How to leverage supplier engagement for better Scope 3 emissions reporting

If you're looking for ways to improve your Scope 3 emissions reporting, you need to work closely with suppliers. Without supplier engagement, planning, understanding, and reducing your full impact on the environment is impossible. You need your suppliers on board, sharing accurate sustainability data so that together, you can make real changes and become more sustainable.

Sustainability isn't just about reducing your carbon footprint; it will impact your long-term business growth. By calculating and reducing Scope 3 emissions, you can be part of a more effective, streamlined and efficient supply chain that delivers value, contributes positively to global warming, and could save you some pennies along the way.

What is supplier engagement and its importance in Scope 3 reductions?

If you aim to reduce emissions up and down the supply chain via more sustainable processes, you must have your suppliers on board. It’s a win-win, really, as while your suppliers can optimise resources to become more energy efficient and potentially save money, your organisation also benefits from stronger supplier relationships, putting you in a great position to negotiate contract terms and snag bulk stock discounts.

At Payhawk, our carbon tracking and reporting features integrate seamlessly with our supplier management features. In addition to automatically tracking carbon emissions on all card spending, you can add extra supplier information and tag them based on sustainability criteria, such as their ESG certifications and accreditations.

The result of collecting all this information? You can easily export the data to spot patterns and make informed decisions about each supplier and the route you should take to reduce your Scope 3 emissions.

Understanding Scope 3 emissions: Why measuring them matters for your business

Scope 1 emissions refer to direct emissions from sources that your company owns or controls, while Scope 2 includes indirect emissions from the energy you use, like electricity, steam, heating, or cooling. Even though these emissions are indirect, they’re tied to your company’s energy consumption and contribute to its greenhouse gas (GHG) output.

Scope 3, on the other hand, encompasses all other indirect emissions across your value chain — both upstream and downstream activities. These often account for more than 70% of your organisation’s total carbon footprint. Measuring Scope 3 emissions goes beyond regulatory compliance; it offers critical insights that can drive impactful change. For instance, it will let you:

• Pinpoint emission hotspots across your value chain, focusing efforts where reductions can have the most impact
• Identify suppliers performing well or falling behind in sustainability efforts.
• Guide procurement, product development, and logistics teams to actions that deliver the greatest emission reductions
• Foster innovation by developing more sustainable, energy-efficient products
• Strengthen climate strategies with measurable, visible progress
• Engage employees in cutting emissions related to business travel and commuting

Tracking Scope 3 emissions will also reveal inefficiencies in your supply chain, highlighting areas ripe for cost savings and optimisation. Focusing on supply chain emissions isn’t just about compliance or sustainability; it’s about uncovering significant opportunities to save costs and operate more efficiently. After all, weaving efficiency into every area of your business means tackling your supply chain too and it’s often where the biggest wins can be found.

The role of supplier engagement in Scope 3 reduction

If you’re just guessing about your supplier’s sustainability practices, you’re not going to be able to collect accurate emissions data, which means you can’t make real change. This is why you need close collaboration with each of your suppliers to accurately collect emissions data and plan a way forward.

At Payhawk, we facilitate better supplier engagement by helping you collect and track accurate emissions through one platform. With Payhawk Green, you can automatically track carbon emissions on each card transaction, giving you better insight into the environmental impact of supplier purchases. And any supplier-related emission can be categorised in detail, ensuring accurate reporting and allowing simplistic analysis of all emissions.

What’s more, our carbon estimations are based on the Greenhouse Gas (GHG) Protocol, ensuring compliance with international emissions standards.

Challenges in supplier engagement for emissions reduction

You may be passionate about reducing your Scope 3 carbon emissions, but unfortunately, passion isn’t enough to make positive changes. There’s a chance you’ll face some of these common barriers:

• Data inconsistencies. You’re putting your trust in your supply chain to share accurate emissions data, and even if it’s not deliberately incorrect, human error can play a massive part in inconsistent data
• Lack of supplier commitment. You might be passionate about reducing your carbon footprint, but it might not be a supplier priority. If that’s the case and there’s no talking to them around, it might be time to find an alternative supplier
• Inadequate resources. Many suppliers, particularly smaller ones, might not have the tools and technology in place to monitor and report on emissions. Which means you might be better off taking the lead on these matters
• Poor communication. Communication is essential to making positive changes to yours (and their) sustainability practices. Using software that automatically calculates carbon emissions can help take the heavy lifting out of a lot of these tasks, making communication effortless

Our automated data integrations reduce manual entry errors and ensure your information is up-to-date, which helps you make well-informed business decisions, leaving no room for guesswork.

