Engaging supply chains on the decarbonization journey
Engaging supply chains on the decarbonization journey
As climate regulations tighten and the 2030 climate goal is fast-approaching, organizations in the Netherlands, especially in the manufacturing sector, face mounting pressure to reduce greenhouse gas (GHG) emissions. While addressing Scope 1 and 2 emissions is essential, it is not enough. The majority of emissions often come from Scope 3, particularly purchased goods and services, which can account for 65–90% of a company’s total footprint. Tackling these upstream emissions is critical for meeting climate goals and maintaining competitiveness.
This article explores one of the most effective ways to address Scope 3 emissions from purchased goods and services: Supplier Engagement.
Addressing this is challenging. Data gaps, supplier diversity, and varying levels of climate maturity make Scope 3 reductions difficult to achieve.
The Science Based Targets initiative (SBTi) recommends setting supplier engagement targets - specific goals that require a defined percentage of suppliers to measure, report, and reduce their emissions within a set timeframe. SBTi promotes these targets because they drive systemic change across value chains. By requiring suppliers to adopt science-based targets, companies can ensure that emissions reductions extend beyond their own operations and align with global 1.5°C pathways.
However, targets alone are not enough. To turn these commitments into measurable results, organizations need a structured approach. This is where a supplier engagement plan comes in. It translates high-level targets into actionable steps by identifying priority suppliers, defining engagement strategies, providing support and tracking progress over time.
In short, the plan is the bridge between ambition and execution.
Not all suppliers have the same impact. Use segmentation models like the Kraljic Matrix, adapted with sustainability metrics such as emissions intensity and climate readiness. This ensures resources are focused where they matter most.
2. Target the top 20%
Start with suppliers responsible for the majority of emissions or spend, typically the top 20%. This approach delivers the greatest impact with the least complexity. Early wins with key suppliers can build momentum and encourage broader participation.
3. Educate and empower procurement
Procurement teams are the bridge between sustainability goals and supplier relationships. Equip them with training on climate-related criteria, contract clauses, and negotiation strategies.
4. Offer support and incentives
Many suppliers lack the expertise or resources to decarbonize. Provide practical tools such as emissions calculators, templates for reporting and access to training. Incentivize progress by linking sustainability performance to preferred supplier status, contract renewals, or even financial benefits.
5. Leverage data and digital tools
Accurate data is the backbone of any engagement plan. Collect primary data where possible, but use hybrid or spend-based methods when necessary. Digital platforms can streamline data collection, ensure confidentiality, and provide dashboards for real-time tracking.
6. Monitor and iterate
Supplier engagement is not a one-off exercise. Establish clear KPIs, track progress regularly, and share feedback with suppliers. Over time, expand the program to include more suppliers and deeper collaboration, moving from basic reporting to joint innovation projects.
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This article explores one of the most effective ways to address Scope 3 emissions from purchased goods and services: Supplier Engagement.
The challenge and the solution
Organizations in manufacturing depend on complex supply chains for raw materials, components, and services. Each supplier’s production process embeds emissions into the goods delivered, categorized under Scope 3, Category 1 in the GHG Protocol. This means that even if a company’s own operations are efficient, supplier-related emissions can keep its overall footprint high.Addressing this is challenging. Data gaps, supplier diversity, and varying levels of climate maturity make Scope 3 reductions difficult to achieve.
The Science Based Targets initiative (SBTi) recommends setting supplier engagement targets - specific goals that require a defined percentage of suppliers to measure, report, and reduce their emissions within a set timeframe. SBTi promotes these targets because they drive systemic change across value chains. By requiring suppliers to adopt science-based targets, companies can ensure that emissions reductions extend beyond their own operations and align with global 1.5°C pathways.
However, targets alone are not enough. To turn these commitments into measurable results, organizations need a structured approach. This is where a supplier engagement plan comes in. It translates high-level targets into actionable steps by identifying priority suppliers, defining engagement strategies, providing support and tracking progress over time.
In short, the plan is the bridge between ambition and execution.
Key tips for an effective supplier engagement plan
1. Prioritize strategicallyNot all suppliers have the same impact. Use segmentation models like the Kraljic Matrix, adapted with sustainability metrics such as emissions intensity and climate readiness. This ensures resources are focused where they matter most.
2. Target the top 20%
Start with suppliers responsible for the majority of emissions or spend, typically the top 20%. This approach delivers the greatest impact with the least complexity. Early wins with key suppliers can build momentum and encourage broader participation.
3. Educate and empower procurement
Procurement teams are the bridge between sustainability goals and supplier relationships. Equip them with training on climate-related criteria, contract clauses, and negotiation strategies.
4. Offer support and incentives
Many suppliers lack the expertise or resources to decarbonize. Provide practical tools such as emissions calculators, templates for reporting and access to training. Incentivize progress by linking sustainability performance to preferred supplier status, contract renewals, or even financial benefits.
5. Leverage data and digital tools
Accurate data is the backbone of any engagement plan. Collect primary data where possible, but use hybrid or spend-based methods when necessary. Digital platforms can streamline data collection, ensure confidentiality, and provide dashboards for real-time tracking.
6. Monitor and iterate
Supplier engagement is not a one-off exercise. Establish clear KPIs, track progress regularly, and share feedback with suppliers. Over time, expand the program to include more suppliers and deeper collaboration, moving from basic reporting to joint innovation projects.
The sooner you start, the better
If your organization is serious about meeting climate targets, start engaging your suppliers now. Waiting will only increase costs, regulatory risks, and reputational exposure. Begin by mapping your supply chain emissions, setting clear engagement targets, and building internal alignment.How BDO can help
Our services include emissions calculation, development of engagement plans, and training workshops to empower your teams. Together, we can turn climate ambition into measurable action.Contact us
