Scope 3 Emissions – The Supply Chain Challenge Reshaping Corporate Climate Action

For years, companies have focused on reducing emissions from their own operations (Scope 1) and purchased energy (Scope 2). But in 2025— the spotlight is firmly on Scope 3 emissions – those indirect emissions that occur across the entire value chain, from raw material extraction to product disposal. For most organizations, Scope 3 accounts for over 70% of their carbon footprint, making it the new battleground for corporate climate leadership.

Why Scope 3 Matters Now

With mounting pressure from investors, regulators and consumers— companies are being called to account for emissions beyond their direct control. The EU’s Corporate Sustainability Reporting Directive (CSRD), effective from 2024, mandates large firms to disclose Scope 3 emissions. In the US— the SEC is finalizing rules that will require climate risk disclosures, including supply chain impacts, for listed companies.

The Supply Chain Complexity

Mapping and measuring Scope 3 emissions is no small feat. Supply chains are often global, multi-tiered and opaque. Small suppliers may lack the resources or expertise to track emissions, while data collection is complicated by inconsistent standards and reporting frameworks.

To address these challenges— leading companies are leveraging digital tools, blockchain, and AI-powered platforms for real-time emissions tracking. Walmart, for example, uses its Project Gigaton initiative to help suppliers avoid a gigaton of emissions by 2030. Unilever and Nestlé are piloting blockchain to trace palm oil and cocoa back to their origins, ensuring transparency and accountability.[1]

Collaboration is Key

No company can tackle Scope 3 alone. Industry alliances like— the Science Based Targets initiative (SBTi) and the World Business Council for Sustainable Development (WBCSD)[2] are setting sector-specific pathways and tools for supply chain decarbonization. Collaborative purchasing, supplier training, and shared data platforms are emerging as best practices.

Opportunities and Risks

Addressing Scope 3[3] isn’t just about compliance; it’s a source of competitive advantage. Companies that decarbonize their supply chains can unlock cost savings, build brand trust and access green finance. Conversely, those that lag risk regulatory penalties, investor divestment and reputational damage.

The Road Ahead

As climate regulations tighten and stakeholder expectations rise, Scope 3 and supply chain emissions are set to define the next era of corporate sustainability. The message for 2025 is clear: climate action doesn’t stop at your factory gate – it starts with your entire value chain.

[1] https://sciencebasedtargets.org/consultations/cnzs-v2-initialdraft

[2] https://www.itln.in/supply-chain/cdp-report-finds-only-25-of-suppliers-have-science-based-targets-1344314

[3] https://events.reutersevents.com/sustainability-europe/sustainability-reporting