Summary
- Clarify objectives to focus supplier engagement on measurable outcomes, not vague or competing priorities.
- Segment suppliers strategically by emissions impact, data readiness, and decarbonization potential to maximize results.
- Start small by piloting with willing suppliers and building capacity for wider participation over time.
- Create mutual value by linking climate action to business benefits like market access, innovation, and shared investment.
- Foster collaboration through industry partnerships that align standards and accelerate collective supplier decarbonization.
Introduction
When companies begin their decarbonization journey, they often find most of their emissions lie in their supply chain. Many struggle with where to begin, how to prioritize, and how to achieve tangible emissions reduction.
In my work advising organizations on supplier engagement as a Principal Decarbonization Specialist, I’ve seen a consistent set of challenges emerge across industries and company sizes. Most fall into three categories: lack of clarity, ineffective prioritization, and missed opportunities to create mutual value. Here’s how companies can leverage good supplier engagement into measurable impact.
Challenge 1 – Ambiguous and Unclear Objectives
“Supplier engagement” is a catch-all term, often used without agreement on what it actually entails. Is the aim to collect Scope 1 and 2 data from suppliers? Improve upstream Scope 3.1 data quality? Or drive actual emissions reduction?
Each of these objectives is valid. But the order and focus matter.
The first step is to define what success looks like over the next 12–24 months, and then stagger that with longer term ambition in the next 5-10 years. Without defining success up front, supplier programs risk spreading efforts too thin, disappointing stakeholders, and exhausting goodwill with suppliers. For example, the two tracks below warrant differentiated engagement strategies:
Track 1 – Improve accuracy of upstream Scope 3.1 emissions
If the priority is to enhance precision of Scope 3.15 (purchased goods and services) data, it makes the most sense to focus on a smaller group of strategic suppliers to develop PCFs for high-impact products.
Track 2 – Build supplier awareness and baseline performance
If the priority is to increase supplier understanding of emissions and energy use, it is more effective to begin collecting basic emissions and energy data from a wider group of suppliers. This builds climate literacy and a baseline for performance tracking. However, this information cannot be directly converted into supplier-specific emission factors for immediate use in the buyer’s Scope 3.1 inventory. These are not mutually exclusive efforts, but they can’t all happen at once. Clear objectives can align teams, and help ensure your supplier engagement strategies are actually effective.
Challenge 2 – Prioritizing Quantity Over Quality
Many companies focus on engaging as many suppliers as possible. But broad engagement without strategic focus rarely delivers results. Not all suppliers contribute equally to a company’s emissions, nor are they equally ready to act. The success of any engagement program rests on choosing the right suppliers. Across sectors, from consumer goods to agri-commodities, I’ve seen the most impactful programs as those that segment suppliers carefully (*with the exception of increasing supplier engagement).
Several metrics can guide supplier priorities: emissions materiality, data accessibility, data quality, and decarbonization potential. Focusing on suppliers of high-impact goods is a start, but it’s essential to assess if they can provide reliable data, and whether they’re willing to take meaningful steps to reduce emissions.
In an ideal world, your suppliers already meet all the criteria above – but that rarely happens. Your suppliers might not be ready or willing to engage today. This is where strategy and creativity come in. Ask yourself: how do I bring them there? It’s fine if they’re not ready now, but you’ll need a plan to ensure they are in three years’ time — and to invest in the right enablers to make that happen. In the meantime, look for practical entry points. Can you start with more willing suppliers who are open to co-creating a pilot? Grappling with these hurdles, and getting incremental steps can build credibility, momentum, and a pathway to think bigger. It’s about starting where impact is achievable and building the systems, partnerships, and trust to go further.
Challenge 3 – Missing the Opportunity to Create Shared Value
Even the best-designed engagement strategy will fall flat if suppliers don’t see the value in participating. For many suppliers (especially smaller ones), climate action feels like a cost centre. Templates and data requests that aren’t sector-specific only reinforce this perception. Here, buyers must reframe the conversation for suppliers. They might want to act but lack the tools, systems, or resources. Instead of simply issuing demands, use the engagement as a platform to enable – be clear on what’s needed, whether that’s energy data, PCFs, or scenario inputs, and offer support where possible. Value creation doesn’t need to be complicated, it could be as simple as offtake agreements, co-investment in low-carbon product development, or access to new markets. In some sectors, it might even involve shared certifications or climate labelling. When action is tied to commercial upside, suppliers are far more likely to participate and sustain that effort over time.
Buyer–supplier collaboration is also more effective when it’s collective. Industry groups or buyer associations can accelerate action by setting common expectations, sharing best practices, and reducing duplication across the supply chain. These initiatives help make decarbonization a shared responsibility, rather than solely a competitive differentiator. Ultimately, supplier engagement should not be about offloading responsibility, but about enabling those who want to decarbonize. In the longer term, when you anchor engagement in mutual value, you create partnerships that blossom into lasting insights.
Final Reflections
No matter where a company is in its climate journey, one thing is clear: effective supplier engagement is an effort best taken with carefully curated suppliers, and a goal of creating mutual value. Starting small, with a focus on learning and iteration, gives companies the ability to test, adjust, and scale with confidence.
The same principle applies to all stages of maturity. A company just starting out may prioritize foundational data collection, while a more advanced one may work on aligning targets and integrating supplier data into reduction tracking. In both cases, the ability to focus, and to design programs that create mutual benefit, determines success.
At Terrascope, we help companies move from intent to action. That’s translating climate ambition into rigorous, tailored, and impact-driven supplier programs. To me, engaging suppliers on climate action is an evolving partnership. The most impactful programs are built on clear goals, priorities, teamwork, and a clear link between action and shared value. It’s only when we apply these principles consistently, can we turn supplier engagement from intent to impact.
