Aligning Purchasing Decisions with Scope 3 Targets

Securing Internal Buy-In from Procurement Teams: Aligning Purchasing Decisions with Scope 3 Targets

As organizations strive to meet their UN 2030 Agenda and Paris Agreement goals, reducing Scope 3 emissions—the indirect emissions that occur throughout the value chain - is becoming a key priority. Procurement teams play a critical role in reducing these emissions. Aligning procurement decisions with Scope 3 emissions reduction targets is not just a matter of sustainability; it’s an essential part of a company’s decarbonization strategy. In this article, we’ll explore how to secure internal buy-in from procurement teams to drive Scope 3 emissions reductions.

Procurement’s Role in Managing Scope 3 Emissions

Scope 3 emissions are the largest portion of a company’s carbon footprint, often making up as much as 70-90% of total emissions. These emissions come from activities in the value chain, such as the production of purchased goods and services, transportation, and waste disposal. Procurement teams, who manage supplier relationships and purchasing decisions, have a direct influence on these emissions. Therefore, aligning procurement processes with Scope 3 targets is critical to achieving climate commitments. Procurement must move beyond focusing only on cost and efficiency, to also consider the environmental impact of their sourcing decisions. Here is how:

Establish Clear Scope 3 Emission Reduction Goals for Procurement Teams

Securing buy-in from procurement starts with defining clear goals for reducing Scope 3 emissions. Procurement teams should be aligned with the company’s broader Scope 3 strategy, which often includes:

• Low-carbon sourcing policies: Clearly defined policies that prioritize low-carbon goods and services, including prioritizing suppliers who disclose their emissions data or demonstrate actions to reduce their carbon footprint.

• Internal carbon pricing: This involves applying an internal carbon cost to the purchase of goods and services, enabling the company to account for the cost of carbon in procurement decisions. More and more organizations use internal carbon pricing as financial mechanism that encourages procurement to prioritize suppliers who have made strides in reducing Scope 3 emissions, ultimately making it easier to reach Scope 3 reduction goals.

• Specific Scope 3 reduction targets: Set quantifiable emission reduction targets tied to procurement decisions, such as reducing the carbon intensity of purchased materials or shifting to suppliers with lower emissions profiles.

With these goals in place, procurement teams are empowered to make choices that directly contribute to Scope 3 emissions reductions, not just cost efficiency.

Develop Procurement-Specific Scope 3 Emissions Metrics

Once goals and policies are in place, it’s critical to establish Scope 3 emissions metrics for procurement. These metrics help track progress and identify areas for improvement.

Here are key steps to ensure procurement-specific metrics effectively reduce Scope 3 emissions:

• Focus on climate maturity rather than just current emissions data to understand the underlying drivers of environmental sustainability, where suppliers are on their sustainability journey and their potential for reducing Scope 3 emissions.

• Identify essential metrics that are critical to measuring and tracking supplier climate maturity efficiently.

• Support suppliers in providing emissions data: Make it easy for suppliers to share their emissions data with minimal effort. Simplifying the process encourages greater participation and helps build a more complete dataset for Scope 3 calculations.

In our ClimateChoice Climate Readiness Check, we encourage companies to take action instead of aiming for perfection when engaging with suppliers to gather data on emission data and decarbonization measures

By asking just three simple questions, companies can make it easy for suppliers to participate and ensure high response rates:

1. Does the supplier calculate their Corporate Carbon Footprint for Scope 1, 2, and 3?

2. Does the supplier have Climate Targets & Roadmap to achieve targets?

3. Does the supplier have Product Level Data Available?

Designed to require little effort but provide valuable data, the Climate Readiness Check offers:

• 5-10 minutes of effort for suppliers to answer core questions for qualification.

• A feedback loop that provides suppliers with recommendations for improvement based on their responses.

• Access to a database of solutions and educational resources, helping suppliers improve their climate maturity.

