Accelerating Supply Chain Decarbonization

Nearly three decades ago, voluntary climate initiatives began motivating companies to manage their climate impacts. The most prominent of these initiatives was the Greenhouse Gas Protocol standards. Served as a foundation for measuring and disclosing emissions, it paves the way for corporate accountability for climate impacts. By the mid-2010s, programs like Carbon Disclosure Project (CDP) and Science Based Targets Initiative (SBTi) surged in popularity, pushing companies to make public climate pledges that showcased their ambitions. More recently, rising stakeholder scrutiny has shifted the focus of voluntary programs beyond transparency and commitments and toward delivering concrete reduction outcomes.

Mandatory efforts are quickly catching up. Net-zero mandates increasingly reference science-based targets (SBTs). New regulations, like the EU’s CSRD and California’s SB 253, extended disclosures to include Scope 3 emissions while using the GHG Protocol as the backbone for reporting. This convergence signals rising expectations on corporate climate actions with greater ambition and stringency. It also clearly shows that the cost of non-compliance is no longer minimal (Exhibit 1).

From disclosure to emissions reduction

The increasing convergence of voluntary and regulatory requirements signals a clear shift toward greater transparency, sector-specific granularity, and a stronger emphasis on measurable reduction outcomes, often reflected in carbon costs or other key metrics. Disclosure alone is no longer enough — companies need to go beyond reporting and demonstrate tangible progress in reducing supply chain emissions.

Achieving these reductions will require companies to build strong internal momentum for change, but the challenge often lies in identifying the most effective tools and procedures to align internal stakeholders. To move from disclosure to tangible emissions reduction, companies should:

• Simplify reporting efforts by navigating complex methodologies through targeted goals, enabling the availability of primary and supplier-specific data.
• Engage the right suppliers for the right goals by segmenting suppliers and applying tailored asks, incentives, and engagement strategies.
• Identify the most suitable procurement options by understanding the opportunities and risks of what’s available for reduction.

The value of going beyond compliance

The value of supply chain transparency extends beyond compliance. Gaining a deeper understanding of supply chain impacts can unlock significant strategic benefits. Enhanced, data-driven decision-making empowers companies to position themselves more competitively in expanding markets. By taking reduction actions, such as purchasing lower-carbon products, companies can lead in developing and scaling these products, accessing net-zero technologies, and gaining first-mover benefits as regulatory and voluntary demands for net-zero aligned solutions grow. Especially as demand for essential materials like steel and aluminum continue to rise, those who not only meet regulatory benchmarks but surpass them will solidify their status as industry leaders.

Building long-term resilience against future policy uncertainties and supply chain risks is another key value for proactively reducing supply chain emissions. With the ever-changing policy landscape, companies can stay ahead of regulatory changes and reduce exposure to new carbon taxes and tariffs. Additionally, by creatively mitigating or hedging risks through lower-carbon purchasing, companies can safeguard their business from price volatility (e.g., rising energy cost) and resource scarcity (e.g., insufficient availability).

Data challenges are often cited by companies as the most prominent barrier in managing Scope 3 emissions, but waiting for perfect data is an unrealistic expectation. To meet climate imperatives, companies need to find a way to act with the available but imperfect data.

Successful companies recognize that managing supply chain emissions calls for different, but aligned, strategies for near-term outcomes and long-term near-zero ambition. Acting in tandem on both fronts allows companies to pursue quick wins while laying the groundwork for systemic change. Recognizing that companies can work toward meeting targets with imperfect data while simultaneously striving to collect better data will support quicker decarbonization.

Here you will find the list of actions your company can take to advance both goals, and more detailed steps and actions are available in following chapters.