EcoVadis on Scaling Scope 3 Emission Reductions
UK businesses face growing pressure to measure and reduce carbon emissions across their supply chains. However, the biggest portion of most companies' carbon footprint sits outside their direct control. For manufacturers and consumer goods businesses especially, emissions from purchased goods, transport, and supplier operations can dwarf anything generated on site.
This challenge has prompted a shift in how companies approach climate action. Rather than focusing solely on energy use in their own buildings or vehicle fleets, businesses now need to work with suppliers to understand and reduce what are known as Scope 3 emissions. These indirect emissions often represent the majority of a company's total carbon footprint, yet they remain the hardest to measure and influence.
Pierre-François Thaler, co-chief executive of sustainability rating platform EcoVadis, has highlighted this issue in recent statements. His central argument is straightforward: meaningful climate progress requires companies to tackle emissions across their supplier networks, not just within their own operations. This view reflects a broader change in corporate sustainability, where procurement teams are increasingly being asked to make climate reduction part of their decision-making process.
For UK SMEs, this matters because it changes what larger customers and public sector buyers expect. Suppliers are now being asked to provide emissions data, demonstrate reduction plans, and sometimes meet specific carbon thresholds to qualify for contracts. Consequently, businesses that cannot measure or report their carbon footprint may find themselves excluded from tender opportunities or pushed down preferred supplier lists.
Why supply chain emissions are becoming a procurement issue
Scope 3 emissions cover a wide range of activities. They include emissions from the goods and services a company buys, the transport and distribution of products, business travel, employee commuting, waste disposal, and the use of sold products. In many sectors, these indirect emissions are far larger than the direct emissions from a company's own operations.
For example, manufacturers often find that emissions from purchased materials and components outweigh those from running their factories. Similarly, retailers typically see most of their carbon footprint in the products they sell rather than in store heating or lighting. Research cited by EcoVadis suggests that value chain emissions can account for more than 70% of total emissions for manufacturers and up to 80% for consumer goods organizations.
This creates a practical problem. A business can install LED lighting, switch to renewable energy contracts, and improve logistics efficiency. Nevertheless, if its suppliers continue to operate high-carbon processes, the overall carbon footprint remains largely unchanged. Therefore, real progress depends on collaboration rather than internal efficiency alone.
EcoVadis, founded in 2007, has built its business model around this idea. Initially focused on sustainability ratings, the company has expanded into carbon management tools designed to collect emissions data from suppliers and help companies prioritize reduction actions. Its approach centers on replacing industry-average estimates with verified supplier data and turning procurement decisions into a mechanism for driving carbon reductions.
Measurement problems and the push for primary data
One of the biggest obstacles to reducing supply chain emissions is the difficulty of measuring them accurately. Many companies still rely on industry averages or spend-based estimates to calculate their Scope 3 footprint. These methods provide a rough picture but lack the detail needed to identify where emissions actually occur or which suppliers contribute most to the total.
Spend-based calculations work by multiplying what a company spends in each category by an emissions factor for that sector. For instance, if a business spends £100,000 on steel, it might apply an average emissions factor for steel production to estimate the associated carbon footprint. While this approach is simple, it fails to account for differences between suppliers. A supplier using renewable energy and efficient processes will have a lower carbon intensity than one relying on coal power and outdated equipment, yet spend-based methods treat them the same.
Primary data, by contrast, comes directly from suppliers. It reflects actual energy use, production methods, and transport choices. Collecting this information is more time-consuming, but it enables companies to see which suppliers generate the most emissions and where targeted interventions can have the greatest impact. Furthermore, it allows businesses to track progress over time and verify that reductions are genuinely taking place.
EcoVadis has developed tools aimed at collecting this primary data at scale. Its Carbon Action Manager is designed to gather supplier-specific emissions information and help companies prioritize high-impact partners. The platform also offers suppliers a free Carbon Estimator tool, which allows smaller businesses to calculate their own emissions and share the results with customers. This approach recognizes that many SMEs lack the resources or expertise to produce detailed carbon reports without support.
How procurement teams are being asked to drive climate action
As supply chain emissions become a bigger focus, procurement is evolving from a cost and quality function into one with environmental responsibilities. Buyers are now being asked to incorporate carbon performance into supplier selection, contract renewals, and tender evaluations. This shift is driven partly by regulatory requirements and partly by customer and investor expectations.
In the UK, public sector procurement has led this change. Procurement Policy Note 06/21 requires suppliers bidding for central government contracts above £5 million to publish a carbon reduction plan. The plan must cover Scope 1, 2, and 3 emissions where relevant, set reduction targets aligned with the UK's net zero commitment, and explain how the supplier will achieve those goals. Businesses without a compliant plan cannot bid for covered contracts.
Private sector buyers are following a similar path, though requirements vary. Some large companies now require suppliers to disclose emissions data as part of onboarding or annual reviews. Others set carbon reduction targets for their supply base and track progress through platforms like EcoVadis. In certain sectors, buyers are beginning to favor suppliers with science-based targets or third-party verified carbon reports.
This creates both pressure and opportunity for UK SMEs. On one hand, businesses that do not measure or report emissions risk losing contracts. On the other hand, suppliers that can demonstrate lower carbon intensity or credible reduction plans may gain a competitive advantage. For instance, a manufacturer that switches to renewable energy and shares verified emissions data may become a preferred supplier for customers under pressure to reduce their own Scope 3 footprint.
