Successful approaches to enhancing your supplier engagement strategy

Supply chain emissions account for a whopping 11.4x that of a company’s total emissions, according to CDP’s Global Supply Chain Report 2022. Yet, Scope 3 targets only made up 15% of all new or in-progress targets that same year—highlighting an important gap.

To find out why, we recently hosted a webinar bringing together experts around supplier engagement. Read on for insights on implementing effective supplier engagement programs from:

• Hadja Seydi, Global Bus Purchasing, Volvo Buses
• Oliver Hurrey, Founder, Scope 3 Peer Group
• Vincent Loubinoux, Sustainability Manager, CO2 AI
• Geoffroy du Berail, Head of Advisory, CO2 AI

Challenges of supplier engagement

Scope 3 encompasses indirect emissions from procured goods, services, and transportation. Managing these emissions is challenging due to their occurrence outside a company's direct control. This is where strategic supplier engagement becomes essential.

So, what challenges must companies overcome to effectively engage suppliers in reducing Scope 3 emissions? Here are a few key areas:

CO2 AI approach to sustainable procurement

To address these challenges, CO2 AI has developed a structured approach helping customers effectively engage their suppliers.

Build a granular scope 3.1 footprint

• Start by measuring your entire Scope 3.1 emissions using the most accurate emission factors. By transitioning from spend-based to activity-based data, companies lay a solid foundation for precise emission tracking across all procurement activities.
• For instance, Volvo Group established dedicated responsible purchasing teams, with consistent supply chain decarbonization targets across divisions. These teams focus on sustainable materials, supplier collaboration, and value chain emissions reduction. Data collection is validated by an external service provider.

Assess & segment your suppliers

• Collect and analyze emissions data from each supplier. This information helps understand their sustainability maturity, in order to tailor our engagement and set appropriate emissions reduction targets based on their specific capabilities and impact.

Set targets and plans for different supplier segments

• With a clear understanding of each supplier's profile, companies can effectively collaborate to set supplier emission reduction targets.
• Detailed emissions, including at product-level, help identify actionable decarbonization levers to ensure that each supplier has a clear roadmap towards reducing their carbon footprint.

Collaborate with suppliers on reduction levers & product footprints computation

• CO2 AI provides a solution for suppliers to compute product environmental footprints (PEFs) and share them easily and securely to feed back into customers’ Scope 3.1.
• PEFs provide the necessary level of detail to measure Scope 3.1 accurately, but also enable suppliers to identify exactly how to reduce emissions, such as by using alternative raw materials, improving manufacturing processes, or optimizing transportation.

Track suppliers’ progress & report

• Finally, companies need automated progress tracking, with solutions like CO2 AI refreshing emissions data every quarter based on the latest activities.
• All teams involved must be able to track their progress against targets, with granular permissions. This fosters transparency and accountability, empowering everyone to contribute to the company’s Net Zero trajectory.

Best practices in supplier engagement for emission reduction

Leading companies across industries are transforming their supply chains by adopting the following best practices:

1. Technology to provide transparency and accountability

By providing access to platforms such as CO2 AI, companies enable their suppliers to compute and share product-level emissions effectively. Using the same interface also avoid any data discrepancies, making it easier to align on reduction targets and track progress.

2. Onboarding and enablement at scale

Climate leaders incorporate environmental criteria into their supplier selection process, ensuring that new partners are committed to sustainability from the outset. They also provide guidance and best practices, which may be distributed through dedicated portals on an ongoing basis, as well as across supplier events such as annual sustainability summits or partner days.

3. Close collaboration with top emitting suppliers

Typically, a small number of key suppliers will make up most of a company’s Scope 3.1 emissions. It’s useful to collaborate more closely with them, by brainstorming innovative decarbonization initiatives and sharing win-win approaches that meet both companies’ objectives.
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Power of collaboration in driving decarbonization

Given the interdependence of supply chains, collaboration is essential for effectively decarbonizing industries. More than 50 industry-wide initiatives offer tools, benchmarks, and industry playbooks to guide companies on their decarbonization journey.

For instance, the Scope 3 Peer Group brings together more than 2,200 sustainability practitioners to share perspectives and best practices on reducing supply chain emissions, through regular meetings, working sessions, and hands-on projects.

To conclude, it’s important to get started now to obtain measurable results. Focus on making progress, rather than designing the perfect roadmap. By collaborating with your top suppliers and exchanging with peers in the industry, you will grab the low-hanging fruits and build confidence toward decarbonizing your entire supply chain.