Why Supplier Engagement is crucial for achieving Science Based Targets

2023 has just begun, and already it’s clear that despite all the recent crises, both policymakers and leading companies are finally putting climate transformation front and center this year. How do we see this? The EU has just taken a decisive step towards the fundamental climate transformation of the European economy with its Green Deal Industrial Plan. At the same time, more and more companies are working to realign their own business model in a sustainable and future-oriented way. Already more than 4000 companies have set themselves Science Based Climate Targets for this purpose – a rapid increase of over 100% in only two years.

Supplier engagement is key for Science Based Targets

The Science Based Targets initiative (SBTi) supports companies in setting climate goals aligned with the latest science. In the work of SBTi, the importance of Scope 3 (emissions from the supply chain) has become increasingly evident in recent years. It is now clear that 90% or more of a company’s emissions typically come from the supply chain. Scope 3 decarbonization and supplier engagement are therefore absolutely essential if a company wants to achieve its climate targets. The SBTi therefore requires companies to pay particular attention to targets and measures for their supply chain. Thus, supplier engagement comes to the center of attention. 

What can companies do to meet these requirements and to engage their suppliers in decarbonizing the supply chain? We take a deep dive into this in the following.

You want to discuss the individual challenges of your company? Then book a call to learn more about how our platform supports you in setting up your supplier engagement program.

Why are Science Based Targets so important? 

The Science Based Targets initiative (SBTi) was founded in 2015 in the year of the Paris Climate Agreement by four NGOs: CDP, WWF, UN Global Compact and World Resources Institute. The initiative is a leading player for both guidance on science-based climate target setting and its validation. Companies can make a high-profile commitment to set Science Based Targets and then have two years to have these targets validated in close consultation with SBTi. 

The SBTi offers companies an important opportunity to ensure the credibility and realism of corporate climate targets. Today, companies are often tempted to tick off the issue of climate protection with quick “solutions” such as mere compensation and then exploit them for marketing purposes. Climate targets plucked out of thin air therefore inevitably lead to justified accusations of greenwashing. Instead, companies need to make the effort and really align their targets with science and the 1.5 degree target.

Why is Scope 3 important for setting Climate Targets?

Companies taking a closer look at their CO2 budget in the course of setting their Science Based Targets, quickly notice that in the majority of industries the bulk of a company’s emissions lie upstream of its core business and are generated through the purchase of goods and services (Scope 3.1). For this reason, the SBTi has stipulated that companies for which Scope 3 emissions account for more than 40% of total emissions must set a specific Scope 3 target for this purpose.

For setting targets for different Scope 3 categories, the SBTi provides guidance and criteria. Based on these criteria, a company should first try to find out where the emissions are coming from in its value chain using a Scope 3 screening. This way, the company knows where to focus its efforts to reduce greenhouse gases.

Using supplier engagement to implement Scope 3 targets

Once companies have identified the hotspots in their supply chain, they can move on to planning the reduction. Strictly speaking, however, companies cannot reduce these Scope 3 emissions themselves. Rather, they must enable their suppliers to take appropriate reduction measures. This is where supplier engagement comes into play and why the Science Based Targets initiative provides the opportunity and guidance for formulating additional supplier engagement targets. 

However, herein things get complicated. After all, engaging suppliers for climate actions continues to pose big challenges for companies. One problem is the complexity of value chains. These usually consist of thousands of small and medium-sized suppliers, who often have only limited resources for structured climate management. Accordingly, most suppliers fail to make their climate maturity and the corresponding climate-relevant data transparent to their business partners. In addition, many suppliers have limited time and resources and can only partially invest in concrete reduction measures.

7 Steps of the supplier engagement framework

To help companies prepare for these challenges, the SBTi has developed a supplier engagement framework. This guidance includes the following steps:

  1. Identify suppliers to engage
    First, companies should target those suppliers that have the highest contribution to the upstream scope 3 emissions.
  2. Determine the approach
    From providing support and guidance to promoting competition among suppliers, there are various approaches whose suitability needs to be assessed.
  3. Communicate
    Communication of expectations as well as the process and implications of data collection is crucial and should always be interactive. 
  4. Collaborate
    This is arguably the most important and also the hardest step of the framework. It involves driving tangible improvement with suppliers through co-creation of action plans, capacity building, training programs, incentives, and more.
  5. Support
    Because suppliers are often at very different stages of their climate transformation, each should receive exactly the right form of resources, workshops, benchmarks, or best practices it needs to take its next step.
  6. Monitor
    By continuously monitoring ongoing progress, companies can track positive developments and also adjust processes and further develop measures as needed.
  7. Reinforce
    Finally, companies should not forget to incentivize suppliers to hold up their end of the bargain.

Let’s make it happen!

