Procurement Glossary
Decarbonizing the supply chain: strategies for reducing CO2 in procurement
November 19, 2025
Supply chain decarbonization refers to the systematic reduction of greenhouse gas emissions along a company's entire value chain. For purchasing organizations, this transformation is becoming a strategic success factor, as up to 90% of corporate emissions are generated in the upstream supply chain. Find out below which methods are available, which trends are shaping developments and how you can successfully manage decarbonization measures.
Key Facts
- Scope 3 emissions account for 70-90% of total corporate emissions on average
- EU taxonomy and CSRD oblige large companies to disclose climate risks
- Science Based Targets Initiative (SBTi) calls for concrete reduction targets for the entire value chain
- Carbon Border Adjustment Mechanism (CBAM) introduces CO2 border adjustment for imports from 2026
- Supplier assessments increasingly integrate ESG criteria and climate performance
Contents
Definition: Decarbonization of the supply chain
Decarbonization of the supply chain includes all measures to systematically reduce greenhouse gas emissions in upstream and downstream stages of the value chain.
Core elements of supply chain decarbonization
The strategic transformation takes place through several levers:
- Recording and evaluation of Scope 3 emissions along the value chain
- Implementation of codes of conduct with climate targets for suppliers
- Development of climate-friendly procurement strategies and product alternatives
- Integration of CO2 assessments in supplier selection and development
Decarbonization vs. carbon neutrality
While carbon neutrality can be achieved through offsetting measures, decarbonization focuses on the actual reduction of emissions. Science-based targets primarily require absolute emission reductions before offsetting.
Importance of decarbonization in Procurement
Purchasing organizations have a decisive influence on the carbon footprint through supplier selection, contract design and product specifications. Due diligence obligations are increasingly being extended to climate risks and emissions transparency.
Methods and procedures
Successful decarbonization requires systematic approaches to emissions recording, supplier development and product optimization.
Carbon Footprint Assessment
The basis for this is the complete recording of all emission sources. Product Carbon Footprints enable product-specific assessments, while Life Cycle Assessments consider the entire life cycle.
- Systematic data collection from suppliers on energy consumption and emissions
- Implementation of digital tools for continuous emissions measurement
- Building transparency across multi-level supply chains
Supplier development and evaluation
Climate performance is becoming an integral part of supplier assessment. EcoVadis ratings and similar systems standardize the sustainability assessment.
- Definition of binding climate targets in supplier contracts
- Regular audits to review decarbonization progress
- Capacity building through training and best practice exchange
Strategic procurement optimization
Product selection and specification decisions determine the emissions balance in the long term. Material substitution and circular economy approaches systematically reduce the CO2 footprint.
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Key figures for managing the decarbonization of the supply chain
Effective decarbonization requires measurable targets and continuous monitoring using suitable performance indicators.
Emission figures
Absolute and relative emission values form the basis for setting targets and measuring progress. Scope 3 emissions require particular attention as they account for the largest share.
- CO2e emissions per procurement volume (kg CO2e/€)
- Share of climate-neutral suppliers in total purchasing volume (%)
- Reduction rate of Scope 3 emissions compared to base year (%)
Supplier performance indicators
The evaluation of supplier development shows progress in the transformation. Science-based supplier targets are increasingly being used as a qualification criterion.
- Number of suppliers with validated climate targets
- Average EcoVadis score of the top suppliers
- Share of renewable energies in the supplier network (%)
Strategic performance indicators
Long-term indicators measure the structural transformation of procurement. Recycling rates and circular economy approaches are important measures of success.
- Share of climate-optimized product specifications in the portfolio (%)
- Investments in supplier development for climate targets (€)
- Time-to-market for climate-neutral product alternatives (months)
Risks, dependencies and countermeasures
The decarbonization of supply chains entails operational, financial and strategic risks that can be minimized through forward-looking planning.
Data quality and transparency
Incomplete or inaccurate emissions data jeopardizes the credibility of climate targets. Information gaps arise, particularly in multi-stage supply chains, which create regulatory compliance risks.
