The GHG Protocol Corporate Value Chain (Scope 3) Standard created the only internationally-accepted framework companies use to measure and categorize indirect emissions. It defines the 15 Scope 3 categories and sets the methodology for how each one should be calculated. 

SBTi

The Science Based Targets initiative (SBTi) gives companies guidance on how to set emissions reduction targets that are aligned with climate science. SBTi doesn't dictate what you have to disclose, but it defines what a credible reduction target looks like.

Under SBTi's Corporate Net-Zero Standard V2.0, any company whose supply chain emissions exceed 40% of its footprint is required to set a Scope 3 target. Where you previously could set one target across all 15 categories, now any category that makes up more than 5% of your total emissions needs its own reduction strategy.

Regulations

Regulations like CSRD go further than voluntary frameworks. The EU's Corporate Sustainability Reporting Directive entered into force in January 2023 and requires companies to report detailed, auditable data on their environmental impact, including Scope 3 emissions. The emphasis is on transparency: not just what targets a company has set, but what the underlying data shows.

CSRD is a signal of where reporting is heading globally. Similar requirements are emerging in other regions, and companies that build robust measurement and reporting processes now will be better positioned as the regulatory landscape continues to tighten.