The SBTi framework provides an initial orientation for the complex field of supplier engagement for climate action. It also shows how highly the topic is rated by the world’s leading driver of climate target setting. Numerous companies that are now setting Science Based Targets see supplier engagement in particular as the biggest challenge ahead of them. That’s why we built the Climate Intelligence Platform to help them and all other companies looking to reduce their Scope 3 emissions.

The Climate Intelligence Platform provides you with everything you need to set up, test, manage and achieve your supplier climate engagement targets – from data acquisition to tracking and engagement. With our corporate and enterprise plan you will be able to

Start your supplier engagement program now and compare our plans.

Escaping the “Climate Neutrality” Trap – with Insetting in favor of Offsetting

We all know offsetting as the quickest and easiest solution to become what we commonly refer to as “climate neutral”. Whether it’s a product, a service, or an entire company, carbon projects in the global south offer CO2 offsets in places, where they are implemented cheaply and efficiently.

But let’s not be fooled! 

Because neutrality should not be understood in the sense that existing emissions are merely measured and then “neutralized” through offsetting projects. In order to tackle climate change, we have to do much more than just compensating for our CO2 emissions! Companies actually have to reduce the amount of emissions they are producing, in order to make a difference. Driving climate transformation means to take climate action instead of offsetting your way into climate neutrality while continuing to do business the way they do.

What is the Problem with Offsetting?

Offsetting means that companies offset the calculated CO2 emissions through climate projects. These are diverse and, if reputable, certified by leading providers. Their impact on the climate is internationally recognized, but also subject to critical scrutiny and constant review. 


What lacks the principle of offsetting is the consideration of a company’s own emissions. Because CO2 offsetting takes place mainly in the global south, it does not initially change the company’s own emissions caused by the use of energy (Scope 1 and 2) or the purchase of goods and services (Scope 3). While offsetting can function as additional climate measure, and a valid step in making a company’s own climate targets visible and clearly tangible, we need to approach climate transformation more comprehensively than that.

Is Insetting the answer?

The decisive factor for whether a carbon project is effective and makes a contribution to climate transformation is the location. Carbon offset projects often have a seemingly arbitrary impact location and mainly map CO2 offsetting at the lowest possible price. In the contrary, insetting projects aim to internally reduce CO2 within the value chain. It generates carbon storage though implementing climate protection measures along the company’s supply chain. This process makes sense because most companies generate or purchase a high proportion of CO2 emissions in their own supply chain. Thereby, insetting ensures that the company’s own supply chain benefits directly from a climate protection project.

Insetting involves stakeholder and suppliers along the value chain and not only benefits the company itself. In comparison to offsetting, insetting tackles the problem at its root and transforms entire supply chains. It claims a holistic approach to entire ecosystems, societies and local economic structures. Thus, it has positive impacts on extensive sustainability goals of companies.

Insetting & Offsetting

What are the Pros and Cons of Insetting?



Our focus: CO2 reduction

While insetting measures are a very relevant way for every manufacturing company to improve its own impact on the climate, the environment and people, insetting in itself does not achieve climate neutrality. Only if companies prioritize to reduce their overall emissions (in Scope 1 and 2) and in the next step make efforts to offset and inset emissions (Scope 3), we can drive effective change.

solar energy

Switching to renewable energy in Scope 1 and 2 is neither offsetting nor insetting – it effectively reduces emissions. The same applies to avoiding waste and water consumption in the office. Through offsetting, however, companies are able to get globally engaged and support climate measures worldwide, thereby raising awareness for complex challenges. These challenges can then be addressed through well-structured insetting projects. As part of a comprehensive CO2 reduction strategy, companies use offsetting and insetting measures complementarily.

First Steps towards CO2 Reduction, Offsetting and Insetting

CO2 reduction, insetting and offsetting need to go hand in hand. These are the first step to take for a companies driving climate transformation:

  1. Measure CO2 emissions along the supply chain – It is crucial to get a holistic overview over a company’s climate performance in order to identify relevant reduction potentials and take action. 
  2. Set ambitious but realistic reduction targets – A company needs to set targets aligned with Science Based Targets. They provide guidance on how companies can reduce their own emissions in line with the goals of the Paris Agreement.
  3. Developing a climate strategy – Companies want to identify specific climate actions and measures to tackle within a specific timeframe. Especially in the manufacturing sector, insetting projects require long-term commitment and should not be missing in a comprehensive climate strategy. Additionally, companies use offsetting options voluntarily, according to their own preferences.

This is how you get started …

Climate Readiness Check

Every successful climate strategy starts with basic and clear insights into the company’s climate performance. An easy and quick way to get those insights is our new and free version of the Climate Readiness Check, available to companies of any size and industry. It can be completed in less than 5 minutes and helps to assess your company’s climate maturity as well as provides concrete recommendations for improvement. 

You want to understand your climate performance, get recommendations for action and take the first step toward climate disclosure requirements? Get more information on the free Climate Readiness Check and pre-register here.