As the world moves towards net-zero emissions, one powerful lever remains underused: the global supply chain. For many companies, emissions don’t come primarily from their operations, but from their value chain. Scope 3 emissions, which include all indirect emissions that occur across a company’s value chain, can make up 90% or more of many companies’ carbon footprint¹.

Source: CDP and Capgemini (2023): From stroll to sprint.

This makes supply chains a major opportunity for emissions reduction. Encouragingly, up to 45% of these emissions can be addressed today with affordable, readily available solutions.² Yet currently, only 24% of companies disclose Scope 3 emissions, with poor visibility beyond first-tier suppliers and unclear ownership across value chains remaining major challenges.3

However, leaders in this area are turning supply chain risks into strategic advantages: They redesign products using recycled materials, improve packaging, and work closely with suppliers to reduce emissions. They combine technologies already on the market with new, often AI-powered, tools.

Scope 3 emissions are a critical lens for evaluating corporate climate risk and transition readiness, not least for investors. Transparency in this area can indicate whether a company truly understands and is managing its full climate footprint as it plays its part in the net-zero transition.

An extended version of this article was published on EFG Insights.

– Author: Melanie Beyeler, Senior Portfolio Manager, EFG International

– This contribution is brought to you by EFG, a valued silver event partner of Building Bridges 2025.

Sources:

  1. CDP (2024): Strengthening the chain. Transform the norm.

https://cdn.cdp.net/cdp-production/cms/reports/documents/000/007/890/original/CDP_HSBC_Report_2024.pdf

  1. WEF (2021): Net-Zero Challenge: The supply chain opportunity.

https://www3.weforum.org/docs/WEF_Net_Zero_Challenge_The_Supply_Chain_Opportunity_2021.pdf

  1. Sustainalytics (2022): Scope 3 Supply Chain Emissions: Five Questions Investors Need to Know.

https://www.sustainalytics.com/esg-research/resource/investors-esg-blog/scope-3-supply-chain-emissions–five-questions-investors-need-to-know