Rethinking Scope 3 Through Supplier-Centric Procurement

As Scope 3 disclosure requirements expand, companies are under growing pressure to improve the quality of their supply chain emissions data. Moving beyond spend-based estimates and generic emission factors will require a more supplier-centric approach, one built on primary data, stronger engagement and better integration with procurement decision-making.

Why Scope 3 is critical

In most sectors, supply chain emissions overshadow operational emissions: recent analyses show disclosed upstream Scope 3 emissions averaging around 26 times direct operational emissions, and at least 11 times in many corporate portfolios. Yet Scope 3 remains a blind spot in risk management, with one CDP report finding that only one in four disclosing companies include supply chain climate risks in their enterprise risk processes, and just 15% explicitly target value chains in their reduction initiatives.

Regulation is tightening around this gap. IFRS S2 (IFRS, 2023) now requires disclosure of absolute Scope 1, 2, and 3 emissions, measured in line with the GHG Protocol, making Scope 3 a global reporting baseline rather than a voluntary add-on. In the EU, CSRD (European Commission, 2023) strongly encourages comprehensive Scope 3 coverage, allowing exclusions only when carefully justified through double materiality assessments. At the same time, KPMG’s 2024 global survey shows 96% of the world’s largest 250 companies already produce sustainability reports and 95% publish climate targets, but the underlying data systems and controls are struggling to keep up.

The limits of spend-based methods and generic factors

Spend-based approaches and generic emission factors were designed as pragmatic starting points for Scope 3. The GHG Protocol guidance explicitly positions the spend-based method as a “last resort” where activity or supplier data is unavailable, noting that it introduces substantial uncertainty and often fails to reflect supplier or product-specific performance.

Multiple industry analyses highlight structural issues with generic factors. Studies point out that spend-based factors can be too generic, ignoring differences between products, suppliers, technologies, geographies, and procurement practices, which leads to large variations and uncertainties in calculated footprints. The result is what many sustainability teams know intuitively: the same supplier swap or process change can barely move a modeled Scope 3 number, even when the real-world emissions impact is significant.

As regulatory and assurance expectations rise, this becomes more than a technical nuance. Assurance providers underline that spreadsheet-based, manually maintained emission factor models are hard to control, difficult to audit, and vulnerable to versioning, formula, and classification errors. In other words, better factors alone cannot solve a fundamentally weak data architecture.

Primary supplier data: from estimates to decision-useful information

Primary emissions data (supplier-specific activity or product data) is increasingly seen as the missing piece in Scope 3 decarbonization. EcoVadis estimates that more than one-third of the world’s largest 2,000 companies have net-zero targets covering Scope 3, but only about 16% are on track, in large part due to an overreliance on generic averages instead of real supplier data (EcoVadis, 2024).

Primary data enables companies to move from high-level emission estimates to decision-useful information by:

• Providing more accurate baselines for science-based targets and performance tracking, especially for SBTi-aligned Scope 3 goals
• Allowing procurement to benchmark suppliers, integrate carbon criteria alongside cost and quality, and identify concrete efficiency levers
• Enhancing transparency and credibility in regulatory reporting by supporting traceable, auditable calculations and clear data lineage

Supplier engagement as a strategic lever

Today, the central constraint seems to be suppliers’ capacity and willingness to generate and share it. A recent MIT survey across 1,200 professionals in 97 countries found that 70% cite lack of available supplier data as one of the most significant obstacles to measuring Scope 3 emissions, ahead of methodology complexity or internal expertise. Other challenges include non-standardized methods (53%), resource constraints, tool costs, and privacy concerns around data sharing (MIT, 2025).

At the same time, the business case for supplier engagement is increasingly clear:

• BCG and CDP analyses show that companies engaging suppliers on climate issues are almost seven times more likely to have a Scope 3 target and a 1.5°C-aligned transition plan, yet only about four in ten corporates currently do so
• CDP’s recent supply chain report finds that suppliers reporting through its program attribute a 43 million tonnes of GHG emissions reduction (more than Sweden’s annual emissions) to buyer engagement, and that financial incentives can make suppliers 52% more likely to reduce emissions (CDP, 2024)

Supplier engagement, in other words, is emerging as a strategic capability, correlated with more ambitious targets, better risk management, and tangible emissions reductions.