- Implementation of standardized data acquisition systems
- Creation of redundant data sources for validation
- Regular audits and plausibility checks
Supplier dependencies
Climate requirements can lead to supplier concentration if only a few suppliers meet the standards. Due diligence processes must balance climate risks and security of supply.
- Diversification of the supplier base with a focus on climate performance
- Development of transformation plans for strategic suppliers
- Development of alternative procurement sources in various regions
Cost risks and investment requirements
Decarbonization measures require significant upfront investment with no guaranteed short-term return. ESG risk assessments must quantify financial impacts and support budget planning.
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Practical example
An automotive manufacturer implements systematic decarbonization of its supply chain through a three-step approach. First, all Tier 1 suppliers are required to measure their Scope 1 and Scope 2 emissions and reduce them annually. In the second phase, this will be extended to critical Tier 2 suppliers with a high proportion of emissions. Finally, product specifications will be revised to give preference to recycled materials and optimize transport routes.
- 25% reduction in Scope 3 emissions within three years
- 90% of strategic suppliers with validated climate targets
- Integration of CO2 costs in all make-or-buy decisions
Trends & developments in the decarbonization of the supply chain
Stricter regulations and technological innovations are accelerating the transformation to climate-neutral supply chains.
Regulatory developments
The Corporate Sustainability Reporting Directive significantly expands reporting obligations. The Carbon Border Adjustment Mechanism introduces CO2 costs for imports for the first time.
- Tightening of due diligence obligations through the Supply Chain Due Diligence Act
- Extension of the EU taxonomy to other economic sectors
- Introduction of digital product passports for traceability
Technological innovations
Artificial intelligence is revolutionizing emissions measurement and forecasting in complex supply networks. Machine learning enables more precise supply chain carbon footprints and automated optimization recommendations.
- Blockchain-based systems for transparent proof of emissions
- IoT sensors for real-time monitoring of energy consumption and emissions
- Predictive analytics for the identification of decarbonization potentials
Market dynamics and financing
Green finance instruments link financing conditions to climate performance. CO2 price mechanisms create economic incentives for emission reductions along the entire value chain.
Conclusion
The decarbonization of the supply chain is evolving from a voluntary commitment to sustainability to a business-critical necessity. Regulatory tightening, investor requirements and customer demand are turning climate transparency and performance into decisive competitive factors. Purchasing organizations that implement systematic decarbonization strategies at an early stage secure access to the best suppliers and reduce long-term compliance and cost risks. Success depends largely on data-driven approaches, strategic supplier development and the integration of climate targets into all procurement decisions.
FAQ
What is meant by decarbonization of the supply chain?
Decarbonization of the supply chain refers to the systematic reduction of greenhouse gas emissions in all upstream and downstream stages of a company's value chain. This includes emissions from suppliers, transportation, product use and disposal. The aim is to transform the supply chain into a climate-neutral supply chain through specific reduction measures rather than pure offsetting.
Which methods are suitable for measuring emissions in the supply chain?
Proven methods include product carbon footprints for product-specific assessments, life cycle assessments for holistic considerations and supply chain carbon footprints for network-wide analyses. Digital platforms enable automated data collection, while supplier surveys and audits ensure data quality. Standardized frameworks such as the GHG Protocol ensure comparability.
How can purchasing organizations motivate suppliers to decarbonize?
Effective levers include contractual climate targets with measurable reduction targets, preference for climate-friendly suppliers in tenders and financial incentives through better conditions. Capacity building through training and best-practice exchange supports smaller suppliers. Long-term partnerships create planning security for necessary investments in climate-friendly technologies.
What are the regulatory requirements for supply chain decarbonization?
The Corporate Sustainability Reporting Directive requires detailed reporting on Scope 3 emissions. The Supply Chain Due Diligence Act extends due diligence obligations to climate risks. From 2026, the Carbon Border Adjustment Mechanism will introduce CO2 costs for imports. Science-based targets are increasingly being demanded by investors and customers.
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