EcoVadis recommends that companies take several steps to embed climate criteria into procurement. These include mapping the value chain to identify high-emission categories, engaging suppliers through training and support programs, standardizing data collection processes, and linking procurement decisions to carbon performance. The company's own corporate commitments illustrate this approach: it has pledged to reduce Scope 3 emissions per unit of value added by 55% by 2030 and 97% by 2040, using 2019 as the baseline.
Practical challenges for smaller suppliers
While the push for supply chain decarbonization is gaining momentum, it also raises questions about capacity and fairness. Large companies often have sustainability teams, carbon consultants, and the resources to invest in measurement and reporting systems. Smaller suppliers typically do not. Consequently, there is a risk that new requirements create barriers for SMEs, particularly those operating on tight margins or in sectors with limited access to capital.
This is where supplier engagement becomes important. Rather than simply demanding data or excluding suppliers that cannot provide it, leading companies are beginning to offer support. This might include free training on carbon measurement, access to online tools, or collaborative projects to reduce emissions in specific categories. EcoVadis provides suppliers with resources such as the Carbon Estimator, which helps businesses calculate their footprint without hiring external consultants.
Nevertheless, challenges remain. Even with free tools, measuring emissions accurately requires time, knowledge, and access to reliable data on energy use, materials, and transport. Many small businesses struggle to gather this information, especially if they operate across multiple sites or rely on subcontractors. Additionally, reducing emissions often requires upfront investment in equipment, processes, or energy contracts, which may be difficult to justify without clear commercial incentives or financial support.
Thaler's argument acknowledges these difficulties. His emphasis on supplier collaboration rather than top-down mandates reflects a recognition that progress depends on thousands of businesses adopting new practices. Simply put, large companies cannot meet ambitious Scope 3 targets unless their suppliers actively participate. Therefore, the most effective strategies combine clear expectations with practical support and commercial incentives.
Core points for UK businesses to understand
- Scope 3 emissions from suppliers and value chain activities typically represent the largest share of a company's total carbon footprint, often exceeding direct operational emissions by a factor of ten or more.
- Procurement Policy Note 06/21 requires suppliers bidding for major UK government contracts to publish a carbon reduction plan covering Scope 1, 2, and 3 emissions where relevant.
- Private sector buyers are increasingly asking suppliers to disclose emissions data, set reduction targets, and demonstrate progress as part of contract requirements or preferred supplier criteria.
- Primary supplier data provides more accurate emissions information than industry averages or spend-based estimates, allowing companies to identify high-impact partners and track genuine reductions.
- Many SMEs lack the resources to measure and report emissions independently, which is why supplier support programs, free tools, and collaborative approaches are becoming central to supply chain decarbonization efforts.
Strategic considerations for businesses selling into larger supply chains
For UK SMEs that supply larger businesses or bid for public sector contracts, the shift toward supply chain decarbonization has several implications. First, measuring and reporting your carbon footprint is becoming a commercial necessity rather than a voluntary exercise. Buyers are asking for this information more frequently, and in some cases they will not consider suppliers that cannot provide it.
Second, the expectations are likely to increase over time. Today, many buyers simply ask for basic emissions data or a carbon reduction plan. In future, they may require more detailed reporting, third-party verification, or evidence of year-on-year reductions. Getting ahead of these requirements now can reduce pressure later and position your business as a preferred partner.
Third, carbon performance is starting to influence pricing and contract terms. Some buyers offer longer contracts or better payment terms to suppliers with strong sustainability credentials. Others use carbon performance as a tie-breaker when evaluating similar bids. While price and quality remain primary factors, carbon is becoming part of the overall value proposition.
To respond effectively, businesses should start by understanding their own emissions. This means collecting data on energy use, transport, waste, and purchased materials. For many SMEs, carbon reporting services can simplify this process and ensure the results meet customer or regulatory requirements. Once you have a baseline, you can identify where reductions are most feasible and develop a credible plan.
Next, consider how to communicate your carbon performance to customers. A clear, concise carbon reduction plan demonstrates commitment and helps buyers understand how your business fits into their own Scope 3 strategy. If you have made specific investments in renewable energy, energy efficiency, or low-carbon materials, make sure customers are aware. These details can differentiate your business from competitors who have not taken similar steps.
Finally, engage with customers early. If a buyer asks for emissions data, treat it as the start of a conversation rather than a compliance exercise. Ask what their targets are, how they plan to support suppliers, and whether they offer training or resources. Many large companies recognize that they need to help suppliers improve, and early engagement can give you access to tools, funding, or expertise that would otherwise be costly to obtain.
Where to find authoritative guidance and resources
The UK government provides detailed guidance on carbon reduction plans for public sector suppliers. The Procurement Policy Note 06/21 sets out the requirements and includes a template to help businesses structure their plans. Additionally, the government's net zero strategy offers broader context on national emissions targets and sector-specific expectations.
For businesses looking to understand Scope 3 emissions in more detail, the UK government's greenhouse gas conversion factors provide standardized data for calculating emissions from energy use, transport, and other activities. These factors are updated annually and form the basis for most carbon reporting in the UK.
Industry bodies such as the Chartered Institute of Procurement and Supply offer guidance on sustainable procurement practices. Their resources cover how to assess supplier sustainability, incorporate environmental criteria into tenders, and manage supply chain risks. Similarly, the Institute of Environmental Management and Assessment provides technical guidance on carbon measurement and reporting, including best practice for Scope 3 calculations.
Businesses seeking support with carbon measurement, reduction planning, or compliance can explore our net zero program, which is designed to help UK SMEs navigate reporting requirements and develop practical strategies for reducing emissions across operations and supply chains.