How Decarbonisation Became Integral to Procurement

The transformation of procurement from cost-focused function to sustainability driver represents one of the most significant shifts in corporate responsibility today. 

As organisations grapple with Scope 3 emissions – which typically account for 70-90% of a company's total carbon footprint, according to the UN Global Compact Network UK – procurement teams find themselves at the centre of decarbonisation efforts that extend far beyond their traditional remit.

"One of the biggest challenges in addressing Scope 3 emissions is the lack of consistent, accurate data from suppliers," explains Fang Chang, Chief Product Officer for Procurement at SAP.

"The most critical capability is collecting supplier- and customer-specific emissions data tied directly to what the company purchases."

This data challenge has become more pressing as regulatory frameworks evolve rapidly across global markets. 

Aniththa Jeyakumaran, Senior Manager for Sustainable and Resilient Supply Chains at Deloitte UK, adds: "Sustainability regulations are constantly evolving and reshaping procurement. Regulations such as CSRD, CSDDD, EUDR, CBAM and PPWR mandate greater sustainability and due diligence, requiring companies to assess environmental and social impacts across their supply chains."

The implications extend well beyond compliance reporting. These regulatory changes are fundamentally altering supplier selection criteria, contract negotiations and risk assessment frameworks. 

"Data collection and transparency are paramount, impacting supplier selection and contract terms,” Aniththa explains. “These changes drive a move towards responsible sourcing and risk mitigation.”

Procurement teams must now evaluate suppliers not only on traditional metrics of price, quality and delivery, but also on their environmental credentials and improvement trajectories.

Take for example, Microsoft, which has called upon its suppliers to reduce emissions in order to make itself more sustainable. 

Melanie Nakagawa, Microsoft's Chief Sustainability Officer, emphasises the importance of this supplier collaboration: "Nearly 75% of Microsoft’s Scope 3 emissions come from purchased goods and services (things like raw materials, office supplies) and capital goods (buildings, vehicles).

"This is an important reminder that our suppliers play a pivotal role in helping us reach our goal of carbon negative by 2030."

The technology foundation for change

Digital solutions are increasingly bridging the gap between measurement and action. Platforms that integrate with existing procurement systems enable real-time tracking of emissions data alongside traditional metrics such as cost and quality. 

This integration represents a fundamental change in how procurement decisions are made, embedding sustainability considerations into everyday operational workflows.

Fang believes "technologies that connect procurement activities directly with emissions data, such as through digital supplier networks or product-level carbon tracking, are foundational. These tools capture emissions information at the point of transaction, linking it to purchasing decisions and turning sustainability from a reporting task into part of daily operations”.

The sophistication of these systems has advanced considerably in recent years. Modern platforms can now track emissions at the product level, linking specific purchases to their carbon impact and enabling procurement teams to make informed trade-offs between suppliers based on comprehensive sustainability profiles. 

This granular visibility extends to often-overlooked categories such as business travel, where solutions can capture Scope 3 emissions data that contributes to a more complete organisational footprint.

"Digital tools are closing the gap by making emissions data more accessible, actionable and embedded into core business workflows," Fang notes. “Tools that bring sustainability into procurement, logistics and supplier engagement workflows allow organisations to measure and manage carbon with the same precision they apply to cost or quality."

According to the latest PwC State of Decarbonisation report, Scope 3 emissions represent the most complex area for procurement, with averages often being 11 times larger than Scope 1 and 2 combined. According to PwC, only 54% of companies are on track to meet their Scope 3 targets, a slight upturn from 50% the previous year.

Speaking after the report’s publication, PWC’s Lynne Baber says: “By uncovering hidden vulnerabilities across supply chains and operations, businesses can proactively shape resilience strategies that protect value at risk, whether financial, operational or reputational.

“Smarter climate adaptation unlocks agility, inspires innovation and positions companies to lead in a more volatile world.”

Navigating supplier complexity

The complexity associated with Scope 3 emissions hammers home a major issue facing procurement – managing suppliers at vastly different stages of their sustainability journey. 

