Data story: Global progress on Scope 3 supply chain emissions reduction

Why It Matters

Scope 3 emissions account for an average of 75 percent of a company's total greenhouse gas footprint, yet fewer than half of the firms reporting to CDP in 2025 disclosed any Scope 3 reduction target (CDP, 2025). That gap between ambition and action matters because supply chain decarbonization is the single largest lever most organizations have for meeting Paris Agreement commitments. As regulators in the EU, California, and beyond mandate value chain disclosures through instruments like the CSRD and SB 253, understanding where corporate Scope 3 performance actually stands is essential for procurement leaders, investors, and policymakers alike.

Key Concepts

Scope 3 emissions encompass all indirect greenhouse gas emissions that occur across a company's value chain, both upstream (purchased goods, transportation, business travel) and downstream (product use, end-of-life treatment). The GHG Protocol divides Scope 3 into 15 categories, of which purchased goods and services (Category 1) and use of sold products (Category 11) typically dominate.

Science Based Targets initiative (SBTi) validates corporate emission reduction targets against climate science. Companies with SBTi-approved Scope 3 targets commit to measurable reductions, usually covering at least 67 percent of total Scope 3 emissions.

Spend-based vs. activity-based accounting describes two methodological approaches to estimating Scope 3 emissions. Spend-based methods multiply procurement spend by sector emission factors, while activity-based methods use primary supplier data. Activity-based accounting delivers higher accuracy but requires deeper supplier engagement.

Supplier engagement rate measures the percentage of Tier 1 and Tier 2 suppliers that actively report emissions data to their buyers, often through platforms such as CDP Supply Chain or EcoVadis.

The Data

The numbers paint a picture of growing commitment paired with uneven execution:

• As of late 2025, over 4,200 companies had SBTi-validated targets, yet only about 1,100 of those included approved Scope 3 targets (SBTi, 2025).
• CDP's 2024/2025 disclosure cycle received responses from more than 24,600 companies globally, a 12 percent increase year on year. Of those, roughly 43 percent reported at least one Scope 3 category (CDP, 2025).
• Among the 500 largest global emitters tracked by the Climate Action 100+ initiative, aggregate Scope 3 emissions declined by just 2.1 percent between 2020 and 2024, compared with a 9.4 percent reduction in Scope 1 and 2 combined (Climate Action 100+, 2025).
• The CDP Supply Chain programme covered more than 40,000 supplier-level disclosures in 2025, up from roughly 33,000 in 2023, representing over $6.4 trillion in procurement spend (CDP, 2025).
• Boston Consulting Group estimated in 2025 that companies using activity-based Scope 3 accounting reduced measurement uncertainty by 30 to 50 percent compared with spend-based approaches (BCG, 2025).

Trend Analysis

Three trends define the current trajectory.

Disclosure rates are rising but depth remains shallow. The share of CDP respondents reporting at least five Scope 3 categories climbed from 29 percent in 2022 to 38 percent in 2025 (CDP, 2025). However, most firms still rely on spend-based emission factors, which introduce significant estimation error. Fewer than one in five reporters used primary supplier data for their largest Scope 3 category.

Target-setting outpaces reduction delivery. SBTi Scope 3 target approvals accelerated after the initiative clarified its corporate net-zero standard in late 2023, reaching a cumulative 1,100 validated targets by 2025 (SBTi, 2025). Yet aggregate reported emissions from those same companies showed only marginal year-on-year declines. The gap suggests that many organizations are still in the baseline-setting and supplier-engagement phase rather than achieving verifiable reductions.

Supplier engagement is the bottleneck. Walmart, one of the most advanced supply chain decarbonizers, reported engaging more than 4,500 direct suppliers through its Project Gigaton initiative by 2025, collectively avoiding over 750 million metric tons of emissions cumulatively since 2017 (Walmart, 2025). By contrast, the median CDP Supply Chain member engages fewer than 200 suppliers, covering less than 40 percent of its procurement emissions.

