What happened
Martin Chilcott argues in Sustainable Brands that companies should treat supply-chain decarbonisation as a commercial procurement issue rather than a reporting exercise. The article says upstream Scope 3 emissions are largely shaped by suppliers’ energy, efficiency, electrification and process-heat choices.
It identifies three barriers: reliance on broad, spend-based emissions estimates; responsibility remaining with central sustainability teams; and limited commercial consequences for suppliers that do not cut emissions. The proposed response is to give purchasing teams product- or facility-level carbon information and build emissions performance into supplier selection.
The article highlights Haleon’s approach for high-emitting purchasing categories. Suppliers submit the footprint of the goods they offer alongside price and quality information. Haleon then applies an EU Emissions Trading System carbon-price measure to that footprint when comparing bids. Suppliers without suitable data are assessed at the sector average plus 50%, according to the article.
Sustainable Procurement Pledge coverage cited in the piece says Haleon had applied this method to more than $800 million of tenders from January 2024. The article says the company believes the approach could address almost half of the emissions-reduction measures required for its 2030 target, while resulting price inflation was close to zero.
Why it matters
For companies operating in EU-linked supply chains, the proposal offers a way to incorporate carbon exposure into purchasing decisions using an established EU carbon-price reference. It could change how suppliers compete: lower-emission production and better emissions data may improve a bid’s relative cost, while weak data can lead to a higher assessed footprint.
The article also argues that buyers should consider a wider business case for supplier decarbonisation, including energy costs, supply resilience, predictable costs and exposure to regulatory or border-related carbon charges. It recommends that procurement, finance and product teams agree in advance how much incentive they can offer suppliers, such as a price premium or shorter payment terms.
Background
The commentary says Scope 3 commonly represents 65% to 95% of a company’s emissions and is often concentrated upstream. It cites International Renewable Energy Agency figures showing that utility-scale solar electricity costs fell by 85% between 2010 and 2020, presenting supply-chain scale and competition as evidence that commercial incentives can accelerate technological change.
It also cites World Economic Forum analysis that many industries could reduce emissions by 10% to 60% without additional cost.
What's next
The article recommends that companies start with a major tender in a high-emitting category, assign a carbon value to bids and revise buyer performance measures so that purchasing decisions account for both financial cost and emissions outcomes.