By focusing on these simple, yet powerful steps, procurement teams can engage their suppliers efficiently, leading to higher participation rates and more actionable emissions data to guide Scope 3 reduction efforts.

Foster Cross-Departmental Collaboration to Address Scope 3

Scope 3 emissions are a cross-functional challenge. For procurement to effectively reduce these emissions, it’s important to foster collaboration between departments. Some key partnerships include:

• Finance: Ensuring that financial models account for Scope 3 emissions and consider carbon pricing.

• Operations: Working with operations teams to align procurement decisions with the company’s Scope 3 reduction goals in production and logistics.

• Sustainability or ESG teams: Collaborating with these teams to align Scope 3 metrics, carbon pricing, and supplier engagement strategies.

Procurement cannot act alone - engaging other departments ensures that Scope 3 emissions are considered at every stage of the decision-making process.

Equip Procurement Teams with the Tools to Measure, Track and Manage Scope 3 Progress

To make informed decisions and drive Scope 3 emissions reductions, procurement teams need the right tools to measure, track, and manage their progress.

Our AI-powered Climate Intelligence Platform is designed specifically for procurement and climate teams to accelerate Scope 3 decarbonization by automating time-consuming supplier engagement and collecting audit-ready data at scale.

• AI-driven data pipeline: Automatically collects granular data for each supplier profile, analyzing both climate data documents and publicly available data sources.

• Efficient supplier engagement: We empower procurement teams to engage suppliers in providing essential Scope 3 data - easy and effortless.

• Actionable insights: Our platform provides easy-to-understand dashboards for procurement teams, enabling them to understand the baseline of supplier climate maturity, track progress, make data-driven decisions - to drive Scope 3 emissions reductions with confidence and at scale.

• Supplier support: Suppliers receive personalized feedback and tailored recommendations for action, along with free learning materials and training resources to foster collaboration and continuous improvement.

Tools like our platform help procurement teams make informed decisions based on public and private Scope 3 emissions data, resulting in more effective emissions reductions. These insights enable teams to make low-carbon choices while meeting business needs.

By equipping procurement teams with these tools, companies can ensure more efficient, impactful Scope 3 emissions reductions across their entire supply chain.

Incentivize Scope 3 Emissions Reduction in Procurement

Incentivizing procurement teams to focus on Scope 3 emissions reduction can drive long-term success. Incentives can include:

• Performance-based rewards: Tie Scope 3 emissions reduction targets to procurement team performance, rewarding teams for achieving emissions goals.

• Public recognition: Acknowledge procurement teams who excel in reducing Scope 3 emissions, further promoting a culture of sustainability.

Rewarding procurement teams for reducing Scope 3 emissions helps create lasting incentives for prioritizing sustainability in every decision.

Action > Perfection: Start Now to Drive Scope 3 Emissions Reduction

Aligning procurement with Scope 3 emissions reduction is an ongoing effort. Start by setting clear goals, incorporating carbon pricing, and fostering collaboration across departments. With the right tools and metrics, procurement teams can make informed decisions that contribute to achieving Scope 3 reduction targets.

From Word to Action: Join our Scope 3 Action Group to Make Scope 3 Part of Every Purchasing Decision

The time to start is now. Join like-minded Scope 3 leaders in our Scope 3 action Group to explore actionable steps to gain internal buy-in and to align procurement with Scope 3 targets and decarbonizing efforts along your supply chain.

This 4-months blended learning program provides you with a unique opportunity to join a group of Scope 3 Action leaders from procurement and sustainability to: share strategies, address challenges, and develop your Scope 3 Strategy.

Cohort #4 will start on March 13th
—> Find more information here
—> Book your information call today

Read on

In our series of blogposts around the content of module 2 from our Scope 3 Action Group "Supplier Engagement & Climate Maturity Assessment ", we dive deeper into each of the steps to provide even more insights and practical tools for designing your own Supplier Engagement Program.

—> Driving Scope 3 Climate Action Through Supplier Engagement
—> Securing C-Level Buy-In for Scope 3 Success