Regional Patterns

Europe leads on mandatory disclosure. Under the CSRD, approximately 50,000 EU companies will report Scope 3 emissions by 2026, with large public-interest entities already filing in 2025. European firms responding to CDP were 1.6 times more likely to disclose Scope 3 targets than their North American counterparts (CDP, 2025).

North America shows a split landscape. California's SB 253 requires companies with revenues above $1 billion to report Scope 3 starting in 2027, spurring early preparation among large US corporates. Meanwhile, voluntary adoption remains concentrated among Fortune 500 companies, with mid-market firms lagging.

Asia-Pacific is accelerating from a lower base. Japan's ISSB-aligned sustainability reporting standards took effect in 2025 for listed companies, and South Korea's Korea Sustainability Standards Board followed suit. China's largest State-owned enterprises began disclosing Scope 3 in pilot programmes coordinated through the Ministry of Ecology and Environment, though data granularity remains limited.

Emerging markets face structural gaps. In Sub-Saharan Africa, Latin America, and South Asia, fewer than 10 percent of CDP-responding companies report any Scope 3 data, constrained by limited supplier capacity and data infrastructure (CDP, 2025).

Sector-Specific KPI Benchmarks

Consumer goods and technology firms demonstrate the highest engagement rates, largely because concentrated supplier bases make primary data collection feasible. Oil and gas companies trail, partly because their dominant Scope 3 category (use of sold products) requires demand-side transformation rather than supplier engagement alone.

What the Data Suggests

The data reveals a sector-wide implementation gap: companies are setting targets faster than they are building the supplier engagement infrastructure required to achieve them. Three implications stand out.

First, regulatory pressure works. Regions with mandatory disclosure requirements show measurably higher Scope 3 reporting rates and data quality. The CSRD's double materiality framework and California's SB 253 are already shifting corporate behavior before full enforcement begins.

Second, primary data is the unlock. Firms relying on spend-based estimates cannot meaningfully track progress. The companies demonstrating real Scope 3 reductions, such as Schneider Electric, which reduced its top 1,000 suppliers' operational emissions by 10 percent between 2021 and 2024 using its Energize programme (Schneider Electric, 2025), invested heavily in supplier-level primary data collection.

Third, the small-supplier problem remains unsolved. Large companies can mandate disclosure from strategic suppliers, but Tier 2 and Tier 3 suppliers often lack the capacity, tools, or incentives to measure and report. Industry collaborations like the Catena-X automotive data ecosystem and the Partnership for Carbon Transparency (PACT) offer promising models for standardized data exchange, but adoption is still concentrated in early-mover sectors.

Key Players

Established Leaders

• CDP — Operates the world's largest environmental disclosure platform; its Supply Chain programme covers 40,000+ supplier disclosures annually.
• SBTi (Science Based Targets initiative) — Validates corporate emission reduction targets; over 1,100 approved Scope 3 targets by 2025.
• Walmart — Runs Project Gigaton, the largest private-sector supply chain decarbonization programme, engaging 4,500+ suppliers.
• Schneider Electric — Its Energize programme provides renewable energy access and decarbonization support to its top 1,000 suppliers.

Emerging Startups

• Watershed — Enterprise carbon accounting platform offering granular Scope 3 measurement using supplier-specific emission factors.
• Carbmee — AI-powered supply chain emissions intelligence platform helping manufacturers identify reduction hotspots.
• Normative — Automated carbon accounting engine with integrations to ERP systems for activity-based Scope 3 reporting.
• Altruistiq — Sustainability data management platform enabling brands to collect primary data from suppliers at scale.

Key Investors/Funders

• Breakthrough Energy Ventures — Funds carbon accounting and supply chain decarbonization startups as part of its climate technology portfolio.
• Climate Action 100+ — Investor-led initiative engaging the world's 500 largest corporate emitters on emissions transparency, including Scope 3.
• IKEA Foundation — Supports supply chain decarbonization and supplier capacity-building in emerging market manufacturing.

