Measuring what matters: Tracking supply chain emissions with supplier data

Supply Chain Emissions Under Scrutiny

Scope 3 emissions—indirect greenhouse gases from activities like purchased goods, services, and upstream supplier operations—typically dominate corporate carbon footprints, often exceeding 75% and reaching over 90% in many sectors. Until recently, companies relied heavily on secondary estimates or industry averages for these emissions, but evolving regulations are pushing for primary, supplier-specific data to enable verifiable tracking and genuine reductions.

In the EU, the Corporate Sustainability Reporting Directive (CSRD) mandates comprehensive ESG disclosures, including Scope 3 where material, with phased reporting underway. While the December 2025 Omnibus simplification package reduced the number of directly affected companies and allowed more use of estimates for Scope 3 in some cases, large in-scope firms must still provide transparent value chain information, often triggering data requests down the supply chain. The related Corporate Sustainability Due Diligence Directive (CSDDD), effective from early 2026, further requires monitoring of environmental impacts across global value chains, integrating Scope 3 tracking into legal obligations.

Across the Atlantic, California's SB 253 requires companies with over $1 billion in revenue doing business in the state to disclose Scope 1 and 2 emissions in 2026, followed by Scope 3 in 2027, with deadlines such as August 10, 2026, for initial reports and potential fines up to $500,000 for non-compliance. This affects thousands of firms worldwide, amplifying pressure on suppliers to provide accurate emissions data.

The stakes are concrete: inaccurate or incomplete Scope 3 reporting can lead to regulatory penalties, restricted market access (such as under the EU's Carbon Border Adjustment Mechanism), higher capital costs from investors demanding credible net-zero alignment, and strained customer relationships as large buyers push questionnaires. Non-obvious tensions include the cost and complexity of supplier engagement—many lack resources or incentives to share detailed data—versus the risk of inaction, which could lock in higher emissions and expose firms to physical climate disruptions or competitive disadvantages as peers advance.

Broader shifts, like rising CDP supplier disclosure requests and market expectations for Paris-aligned plans, mean even non-regulated companies face cascading demands, turning supply chain emissions tracking into a strategic imperative rather than a compliance checkbox.