According to PwC’s 2026 State of Decarbonization Report, a majority of companies are maintaining or accelerating their climate commitments, and a growing number are now on track to meet their operational and value chain decarbonization targets. Supplier engagement is a key part of that progress. Companies are increasingly prioritizing supply chain transparency and maturing how they work with suppliers to get a clearer picture of Scope 3 emissions.
Rising physical and transition climate risks pose direct threats to business continuity, and addressing climate impacts must be an organization-wide responsibility. But gaining genuine visibility into supplier activity, and influencing it, remains one of the harder problems to solve.
Why the Supply Chain Is Material
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- Reduced costs and improved efficiency: lower energy use, less waste, and smarter logistics can all drive meaningful savings. Reducing dependence on fossil fuels also helps companies hedge against the price volatility that comes with that exposure.
- Access to new markets and customers: Public procurement is increasingly tied to sustainability criteria, and customer expectations are shifting. Companies that manage carbon in their supply chains are better positioned to meet those requirements, and open doors to markets that put a premium on sustainable products.
- Greater resilience to disruption: Understanding what’s in their supply chain means companies can build continuity plans before they need them. Physical climate risks like flooding and extreme weather, transition risks like stranded assets and regulatory scrutiny, and reputational risks from rapid market change are all factors companies need to plan around.
- Better access to capital: Climate risk is increasingly priced into capital allocation decisions. Companies that account for these risks are better positioned to meet investor expectations and access financing.
- Innovation opportunities: Supply chain visibility surfaces new possibilities for material innovation, product redesign, and business models that weren’t apparent before.
- Stronger supplier relationships: Mapping the supply chain builds deeper insight into supplier practices, leading to improved data quality, faster responses when disruptions occur, and laying the groundwork for more collaborative relationships.
How to Get Started
From margin pressure to supplier capability gaps, companies face a number of short-term obstacles to managing supply chain emissions. It’s a big task, and this can make it feel difficult to get started. But, as with many challenges, starting simple to build momentum is better than deferring in search of perfect solutions.
If you’ve not started tackling your scope 3.1 emissions, here’s a quick overview of how to break down the challenge and start action.
Step 1: Start with materiality
At this stage, perfect data isn’t the goal. Building a rough Scope 3 baseline (spend-based data is a practical starting point) helps identify emissions hotspots by category and supplier. Once you have this, review the data and combine it with other materiality markers. For example, cost and spend exposure, where regulatory or disruption risk is highest, and where the company has the ability to drive change. This should start to identify groups of suppliers and/or inputs to focus on in the first instance.
Step 2: Prioritize what’s actionable
Emissions data identifies where the problems are, and materiality helps highlight a useful starting point. Companies should focus first on areas where they have real influence, meaningful access, and strategic importance to the relationship. From there, the work is identifying potential interventions based on each material group identified, such as helping energy intensive suppliers switch to renewable energy, redesigning product specifications, or exploring alternative sourcing for products/inputs.
Step 3: Define what success looks like
Teams should be explicit about target outcomes, whether that’s greater visibility into supplier-level emissions data, reductions in key categories, savings from sourcing shifts, or reduced exposure to carbon pricing and supply disruption. Once interventions and outcomes are outlined, an honest audit of internal capabilities is essential, including what data exists, what will be needed, and what needs to change within the organization for success.
Step 4: Design and test workflows
Mapping the end-to-end process, from data collection through to decision-making, and piloting it with a small set of suppliers before scaling is important. The goal is to understand what data suppliers can realistically provide, where friction exists, and whether the process is creating duplicative requests.
Step 5: Build internal alignment
A supply chain decarbonization program only works if the organization is behind it. Securing senior buy-in, upskilling relevant stakeholders, and engaging with other departments early to understand how the program intersects with their work is critical. Clear ownership should be assigned, and sustainability expectations embedded into existing processes rather than treated as a separate workstream. You can never spend enough time doing this, especially in larger complex companies.
Step 6: Evaluate tools and partners
Once a plan is defined, companies are in a much stronger position to assess vendors and technology solutions for the specific needs they have identified. Fit should be evaluated based on data quality, internal usability, and adoption within the team. The right tool will also evolve alongside the program as regulations, methodologies, and expectations continue to shift.
Step 7: Iterate
Once you launch, you’ll immediately start learning, collecting new data, and gaining insights from stakeholders involved. No plan survives without ongoing iterations.
Remember to celebrate all and any wins along the way to build a sense of momentum.
Managing Supply Chain Emissions with Novata
Effectively managing emissions across the supply chain requires the right infrastructure. Fragmented requests and inconsistent methods leave sustainability and procurement teams working with data that’s difficult to collect, hard to benchmark, and easy to distrust. Novata helps simplify the process, making it easy to collect sustainability data, including Scope 3 emissions, directly from suppliers and get a clear, connected view of the supply chain in one place. Learn more about how Novata can help your track and manage your Scope 3 footprint with decision-useful insights.