Action Checklist

• Map your Scope 3 footprint across all 15 GHG Protocol categories and identify the top three contributors by absolute emissions.
• Transition from spend-based to activity-based accounting for your highest-impact categories within 12 months.
• Set an SBTi-validated Scope 3 target covering at least 67 percent of value chain emissions.
• Enrol key suppliers in CDP Supply Chain or equivalent disclosure platforms to collect primary emissions data.
• Establish supplier decarbonization incentives such as preferred procurement status, co-investment in efficiency upgrades, or renewable energy purchasing support.
• Join industry collaborations (PACT, Catena-X, Together for Sustainability) to standardize data exchange and reduce reporting burden on suppliers.
• Prepare for upcoming regulatory mandates (CSRD, SB 253, ISSB) by aligning internal systems with required disclosure timelines.

FAQ

What percentage of corporate emissions typically fall under Scope 3? For most sectors, Scope 3 represents 70 to 95 percent of total greenhouse gas emissions. In financial services, financed emissions (a Scope 3 subcategory) can exceed 99 percent of the institution's total footprint. Retailers and consumer goods companies typically see 85 to 95 percent of emissions originating in their supply chains.

Why is Scope 3 reduction lagging behind Scope 1 and 2? Scope 1 and 2 emissions are under a company's direct operational control, making them easier to measure and abate through energy efficiency, fuel switching, and renewable energy procurement. Scope 3 emissions require engaging hundreds or thousands of independent suppliers, many of whom lack the capacity or incentive to measure and reduce their own footprints. The data infrastructure for primary supplier-level accounting is still maturing.

Which sectors are making the most progress on Scope 3? Technology and consumer goods companies lead in both disclosure rates and active supplier engagement, driven by concentrated supplier bases and strong brand pressure. The automotive sector has made notable progress through data-sharing ecosystems like Catena-X. Oil and gas companies trail significantly because their largest Scope 3 category is the combustion of sold products, which requires economy-wide demand-side transformation.

How reliable is current Scope 3 data? Reliability varies widely. Companies using spend-based estimates face uncertainty ranges of 30 to 50 percent or more. Those using supplier-specific primary data can achieve uncertainty levels comparable to Scope 1 and 2 reporting. BCG (2025) found that activity-based methods reduced measurement error by up to half compared with spend-based approaches. Investors and regulators increasingly distinguish between these quality tiers.

What role do regulations play in driving Scope 3 disclosure? Regulations have proven to be the strongest driver of disclosure uptake. European companies subject to CSRD requirements show significantly higher Scope 3 reporting rates than voluntary-only peers. California's SB 253 and Japan's ISSB-aligned standards are expected to produce similar effects. Mandatory disclosure creates a level playing field and reduces the competitive disadvantage that early movers previously faced.

Sources

• CDP. (2025). Global Supply Chain Report 2024/2025: Scope 3 Disclosure Trends and Supplier Engagement Metrics. CDP Worldwide.
• SBTi. (2025). SBTi Progress Report: Target Validation Statistics and Scope 3 Coverage Analysis. Science Based Targets initiative.
• Climate Action 100+. (2025). 2025 Benchmark Assessment: Aggregate Emissions Performance of Focused Companies. Climate Action 100+.
• BCG. (2025). The Scope 3 Data Challenge: Spend-Based vs. Activity-Based Accounting Accuracy. Boston Consulting Group.
• Walmart. (2025). Project Gigaton Progress Report: Supplier Engagement and Cumulative Emissions Avoidance. Walmart Inc.
• Schneider Electric. (2025). Energize Programme Impact Report: Supplier Decarbonization Outcomes 2021–2024. Schneider Electric SE.
• European Commission. (2024). Corporate Sustainability Reporting Directive Implementation: Scope 3 Requirements and Timeline. European Commission.
• California Air Resources Board. (2024). SB 253 Implementation Guidance: Climate Corporate Data Accountability Act. State of California.