BrazilDecarbonization through Supplier Engagement: A 5-step guide for organizations
For organizations seeking to decarbonize their supply chains and Scope 3 footprint, building and maintaining engagement with suppliers is a key activity – and challenge. For those seeking guidance, Christelle Marais (Nexio Projects) and Mirzada Karabegovic (Green Project) outline a 5-step approach for nurturing effective supplier relationships.
With supply chain emissions typically accounting for the large majority of a company’s total greenhouse gas emissions, engaging suppliers in sustainability efforts is critical for achieving meaningful progress on climate goals.
Beyond contributing to climate goals, supplier engagement is also a strategic opportunity for organizations to build resilient supply chains and be ahead of potential resource shocks, unlock new efficiencies, and drive innovation.
Yet practice shows that achieving collaborative supplier relationships can be a (daunting) challenge. Large organizations have a huge ecosystem of suppliers, making it difficult to reach out and engage on a continuous basis. While they tend to have the resources and scale to implement comprehensive supplier engagement programs, they often face complexity and slower adaptability due to their size. Smaller organizations meanwhile often lack the scale or resources for such efforts.
So how to get started? Nexio Projects (a European sustainability consulting firm) and Green Project (a US provider of software for carbon management) teamed up to develop a 5-step framework for deeper supplier engagement.
1) Prioritise: Identify high-impact suppliers
The first step in any supplier engagement programme is identifying which suppliers contribute most significantly to your environmental footprint. Using greenhouse gas (GHG) data can help you rank suppliers by their emissions intensity or their share of Scope 3 emissions.
How to prioritise:
- Conduct a Scope 3 screening to identify suppliers responsible for the majority of your emissions.
- Use spend-based analysis as a proxy if activity data is unavailable for certain suppliers.
- Focus on suppliers that cumulatively account for at least 67% of your total Scope 3 emissions, as recommended by the Science-Based Targets initiative (SBTi).
2) Communicate: Share Climate goals and resources
Once high-impact suppliers are identified, clear communication is essential. Suppliers need to understand your sustainability objectives and how they align with broader industry standards like CDP (Carbon Disclosure Project) or SBTi-aligned targets.
Best practices:
- Host virtual town halls or webinars to explain your climate goals and expectations.
- Provide resources such as training programmes or case studies that demonstrate successful decarbonisation efforts.
- Ensure ongoing communication through dedicated procurement teams who can address supplier questions and concerns.
3) Incentivise: Reward sustainable practices
Incentives can motivate suppliers to adopt sustainable practices more quickly. Offering preferential terms or public recognition can go a long way in fostering collaboration.
Examples of incentives:
- Preferential payment terms for suppliers who meet sustainability criteria.
- Recognition programmes that highlight top-performing suppliers in sustainability reports or stakeholder communications.
- Joint marketing opportunities for suppliers who achieve significant emissions reductions.
4) Collaborate: Partner on joint projects
True progress requires collaboration between buyers and suppliers. Joint projects can help both parties innovate and share best practices while addressing common challenges.
Collaboration ideas:
- Co-developing low-carbon product lines or packaging solutions.
- Sharing renewable energy infrastructure or waste management systems.
- Partnering on pilot projects that test new technologies before scaling them across the supply chain.
5) Monitor: Conduct regular reviews
Ongoing monitoring ensures accountability and continuous improvement. Annual reviews provide an opportunity to assess progress against targets and refine strategies as needed.
Monitoring tools:
- Supplier scorecards that track performance metrics such as emissions reductions or compliance with reporting requirements.
- Automated systems that aggregate data across multiple categories for easier analysis.
- Regular feedback sessions with suppliers to identify barriers and opportunities for improvement.
Conclusion
Supplier engagement is no longer optional – it’s a strategic imperative for organizations looking to stay competitive in an increasingly sustainability-driven economy. By following this five-step playbook, organizations can turn their supply chains network into a powerful driver of environmental impact.
