Your supply chain is responsible for up to 60% of global emissions, making it a critical area for reducing your company’s carbon footprint. With regulations tightening in 2025, it’s essential to act now. While many companies have made strides in reducing their direct emissions, supply chain emissions—often the largest part of your carbon footprint—remain under-addressed.
In a recent survey by Sweep and Capgemini, only 28% of companies are measuring their Scope 3 emissions, even though these emissions can be up to 11 times greater than those from your own operations. But with 86% of businesses now requiring suppliers to prove their green credentials, waiting to act could put you at a competitive disadvantage.
The Corporate Sustainability Reporting Directive (CSRD) is already in effect, and if you have over 250 employees, generate €50 million in turnover, or hold €25 million in assets, you’ll need to start reporting your Scope 3 emissions for the 2025 financial year by 2026.
On top of this, the EU’s Carbon Border Adjustment Mechanism (CBAM) will impose carbon pricing on imports based on their embedded emissions, raising the stakes for businesses with global supply chains. Acting now ensures you’re not only compliant but also ahead of the curve.
Smarter supplier decisions
Measuring carbon emissions lets you identify climate-conscious suppliers, aligning your goals with theirs to drive sustainability throughout your value chain.
Cost-saving opportunities
Pinpointing emissions hotspots helps you find efficiency improvements, cutting both your carbon footprint and operational costs.
Enhanced reputation
Customers, investors, and partners want to see genuine climate action. Decarbonizing your supply chain will demonstrate your commitment, giving you a competitive edge.
Responsibility for supply chain emissions is shared. Without effectively engaging your suppliers, you won’t be able to achieve your climate goals.
But get them on your side, and you have a good chance of driving collective and collaborative climate action. And in doing so, you’ll become a Forever Company.
There are three key ingredients needed for a robust calculation of your supply chain emissions:
The right measurement method for your baseline
A clear map of all your supply chain contributors
Tools to collect accurate data from the most important suppliers
Let’s go through each of these in more detail.
The best method for establishing a baseline measurement for your supply chain emissions depends mostly on the supply chain data at your disposal and the resources available for tracking and measuring emissions. Below, we give you an overview of the four key ways to calculate the carbon footprint of your supply chain. Sweep helps you to select the right method based on your data maturity.
Four methods of measurements
Industry averages – These are sectoral emissions factors, or averages of the emission data submitted by organizations operating in a given sector. They can be used as a starting point for carbon footprint calculations in the absence of more accurate data.
Spend-based – This is based around the cost of purchased goods or services. The value is multiplied by a given emission factor to calculate an estimate of your total emissions. Spend-based emission factors are derived from an industry average of emission levels usually at a national level. This means they aren’t super accurate. On the plus side, spend-based methodology is relatively simple to implement and can provide a useful approximation of your company’s indirect emissions.
Supplier-based – As this is primary data, it is the most accurate form of Scope 3 accounting. It involves tracking the emissions from individual suppliers, and then using that data to calculate the emissions associated with your company’s purchased goods and services.
Hybrid – The hybrid method uses a mix of the above methodologies. It usually presents a fairly accurate picture of your total emissions, but it can be complex and resource-intensive to implement.
Mapping your supply chain contributors is crucial as it gives you a clear picture of the activities, processes, and systems involved in the entire chain. It also helps you identify your top emitters.
With a clear map (which we refer to as a ‘Tree’ in Sweep) you’ll be able to visualize exactly what data you’ll need and from whom. You can also use this to conduct a baseline measurement of your emissions using the data that you have at your disposal.
“We need to demystify the challenges of supply chain emissions. It starts with empowering teams and supplier educational resources and user-friendly tools like Sweep. When I started digging into QIMA’s carbon footprint, Sweep’s Tree was incredibly helpful to understand, structure, and get a full overview of our global emissions. That’s a key step to identifying missing data and our main emission sources, and taking action from there.” Anouschka Jansen, Director Sustainability Solutions at Qima.
Focus on the strategic suppliers using the Pareto principle of 80-20: 20% of your suppliers are likely responsible for 80% of your carbon footprint.
Focus on these suppliers first, and get them on board by making more exact data collection as simple as you can. Provide your procurement and sustainability teams tools to automate data collection for purchased goods and services. Empower them to send surveys to suppliers to collect missing data.
