Myth-busting procurement & supplier engagement: separating hype from reality

Corporate supply chain (Scope 3) emissions are on average 26 times greater than direct operational emissions—yet only 13% of companies include climate requirements in supplier contracts. This gap between emissions exposure and procurement action represents one of the largest missed opportunities in corporate sustainability (CDP & BCG, 2024).

For procurement professionals and sustainability leads, the path forward is obscured by persistent misconceptions about what works in supplier engagement. Understanding the evidence—and separating effective strategies from sustainability theater—is essential for driving real emissions reductions.

Why It Matters

The magnitude of Scope 3 emissions is staggering. According to CDP's 2024 analysis, upstream emissions from manufacturing, retail, and materials sectors alone represent a $335 billion carbon liability—1.4 times the total CO₂ emitted by the entire European Union in 2022. These emissions expose companies to $162 billion in potential climate-related financial risks.

Yet the business case for action is equally compelling. Companies actively managing supply chain emissions have already saved $13.6 billion through efficiency improvements and risk mitigation. CDP estimates that addressing supply chain climate risks could unlock $165 billion in financial opportunities—nearly three times the $56 billion cost to mitigate these risks.

The challenge is execution. Despite the clear financial logic, only 40% of companies engage suppliers on climate issues, and only 15% have set upstream Scope 3 targets. This implementation gap creates both risk and competitive opportunity for procurement teams that take action.

Key Concepts

The Scope 3 Challenge

Scope 3 emissions encompass all indirect emissions in a company's value chain, including purchased goods and services (Category 1), capital goods (Category 2), and upstream transportation (Category 4). For most companies, Category 1 represents the largest share—often 60-80% of total corporate footprint for consumer packaged goods companies.

Procurement Practice	2024 Adoption Rate
Climate requirements in supplier contracts	13%
Requiring suppliers to disclose climate data	<6%
Sustainability metrics in supplier scorecards	64%
Supply chain risks in risk management	25%
Internal carbon pricing	14%

The Engagement Multiplier Effect

CDP data reveals a powerful finding: companies that engage suppliers are seven times more likely to have Scope 3 targets and 1.5°C-aligned transition plans. This correlation suggests that supplier engagement both requires and reinforces ambitious climate strategy.

Financial incentives amplify effectiveness. Suppliers are 52% more likely to cut emissions when buyers provide financial incentives versus training alone. This finding challenges the assumption that information sharing is sufficient—meaningful supplier action requires aligned economic interests.

Board-Level Climate Governance

Companies with climate-competent boards are five times more likely to have Scope 3 targets. This suggests that procurement-driven sustainability initiatives require executive sponsorship to succeed. Without board-level accountability, supplier engagement programs often lack the resources and mandate to drive meaningful change.

What's Working and What Isn't

What's Working

Tiered Data Collection Approaches: Leading companies are implementing phased supplier data programs. Phase 1 (2024-2025) focuses on Tier-1 suppliers representing 70-80% of spend, requiring disclosure of Scope 1 and 2 emissions. Phase 2 (2026-2028) extends to product-level carbon footprint data for major categories. This staged approach builds supplier capacity while generating actionable data.

CDP Supply Chain Program: The CDP Supply Chain program has enabled 5,500+ suppliers to collaborate on emissions disclosure and reduction. In 2023, buyer-supplier collaboration through CDP achieved 43 million tonnes CO₂e reductions—equivalent to Sweden's annual emissions. An additional 193 million tonnes in reduction potential have been proposed but not yet implemented.

Integrated Procurement Scorecards: Companies like Philip Morris International report that 94% of their 2024 spend was "sustainable spend," with 43% of supply chain spend covered by suppliers with science-based targets. This integration of sustainability metrics into standard procurement scorecards (adopted by 64% of companies, up from 38% in 2020) enables consistent tracking and incentive alignment.

What Isn't Working

Training Without Incentives: Supplier training programs alone show limited effectiveness. The 52% gap in emission reduction likelihood between financial incentives and training-only approaches suggests that knowledge transfer is necessary but insufficient. Suppliers face competing demands and will prioritize actions that align with their economic interests.

Voluntary Disclosure Requests: Despite growing pressure, only 6% of companies require suppliers to disclose climate data. Voluntary requests generate inconsistent and often incomplete responses. Leading practitioners are moving toward contractual requirements with consequences for non-compliance.

Ignoring Tier 2 and Beyond: Most supplier engagement programs focus exclusively on direct (Tier 1) suppliers. However, significant emissions often occur further upstream—in raw material extraction, component manufacturing, and logistics. Companies that fail to cascade requirements through their supply chains miss the majority of their Scope 3 exposure.

Key Players

Established Leaders

Philip Morris International (PMI): Seven consecutive years on CDP Supplier Engagement A-List. 94% sustainable spend in 2024, with 92% of direct material spend through EcoVadis sustainability assessments.
Johnson Controls: Achieved 20% Scope 3 reduction since 2017, ahead of its 16% target by 2030. Named to CDP 2024 Supplier Engagement Assessment A-List.
Nestlé: Targets 70% of emissions covered by engaged suppliers by 2024, requiring suppliers to set science-based targets.
Unilever: Net-zero target by 2039 with 70% of footprint in extended supply chain. Pioneering supplier finance mechanisms linked to sustainability performance.