The supplier ecosystem encompasses everything from multinational corporations with dedicated sustainability teams to small enterprises just beginning to understand their environmental impact.

"Not every supplier is on the same sustainability journey," Fang acknowledges. 

"A key part of onboarding suppliers is understanding their sustainability reporting capability, an area that can become a barrier, especially for smaller or diverse suppliers who may lack the resources or systems to report consistently."

The disparity creates both operational challenges and opportunities for innovation. 

Aniththa emphasises that supporting smaller suppliers requires a comprehensive approach: "Reducing carbon emissions within a supply chain, especially among smaller suppliers, requires a multifaceted approach. It involves building strong partnerships, providing the necessary resources and expertise, creating financial incentives and establishing clear expectations and measurement systems."

The challenges cover a variety of situations, such as diverse suppliers and those in emerging markets, where sustainability infrastructure may be less developed. Successful programmes recognise that one-size-fits-all approaches often fail, instead developing tiered engagement strategies that provide additional support for suppliers who need it most. 

These may include training programmes, shared technology platforms or collaborative initiatives that allow smaller suppliers to access sustainability expertise they couldn't afford independently.

"Crucially, it means understanding and addressing specific challenges faced by smaller businesses to ensure their participation," Aniththa adds. 

Myths still exist around decarbonisation, such as an increased effort will inevitably increase costs and remain a significant barrier to progress.

"One misconception is that decarbonising procurement automatically increases costs within a business," Aniththa goes on.

“While initial financial funding might be necessary—for example in new technologies, supplier training or data management systems—these should be viewed as investments, not expenses, as they will contribute towards a more sustainable, resilient and ultimately a more cost-effective future."

Platform solutions and collaboration

Major companies’ vast supply chains demand platforms capable of handling thousands of supplier relationships – all while maintaining data integrity and security. 

Fang asserts that there is “no one-size-fits-all tool”, with the most effective platforms supporting product-level carbon measurement and enabling seamless supplier collaboration. 

"Ideally,” he adds, “these tools integrate with existing procurement and supply chain systems, embedding sustainability into how companies operate, not layering it on later.”

The evolution from spreadsheet-based data collection to integrated digital platforms represents more than a technological upgrade—it's a fundamental shift in how organisations approach supplier engagement. 

Fang says many organisations are “digitising supplier engagement—moving beyond spreadsheets to embed sustainability into core procurement workflows. This approach can increase data quality, foster inclusion across supplier tiers and build a clearer, more actionable view of their Scope 3 footprint”. 

Leading firms are achieving remarkable results through this digital transformation. Some have reduced supplier onboarding times to as little as one week, significantly accelerating the pace at which new sustainability-focused partnerships can be established. 

The use of open standards and secure data exchange protocols ensures that information sharing remains both trustworthy and scalable, whether organisations are engaging with 50 suppliers or 5,000.

The integration of these platforms with existing enterprise systems creates seamless workflows that don't burden procurement teams with additional administrative tasks. Instead, sustainability considerations become embedded in the same systems used for traditional procurement activities, making environmental impact as visible and actionable as cost or delivery performance.

The path forward

As digital solutions continue to mature and regulatory requirements become more stringent, procurement's role in corporate decarbonisation will only expand. The organisations leading this transformation are those that view sustainability not as an additional requirement but as an integral part of procurement excellence.

"The pace of innovation in sustainability technology is accelerating – and with it, the ability to turn carbon data into action," Fang concludes. "What was once a fragmented, backward-looking process is becoming more integrated, real time and operational across complex supply chains."

The success of such initiatives depends on recognising that decarbonisation is not merely a technical challenge but a collaborative endeavour requiring engagement across entire supply ecosystems. 

Aniththa summarises: "A gradual, well-planned approach, underpinned by a genuine commitment to environmental responsibility, is key."

For procurement leaders, the question is no longer whether to embark on decarbonisation but how quickly and effectively they can transform their operations to meet the demands of a carbon-constrained future.