Supply chain emissions tracking refers to the process of measuring, monitoring, and managing the greenhouse gas (GHG) emissions generated throughout a company's supply chain. This includes emissions from raw material extraction, manufacturing, transportation, distribution, and end-of-life disposal of products. It is a critical component of a company’s sustainability strategy, as supply chain activities often account for a significant portion of a company’s overall carbon footprint.

Why Track Supply Chain Emissions?

• Regulatory Compliance: Governments and international bodies are increasingly requiring companies to report their emissions, including those from supply chains, under frameworks like the Greenhouse Gas Protocol or regulations such as the EU’s Corporate Sustainability Reporting Directive (CSRD).


• Sustainability Goals: Companies aiming for net-zero emissions or science-based targets (SBTs) need to address supply chain emissions (often categorized as Scope 3 emissions under the GHG Protocol).


• Risk Management: Understanding emissions helps identify vulnerabilities in the supply chain, such as reliance on high-emission suppliers or carbon-intensive processes, which could pose financial or reputational risks.


• Stakeholder Expectations: Investors, customers, and partners increasingly demand transparency and accountability in environmental performance.


• Cost Savings: Reducing emissions often correlates with energy efficiency and waste reduction, leading to cost savings.

Key Components of Supply Chain Emissions Tracking

• Upstream Activities:


• Purchased goods and services (emissions from suppliers producing raw materials or components).


• Capital goods (emissions from producing equipment or infrastructure).


• Fuel- and energy-related activities (emissions from energy production not included in Scope 1 or 2).


• Transportation and distribution (emissions from logistics and shipping).


• Waste generated in operations.


• Downstream Activities:


• Transportation and distribution (emissions from delivering products to customers).


• Use of sold products (emissions from the energy consumed by products during use).


• End-of-life treatment of sold products (emissions from disposal or recycling).

Steps to Track Supply Chain Emissions

• Define Boundaries: Identify which supply chain activities and Scope 3 categories are most relevant to your business based on materiality and data availability.


• Collect Data:


• Primary Data: Gather direct data from suppliers through surveys, questionnaires, or reporting systems about their emissions, energy use, and processes.


• Secondary Data: Use industry averages, life cycle assessment databases (e.g., Ecoinvent), or emission factors from government sources (e.g., EPA, DEFRA) when primary data is unavailable.


• Calculate Emissions: Use standardized methodologies like the GHG Protocol to calculate emissions. Common tools include:


• Spend-based method (based on financial data and emission factors).


• Activity-based method (based on physical data like fuel consumption or distance traveled).


• Hybrid method (combining spend and activity data for accuracy).


• Analyze Hotspots: Identify high-emission areas in the supply chain to prioritize reduction efforts.


• Engage Suppliers: Collaborate with suppliers to improve data quality, share best practices, and encourage emissions reduction initiatives.


• Report and Disclose: Share emissions data with stakeholders through sustainability reports, CDP (Carbon Disclosure Project), or other platforms.


• Set Targets and Monitor Progress: Establish reduction targets (e.g., aligned with Science-Based Target initiatives) and track progress over time.

Challenges in Supply Chain Emissions Tracking

• Data Availability: Suppliers, especially in complex or global supply chains, may lack the resources or systems to provide accurate emissions data.


• Complexity: Supply chains often involve multiple tiers of suppliers, making it difficult to map and quantify emissions comprehensively.


• Standardization: Variability in reporting standards and methodologies can lead to inconsistencies.


• Cost and Resources: Tracking emissions requires investment in tools, expertise, and supplier engagement.


• Scope 3 Focus: Since Scope 3 emissions are indirect, companies often struggle to exert control over them compared to Scope 1 (direct emissions) and Scope 2 (purchased energy).

Tools and Technologies for Tracking

• Carbon Accounting Software: Platforms like Carbon Trust, Sphera, or Persefoni help automate data collection and emissions calculations.


• ERP Systems Integration: Enterprise Resource Planning systems can integrate emissions tracking into existing supply chain management processes.


• Blockchain: Provides transparency and traceability by recording emissions data across the supply chain.


• Supplier Portals: Digital platforms to collect and manage supplier data on emissions and sustainability performance.


• Life Cycle Assessment (LCA) Tools: Software like SimaPro or GaBi for assessing emissions at each stage of a product’s life cycle.

Best Practices for Effective Tracking

• Start Small: Focus on key suppliers or high-impact categories first, then expand scope over time.


• Build Relationships: Work collaboratively with suppliers to build trust and improve data sharing.


• Leverage Industry Standards: Use frameworks like the GHG Protocol or ISO 14064 for consistency and credibility.


• Incorporate Technology: Invest in digital tools to streamline data collection and analysis.


• Set Clear Goals: Align emissions tracking with broader corporate sustainability objectives.


• Educate Stakeholders: Train internal teams and suppliers on the importance of emissions tracking and reduction.

Benefits of Supply Chain Emissions Tracking

• Enhanced transparency and accountability.


• Improved decision-making through identification of carbon-intensive processes.


• Strengthened supplier relationships through collaboration on sustainability.


• Competitive advantage by meeting customer and investor demands for green practices.


• Contribution to global climate goals, such as those outlined in the Paris Agreement.