Emerging Startups

Watershed: Carbon accounting platform with supplier engagement modules enabling automated data collection and analysis.
Persefoni: AI-powered carbon management platform with supply chain emissions tracking capabilities.
Ecovadis: Business sustainability ratings platform used by 90,000+ companies for supplier assessments.

Key Investors & Funders

CDP (formerly Carbon Disclosure Project): Non-profit running the largest environmental disclosure system globally, including the Supply Chain program.
Science Based Targets initiative (SBTi): Partnership validating corporate emissions reduction targets, increasingly required by buyers.
HSBC: Banking partner for CDP Europe reports on supply chain sustainability transformation.

Examples

Philip Morris International Sustainability Accelerator Program: PMI launched a pilot with 5 suppliers in 2023, expanding to 46 suppliers by 2025. The program provides technical assistance, financing, and shared targets. Results include 15% absolute CO₂ reduction since the 2019 baseline and 99% of tobacco farmers earning a living income in 2024. The program demonstrates that deep engagement with strategic suppliers delivers measurable outcomes.
Atos CDP Supplier Engagement Leadership: Atos, recognized for the fifth time on CDP's Supplier Engagement A-List, reports that 75% of its 2024 spend is with sustainability-assessed suppliers. Notably, Scope 3 represents 95.5% of Atos's total carbon footprint, making supplier engagement non-optional for its climate strategy. The company uses EcoVadis assessments integrated into procurement decision-making.
Coca-Cola and PepsiCo Agricultural Supply Chain: Both beverage giants target 70% supplier engagement by 2024 and require science-based targets from major agricultural suppliers. Using CDP Supply Chain and Together for Sustainability (TfS) platforms, they've created industry-wide expectations that cascade through food and beverage value chains. This sector-wide coordination reduces the burden on suppliers who would otherwise face inconsistent demands from multiple customers.

Action Checklist

Map your Scope 3 Category 1 emissions by supplier, identifying the 20% of suppliers that likely account for 80% of upstream emissions
Integrate sustainability KPIs into standard supplier scorecards—not as separate sustainability assessments
Include climate requirements in new supplier contracts and contract renewals for strategic suppliers
Align financial incentives with sustainability performance (e.g., preferential payment terms, volume commitments)
Join industry platforms (CDP Supply Chain, EcoVadis, Together for Sustainability) to leverage shared infrastructure and reduce supplier fatigue
Brief your board on Scope 3 exposure and supplier engagement strategy—board-level governance correlates with 5x better outcomes
Implement internal carbon pricing to create consistent economic signals across procurement decisions

FAQ

Q: How do we get suppliers to share emissions data when they view it as proprietary? A: Start with aggregated or category-level data rather than product-specific footprints. Use third-party platforms (CDP, EcoVadis) that provide confidentiality protections. Frame requests in terms of shared risk and opportunity, not compliance demands. For strategic suppliers, link data sharing to commercial incentives.

Q: What's the business case for supplier engagement beyond emissions reduction? A: Companies managing supply chain emissions have saved $13.6 billion through efficiency improvements. CDP identifies $165 billion in financial opportunities from addressing supply chain climate risks. Additionally, regulatory pressure (CSRD, SEC climate rules) is making Scope 3 disclosure mandatory for large companies—building supplier data infrastructure now avoids future compliance costs.

Q: Should we require science-based targets from all suppliers? A: Focus SBTi requirements on strategic suppliers representing significant emissions and spend. For smaller suppliers, start with disclosure requirements and capacity building. The goal is to create momentum rather than exclude suppliers who lack resources for formal target-setting.

Q: How do we avoid supplier fatigue when they receive requests from multiple customers? A: Use shared platforms and standards. CDP Supply Chain enables suppliers to respond once and share data with multiple customers. Industry consortia like Together for Sustainability (chemicals) and Railsponsible (rail) coordinate requirements across competitors. Emphasize that investing in sustainability data infrastructure benefits suppliers across all customer relationships.

Q: What role should procurement play in Scope 3 target-setting? A: Procurement should co-own Scope 3 targets with sustainability teams. Targets that sustainability sets without procurement input often prove unachievable. Procurement brings supplier relationship knowledge, commercial leverage understanding, and implementation capacity. Companies where procurement leads supplier engagement are 7x more likely to have Scope 3 targets.

Sources

CDP & BCG. "Scope 3 Upstream: Big Challenges, Simple Remedies." June 2024.
CDP & HSBC. "Strengthening the Chain: Industry Insights to Accelerate Sustainable Supply Chain Transformation." September 2024.
CDP. "Corporates' Supply Chain Scope 3 Emissions Are 26 Times Higher Than Their Operational Emissions." 2024.
CDP. "Supplier Engagement Assessment Methodology 2025." 2025.
CO2 AI. "CPG Scope 3 Emissions Suppliers: Why Your Carbon Data Determines Your Contracts." 2024.
Supply Chain Digital. "PMI: Embedding Sustainability into its Global Supply Chain." 2024.