Since using Sweep, they’ve obtained a dynamic and granular view of their carbon footprint and reduction efforts across their entire company and value chain.
The Sweep methodology
If you don’t have exact supplier-based data at your disposal, don’t worry. You can still obtain a baseline measurement for your supply chain emissions. Our platform is specifically designed to suit companies with varying levels of data maturity.
We can help you:
Model your supply chain using benchmark data and identify your emission hotspots. We use industry averages and spend-based data as a starting point.
Send each supplier a straightforward climate survey. This is the first step to embarking on their own climate journey and tracking the impact of their actions. Note that you can adapt our climate surveys to make them suited to your needs.
It’s tempting to think that taking climate action is a four step, linear process: measure, set targets, reduce, communicate… Although – for the sake of clarity – this guide addresses each of these elements, the reality is somewhat different. In fact, a climate action pathway is best seen as of activity, moving ever outwards.
Your company can begin measuring its carbon footprint using benchmark data. Use this to set targets and engage in reduction activities across your supply chain. But once you start reducing your emissions, you need to reach a deeper level of accuracy with your carbon measurement. Here, getting data directly from your suppliers is crucial.
The below diagram shows how your climate action should evolve and grow – from a straightforward baseline measurement, to a comprehensive reduction strategy involving your entire value chain.
Once you’ve measured your emissions, the next step is understanding how to communicate them to your internal and external stakeholders in an understandable way. Below are two commonly used approaches.
This is based around the cost of purchased goods or services. The value is multiplied by a given emission factor to calculate an estimate of your total emissions. Spend-based emission factors are derived from an industry average of emission levels usually at a national level. This means they aren’t super accurate. On the plus side, spend-based methodology is relatively simple to implement and can provide a useful approximation of your company’s indirect emissions.
Measuring a product’s carbon footprint is valuable for procurement because it gives you an at-a-glance overview of the environmental impact of the products that your company is purchasing and using. This information can be used to make informed purchasing decisions and can help reduce your overall emissions – while identifying potential cost savings.
With Sweep, you can define your product system boundaries i.e. all the activities, processes, and suppliers involved in producing and delivering your products to the end user. You can then efficiently collect climate data from your entire value chain.
You’ll obtain a robust estimate of the carbon footprint for that particular product – giving you greater purchasing power.
A common method in carbon accounting is to establish a starting point, known as a baseline year, and then set science-based targets (SBTs) to decrease emissions in comparison to that baseline. It’s worth setting separate targets for your Scope 1, 2, and 3 emissions, either absolute or intensity-based.
Absolute emission targets
Absolute emission targets refer to a specific amount of emissions that your company commits to reducing or avoiding over a given period of time. This target is set in terms of the total amount of emissions and isn’t dependent on the growth of your business, or the profits made in a given year.
Example: Duff’s Beer pledges to reduce its Scope 3 emissions by 40% by 2030.
Intensity-based emission targets
Intensity-based emission targets refer to a reduction in emissions per unit of economic activity. They allow businesses to set emission reduction targets while at the same time accounting for growth or business changes (such as mergers or acquisitions).
Example: Honeydukes pledges to remove 5 metric tonne (MT) of CO₂ per $1 million in sales.
What are Science-based targets?
Science-based targets are goals set to align with the level of decarbonization needed to limit global warming to 2 degrees Celsius or less, as outlined in the Paris Agreement.
As category 1, Scope 3 emissions represent the biggest part of your carbon footprint, you’ll have to work with your suppliers to align on your science-based targets – their targets effectively feed into your broader company target.
You might view this as a next generation climate KPI – is your supply chain aligned with the science-based trajectory of limiting global warming to 1.5 degrees?
This is a powerful idea borrowed from the financial sector. Financial organizations are increasingly demonstrating their commitment to climate action. To monitor progress and make more informed decisions, they need transparent and comparable metrics.
Regulators and organizations like the Task Force on Climate-related Financial Disclosures (TCFD) are exploring the measurement of financial portfolio temperature as a way for investors to better understand their impact on climate change. The temperature method translates the projected emissions of companies within a given portfolio into a rise in average global temperatures. It can be used to indicate, for example, whether a portfolio is likely to keep global warming to 1.5 degrees, as outlined in the Paris agreement.
In fact, investment performance is likely to soon be reported not just on returns, but also in terms of temperature.