Common barriers to supplier engagement

Despite the clear rationale, companies face a familiar list of obstacles when they try to operationalize supplier engagement at scale:

• Data collection: Collecting reliable emissions data remains a major challenge, as inconsistent data quality, fragmented information sources, and heavily manual processes continue to hinder progress
• Immature data systems: Many organizations also lack the technological infrastructure needed to manage sustainability data efficiently, with research showing that approximately half still rely on spreadsheets for Scope 3 and broader sustainability reporting, often describing these processes as cumbersome, inefficient, and difficult to scale (KPMG, 2024)
• Limited visibility: Visibility across supply chains presents another significant barrier, as many companies have only partial insight into their supplier networks, limiting their ability to identify emissions hotspots and prioritize engagement efforts. EcoVadis’ 2024 Sustainable Procurement Barometer, co-developed with Accenture, reports that only about half of companies have visibility into more than 50% of their tier 1 suppliers, and engagement practices are often neither broad nor deep
• Supplier capacity and fatigue: Many suppliers lack GHG accounting expertise and face multiple, overlapping data requests from different customers, leading to reporting fatigue and inconsistent responses

These issues are amplified further down the value chain, where SMEs encounter resource constraints and perceive climate data collection as a low priority relative to immediate commercial pressures.

How leading companies are building supplier engagement programs

Leading organizations are responding by professionalizing supplier engagement programs rather than treating them as one-off data requests. Several converging trends stand out.

First, major buyers are leveraging shared platforms like CDP’s Supply Chain program, which now reaches approximately 45,000 suppliers and allows more than 270 leading corporates to request standardized environmental data at scale. CDP data shows that companies requesting supplier disclosure through these platforms are 6.6 times more likely to have Scope 3 targets aligned with a 1.5°C transition plan.

Second, initiatives like WBCSD’s Partnership for Carbon Transparency (PACT) are enabling comparable, verified product-level carbon data exchange, which represents an essential building block for category-level Scope 3 improvements. Sector-specific guidance such as the chemical industry’s product carbon footprint standard similarly acknowledges the limitations of generic emission factors and pushes toward harmonized primary data.

Third, SBTi’s supplier engagement target method and related guidance give companies a structured pathway: select priority Scope 3 categories, identify high-impact suppliers, and commit that a defined percentage of spend or emissions will be covered by suppliers with science-based targets within five years. This effectively turns supplier engagement into a measurable performance commitment rather than a vague aspiration.

Finally, leading procurement teams are integrating climate into core processes. Advanced organizations embed sustainability visibility and indicators into sourcing, supplier segmentation, contract terms, and performance reviews, even though many peers remain at early stages. Case studies from CDP members such as BT, Vodafone, and Bosch show the use of contract clauses requiring SBTs, preferential financing rates, and supplier training as combined levers.

Taken together, the evidence points to a simple but uncomfortable conclusion: the Scope 3 frontier is shifting away from chasing the “perfect” emission factor and toward building the relationships, systems, and incentives that enable high-quality supplier data.

Organizations that focus solely on refining models, without investing in supplier capability-building, collaborative platforms, and integrated procurement levers, will continue to produce estimates that are hard to audit and even harder to use for actual decarbonization. By contrast, companies that consider supplier engagement as a strategic priority are already seeing better target alignment, clearer risk visibility, and measurable emissions reductions across their value chains.

The emerging playbook for Scope 3 leaders is therefore relational as much as it is technical: standardize where you can, but prioritize primary data; centralize systems, but decentralize responsibility through procurement and category teams; and use regulation and assurance as catalysts to renegotiate how you collaborate with suppliers, not just how you calculate emissions.

How UL Solutions can support supplier centric Scope 3 strategies

For organizations moving from compliance oriented Scope 3 reporting to supplier centric decarbonization, technology and third-party data verification capabilities are becoming just as important as methodology. UL Solutions has been expanding its software and advisory offerings precisely around these pain points: supplier data collection, product level carbon footprints and audit ready reporting aligned with global and local standards.

UL Solutions’ ULTRUS® UL 360 software is designed to centralize sustainability and carbon data, including Scope 3, and connect it to disclosure and decision making workflows. Also, to help address the bottleneck of supplier data, UL Solutions recently launched AI enabled capabilities in ULTRUS ® UL 360 to calculate product carbon footprints from supplier provided emissions data. The new software is built for sustainability, procurement and product teams that need a repeatable way to request, organize and use supplier emissions data for Scope 3 reporting and product level carbon information, rather than relying on one off questionnaires and generic factors. By centralizing supplier inputs and applying consistent rules across a product portfolio, companies can improve both data quality and the “decision readiness” of Scope 3 information for sourcing and product design decisions.

Beyond software, UL Solutions sustainability advisory services can also support the design and implementation of supplier engagement programs, helping organizations strengthen supplier relationships, establish consistent data collection frameworks, and equip suppliers with the tools and guidance needed to measure, report, and improve their emissions with confidence.

For companies pursuing supplier centric Scope 3 strategies, this kind of integrated support can help close the gap between ambitious targets and the reality of fragmented, inconsistent supplier data. Rather than choosing between better factors and better relationships, organizations can use platforms like ULTRUS® UL 360 as a backbone for engaging suppliers systematically and turning primary data into both compliant disclosures and actionable procurement insights.