Strategies for successful supplier engagement in emissions reduction

1. Start with the high-impact suppliers

If there are suppliers you work with to create a product or product packaging, it’s a good idea to start with these first, as they’re likely your highest Scope 3 emissions generator out of all suppliers. Working together on your new sustainability practices can mean implementing similar practices with small suppliers is more straightforward.

2. Set clear goals

Setting realistic targets is key to keeping everyone involved motivated and on track. Both parties must be on the same page, which means setting these goals together and understanding each other’s expectations and responsibilities.

3. Use technology to assist in your carbon reporting

You need tech that helps you effortlessly collect, track and report on all your carbon emissions. Spoiler, Payhawk can help you do all this with Payhawk Green. With our solution, you can track emissions on all card spend automatically and tag suppliers with additional sustainability information to make it easier to break down your data.

Selwyn Duijvestijn, Executive Director, DGB Group, says:

Payhawk Green’s CO2 calculations are reliable and provide valuable insights, particularly for tracking Scope 3 emissions. The spend-based approach makes it easy to monitor overall emissions, allowing companies to understand their footprint and take targeted sustainability actions.

4. Evaluate the success of your reductions

Conducting performance reviews is something you should build into your process. Monitor KPIs to check you’re on target:

• Look at the total Scope 3 emissions generated. Is it showing a downward trend?
• Filter your Scope 3 emissions data by category, is there a category that isn’t improving as much as you’d hoped?
• How many suppliers regularly provide emissions data? If some are falling behind, it’s time to address that

5. Celebrate successful milestones and success stories

Each time you achieve a sustainability win, you should celebrate internally with your team but also your suppliers. This is a great way to share some positive publicity. Building transparency with your market helps you (and your supplier) look more favourable, with 34% of consumers stating brand trust would improve if they were recognised as an ethical or sustainable provider.

6. Incentivise the process to engage suppliers

Making sustainable changes can be daunting for suppliers, but encouraging them with long-term benefits and incentivising them throughout the process can prove successful. Consider incentivising them with increased order volume or add top performing suppliers to a preferred supplier list.

7. Ensure both parties participate

Your supplier might have fantastic ideas to reduce emissions, so give them the opportunity to share their ideas. This process should be collaborative from start to finish.

The financial benefits of engaging suppliers in Scope 3 emissions reporting

• Competitive advantage. Investors and other stakeholders increasingly want to see a company's full environmental impact, which includes reporting on Scope 3 emissions.
• Procurement cost savings. By optimising your supply chain, you stand to make significant cost savings in procurement, product development and other aspects.
• Improved product innovation. When suppliers make changes to their operations, making them more sustainable, this could mean adoption of smart tech to speed up the process of product production, for example. Your organisation can benefit from these innovative solutions, giving you an opportunity to access new markets or enjoy cost savings as a result.
• Access to better supplier data to drive business decisions. To make accurate financial forecasts, you need accurate data. And working closely with suppliers can give you access to that valuable data.

Payhawk features that support streamlined reporting and real-time data access

We built Payhawk Green to help you effortlessly track carbon emissions across all your Payhawk cards. We partner with Lune to provide accurate CO2 emissions data so you can export data instantly to learn more about your impact on the environment.

Our intuitive platform design makes it easier than ever to measure your Scope 3 emissions and remain compliant with UK and EU legislation. Our system uses thousands of spend-based emissions factors, including country-specific data from over 45 countries. This means we can ensure global coverage.

Payhawk customer? Simply switch the ‘carbon tracking’ toggle on and start collecting the emissions data at no additional cost.

Interested in learning more? Request a demo today to see Payhawk Green in action.