Scope 3 Starts in the PO

It’s no surprise: for many firms, up to 70–90% of total carbon footprint comes from the value chain. Yet most of those emissions sit in supplier operations, logistics, and product use - areas historically beyond the reach of a purchasing manager focused on price and quality. This is precisely why Scope 3, often seen as a reporting headache, is emerging as a strategic opportunity. New regulations from the EU and SEC are dragging supply-chain carbon data into the open, but the real game-changer is that procurement can flip carbon from a risk into a value-creation engine. Forward-thinking organisations are discovering that by rewiring purchasing decisions and supplier relationships, they can cut emissions while cutting costs and driving innovation. It all starts with the purchase order (PO).

Why Scope 3 Isn’t Just a Burden – It’s an Opportunity

Hand-wringing over suppliers’ emissions won’t get us to net-zero - but hard numbers and incentives will. Treating Scope 3 as a strategic supply-chain programme (not just an annual disclosure) opens up win-wins. First, there’s sheer scale: tackling value-chain emissions unlocks far bigger carbon gains than tweaking onsite operations. According to McKinsey, Scope 3 can be 5–10 times higher than operational (Scope 1+2) emissions. This means a small percentage reduction at suppliers can outweigh major cuts internally. Second, cleaning up the supply chain often yields efficiency gains: think reducing material waste, energy use, and transport miles - all of which can lower costs. Third, investors and customers are pressuring companies to address indirect emissions; those that lead will secure preferential access to capital and customer loyalty. Finally, by treating suppliers as partners in innovation rather than sources of pollution, companies can co-develop low-carbon solutions (new materials, processes, circular models) that create shared value.

In short, Scope 3 is where sustainability meets business opportunity. Procurement teams are uniquely positioned to drive this, by embedding carbon criteria into how they buy, and by wielding their spending power to shift entire markets toward low-carbon options. As one Volvo executive noted, purchasing departments can “steer financial flows towards sustainable solutions” - effectively rewiring the carbon impact of every product they source. Instead of viewing Scope 3 as someone else’s problem, organisations are making it core to supply-chain strategy.

Diagram of Scopes and Emissions Across the Value Chain. Source: GHG Protocol

Three Practical Moves to Cut Scope 3 via Procurement

1. Embed Carbon in Every Sourcing Decision: It’s time to treat carbon like a cost. Progressive organisations are adding explicit climate criteria to their Requests for Proposal (RFP) and supplier scorecards. For example, a tender might be evaluated 60% on cost, 25% on quality, and 15% on carbon footprint or circularity. In practice this means requesting product carbon footprints or eco-labels in RFPs, and giving low-carbon bids a scoring boost. It also means including contract clauses that commit suppliers to emissions transparency and reductions. Many buyers now require key vendors to set carbon targets and share their progress data annually - sometimes even written into Service Level Agreements. The UK government has mandated Carbon Reduction Plans from suppliers on major contracts, and the NHS (UK health service) will by 2030 cease buying from suppliers who don’t align with its net-zero requirements. Leading companies go further, baking carbon fees into “Total Cost of Ownership” models. In other words, when comparing bids, they put a shadow price on CO₂ (or use internal carbon prices) to prefer options that may look pricier upfront but save emissions long-term. The takeaway: procurement can flip the script so that cutting carbon also helps win the contract. And when suppliers know this, it “sends a clear signal…developing low-carbon products will be strategic”.

2. Team Up through Coalitions and Supplier Partnerships: No company can transform a complex value chain alone but a coalition of buyers can. Enter the era of the buyers’ club. The First Movers Coalition, for example, pools the clout of over 50 big companies (worth $8.5 trillion) to pledge purchasing of low-carbon steel, aluminium, shipping, trucking and more. By committing that, say, 10% of their future aluminium purchases will be near-zero carbon, these firms create guaranteed demand that nudges suppliers to invest in green production. Similar alliances are forming in shipping: major cargo owners have created green corridors (e.g. a clean shipping route from Los Angeles to Shanghai) to use zero-emission fuel vessels, leveraging collective volume to make new fuels viable. Even competitors are joining forces to pre-negotiate supply of green commodities (from sustainable aviation fuel to recycled plastics), recognizing that aggregating demand can bring down unit costs of new tech. On a more local scale, procurement teams are collaborating with suppliers through data-sharing platforms and training programs, essentially helping vendors measure and reduce their own footprints. This “supplier enablement” might involve buyers co-funding energy efficiency upgrades at a manufacturer, or sending in experts to help a farmer adopt regenerative practices. The benefit flows both ways: suppliers get access to capital and skills, and buyers get lower emissions products (and often more resilient supply chains). A great example is Nestlé’s partnerships with dairy farmers: providing financing and agronomy help to cut methane via new feed and manure management, which in 2023 helped Nestlé reduce supply-chain GHGs by 15%+ including over 15% cuts in methane. The broader point: cross-industry collaboration turns zero-carbon options from pipe dream to mainstream, by de-risking the investment through pooled resources and shared knowledge.

3. Redesign, Reuse, Recycle – The Circular Low-Carbon Playbook: Sometimes the greenest supply is no supply at all i.e. cutting out waste and single-use models. Procurement can spur this by prioritising circular design and end-of-life solutions. For instance, a consumer goods company can switch to packaging that is not only recyclable but actually reused multiple times, the procurement team might establish a take-back program with packaging suppliers, or require a certain percentage of recycled content in new packaging. These moves directly slash Scope 3 emissions by reducing raw material extraction and processing. Case in point: one reusable packaging pilot in e-commerce cut emissions by ~30–80% per use compared to single-use packaging (depending on return logistics). In manufacturing, redesigning products for longevity and repair can yield big Scope 3 savings: if you’re buying equipment or electronics, favour models with modular, upgradeable components. This extends product life and avoids the carbon cost of making a new unit. Some companies now even lease or buy “remanufactured” machinery, giving a second life to used equipment, often at lower price and carbon footprint. On the supplier side, engaging vendors in “design-to-carbon” innovation is key. Procurement can ask suppliers during R&D phases to propose lower-carbon alternatives (materials with smaller footprints, or processes that use renewable energy). Pioneers like Patagonia have worked with material suppliers on low-impact fabrics, and automakers are sourcing green steel and aluminium (produced with clean energy) to cut vehicle supply-chain CO₂ by 30-50%. All these strategies share a theme: use less, and reuse where possible.

Scope 3 may feel daunting, but procurement holds the keys to unlock change. By treating every purchase order as a lever for emissions reduction, organisations can turn supply chains from liabilities into engines of innovation and resilience.