Why not adopt the same idea for supply chains?
A data-driven strategy for carbon reduction allows for more precise targeting, increased efficiency, and accountability in building a more sustainable business.
Sweep can help. We can empower you to get a thorough understanding of carbon emissions across your supply chain, enabling a more targeted approach to reduction. You’ll have access to a powerful carbon simulation tool which can help you test the impact of specific activities in terms of reduction potential, cost and feasibility. This will also support you to drive collaboration between CSR and procurement.
When it comes to reporting, one of your key KPIs will be your suppliers’ progress on their Scope 3 emissions. This will require you to share your reporting tool with each of them and to regularly monitor progress against targets. Each individual supplier target will fit into your own overall climate target.
Some companies choose to classify their suppliers based on their progress towards decarbonization. The idea is that a supplier can move up to the next level once they’ve taken the next step in measuring or addressing their emissions.
The below levels is just one suggestion of how you could conduct your classification:
Level 1. Suppliers that have achieved net zero for Scopes 1 and 2, and their Scope 3 reduction trajectories are aligned with a 2°C max increase in temperature.
Level 2. Suppliers whose Scope 1 and 2 trajectories are aligned with a 2°C max increase in temperature and their Scope 3 calculations are 80% based on physical data.
Level 3. Suppliers whose Scope 1 and 2 trajectories are aligned with a 2°C max increase in temperature and their Scope 3 calculations are 60% based on physical data.
Level 4. Suppliers that have calculated their Scope 1 and 2 emissions based on physical data and their Scope 3 carbon footprint based on spend-based data.
Level 5. Suppliers that are using a spend-based approach across all scopes to calculate and act on their carbon footprint.
Such classifications enable you to more easily demonstrate progress against targets.
E.g. In January 2020, we had 10% of suppliers at level 3, 20% at level 4 and 70% at level 5. But in January 2023, we have 5% of suppliers at level 1, 15% at level 2, 30% at level 3 and the remainder at level 4.
Your company’s Scope 3 emission reports are likely to be requested by a number of stakeholders, including customers, suppliers, investors, and analysts. Reporting is also essential for complying with industry standards. These depend on your region and scope of operations.
European Union
Corporate Sustainability Reporting Directive (CSRD) & European Sustainability Reporting Standards (ESRS)
The CSRD, now in full effect, expands sustainability reporting across the EU. By 2025, most large companies and listed SMEs must comply with mandatory reporting on Scope 1, 2, and 3 emissions.
Corporate Sustainability Due Diligence Directive (CSDDD)
The Corporate Sustainability Due Diligence Directive (CSDDD) aims to ensure companies address human rights and environmental risks across their operations and value chains. It establishes mandatory due diligence obligations for companies operating in the EU.
Who it applies to:
What you need to do: Identify, prevent, and mitigate adverse human rights and environmental impacts, including deforestation, forced labor, and pollution, across your value chain.Establish and implement due diligence policies, including remediation processes for affected parties.
Timeline: CSDDD requirements are expected to apply from 2026 for large companies and 2028 for smaller businesses in high-impact sectors.
Penalties: Non-compliance could result in fines, legal liability, and exclusion from public procurement contracts.
CSDDD reinforces the EU’s commitment to sustainable business practices, urging companies to embed human rights and environmental responsibility into their core operations.
France
Bilan d’Émissions de Gaz à Effet de Serre (BEGES)
France’s BEGES legislation requires companies with over 250 employees to track and report Scope 1, 2, and 3 emissions.
Germany
Supply Chain Act
Germany’s Supply Chain Act, effective since 2023, enforces due diligence on human rights and environmental impacts across global supply chains.
United Kingdom
Streamlined Energy and Carbon Reporting (SECR)
The SECR requires large companies and LLPs to report their energy use and emissions, including some Scope 3 categories.
Sustainable Disclosure Requirements (SDR)
The UK is consolidating regulations under the SDR framework, which will integrate and expand upon the SECR.
What you need to know
Managing Scope 1, 2 and 3 emissions is a major challenge for organizations with complex supply chains and multiple business units. Our platform makes data collection simple and efficient, organizing disparate data sources into one single measurement.
Sweep is a carbon and ESG management platform that empowers businesses to meet their sustainability goals.
Using our platform, you can:
