Summary
Most of a retailer's emissions are Scope 3: the goods it buys from suppliers and what happens when customers use and throw them away. Stores and warehouses matter, but are usually a smaller share. Retailers decarbonise by mapping their value chain, cutting store energy, switching to renewables and working with suppliers on the products that drive their footprint.
What does decarbonisation mean for a retailer?
Decarbonisation means cutting the greenhouse gas emissions a business causes, in its own operations and across its value chain. For a retailer, that value chain runs from raw materials and manufacturing through shipping and stores to product use and disposal.
A retailer sits at the end of the grower, producer and manufacturer chain. So most of its footprint is other companies' emissions, counted as its Scope 3.
Where do a retailer's emissions come from?
They come mostly from purchased goods, then from logistics, stores, and the use and disposal of sold products. The table maps typical retail hotspots to the GHG Protocol scopes and categories.
| Hotspot | GHG Protocol scope / category | Example | Main levers |
| Products bought for resale | Scope 3, Cat. 1 (purchased goods and services) | Clothing from contract factories, food from growers | Supplier engagement, lower-carbon sourcing, product footprints |
| Inbound logistics | Scope 3, Cat. 4 (upstream transport) | Shipping and trucking goods to warehouses | Mode shift, load efficiency, low-carbon fuels |
| Store and warehouse energy | Scope 2 (electricity), Scope 1 (gas, diesel) | Lighting, air conditioning, heating | Efficiency, renewable electricity |
| Refrigeration | Scope 1 (refrigerant leaks), Scope 2 (power) | Supermarket chillers and freezers | Leak control, low-GWP refrigerants, efficient units |
| Use of sold products | Scope 3, Cat. 11 | Electricity used by phones and appliances sold | Stock more efficient products |
| End of life of sold products and packaging | Scope 3, Cat. 12 | Packaging and goods sent to landfill | Recyclable design, take-back schemes |
A few examples:
- Fashion. Garment manufacturing is energy-intensive and often runs on fossil-fuel power. Fast fashion adds emissions through quick turnover and frequent shipping.
- Grocery. Supermarkets keep refrigerated sections cold around the clock. Depending on the grid mix, that power may come from fossil sources. Refrigerant leaks are a separate, often overlooked, Scope 1 source.
- Electronics. Emissions arise at every stage, from mining raw materials to manufacturing, shipping, use and disposal. Devices that are not recycled waste materials that must then be newly extracted.
Packaging cuts across all three. See our guide to decarbonising packaging.
How does climate change affect retailers?
Climate change is already a business risk for retailers. Copernicus found that 2024 was the first calendar year with global average temperature more than 1.5°C above pre-industrial levels, at 1.60°C (Copernicus Global Climate Highlights, January 2025).
For retailers, this shows up as:
- Supply chain disruption. Floods, storms and heatwaves damage factories, ports and roads, and delay shipments.
- Higher costs. Bad harvests and damaged infrastructure push up raw material and freight costs.
- Stock problems. Weather-dependent goods, especially food, become harder to forecast, leading to stockouts or overstocking.
Why should retailers decarbonise?
Because the pressure comes from several directions at once, and early action costs less than late action.
- Cost savings. Energy efficiency lowers store and warehouse running costs. Some governments offer incentives for renewable energy.
- Regulation. Climate disclosure rules increasingly require large companies to report Scope 3. Packaging rules are tightening too, such as the EU Packaging and Packaging Waste Regulation, which applies from 12 August 2026. Our guide to the sustainability reporting alphabet soup explains which disclosure rules apply where.
- Customer and investor expectations. Customers and investors ask for clearer, verifiable information on product footprints and sourcing.
- Supplier leverage. Retailers set the terms for their vendors. As they push for supplier data and reductions, vendors, including smaller private-label suppliers, are asked to measure and invest in cutting their own emissions.
What steps should retailers take to decarbonise?
Start by measuring the full value chain, then follow a mitigation hierarchy: avoid, reduce, substitute, remove, and only then compensate. Our post on the mitigation hierarchy explains how this links to SBTi targets.
1. Account for your emissions in detail
Map your whole value chain to find high-emission hotspots. Collect supplier data for the product categories that matter most, and use estimates for the rest. Focus effort where materiality is highest. Our value chain mapping workshop is a structured way to start.
2. Avoid emissions at the outset
Prevent emissions before they happen. Examples: replace some business travel with virtual meetings, design out unnecessary packaging, and choose lower-carbon products when setting up new ranges.
3. Reduce the intensity of unavoidable emissions
Where activities must continue, make them less carbon-intensive. Examples: switch delivery fleets to electric vehicles, upgrade lighting and refrigeration, and use recycled materials in own-brand products.
4. Substitute energy sources
Replace fossil fuels with renewable electricity, through green tariffs, power purchase agreements or on-site solar.
5. Work with suppliers on Scope 3
Most reductions happen in the supply chain. Set clear data requests, share targets and support key suppliers with tools and training. See our Scope 3 supplier engagement tips.
6. Remove residual emissions, then compensate
Under the SBTi Corporate Net-Zero Standard, companies must cut the large majority of their emissions, typically 90% or more by 2050, before neutralising what is left with carbon removals. Removals inside the value chain, such as agroforestry with suppliers, are preferred. Carbon credits do not count towards reduction targets.
What does this look like for a consumer brand?
Retailers need product-level data from their suppliers. Pokka, the beverage brand, used Terrascope to calculate product carbon footprints for 4,980 SKUs, with about 92% accuracy on 700 of them. Read the Pokka case study.
How Terrascope helps
Terrascope helps retailers measure and cut the Scope 3 emissions that make up most of their footprint:
- Value chain mapping to find hotspots across product categories, suppliers and logistics.
- Scope 3 supplier engagement to collect primary data from vendors and track their progress.
- Product carbon footprints at SKU scale, so buyers can compare products and set sourcing rules.
- Store and logistics emissions in the same inventory as Scope 3, through our corporate carbon footprint tools.
For the wider Scope 3 picture, read our guide to Scope 3 emissions.
Frequently asked questions
What are the biggest sources of retail emissions? For most retailers, products bought for resale (Scope 3, Category 1) are the largest source. Logistics, store energy, refrigeration and the use and disposal of sold products follow.
How can retailers reduce Scope 3 emissions? Map the value chain, focus on the product categories with the highest emissions, and work with those suppliers on data and reductions. Product carbon footprints help buyers compare and choose lower-carbon options.
How does climate change affect the retail industry? Extreme weather disrupts production and shipping, raises raw material and freight costs, and makes weather-dependent stock harder to forecast. 2024 was the first calendar year above 1.5°C (Copernicus, 2025).
What is the mitigation hierarchy? A priority order for climate action: avoid emissions, reduce them, substitute cleaner energy, remove what's left, and only then compensate with credits.
Do refrigerants count in a retailer's carbon footprint? Yes. Leaked refrigerants from chillers and air conditioning are Scope 1 emissions, and many have a high global warming potential.
Talk to us
Want to find the hotspots in your retail value chain? Contact our team.
