Why The Boardroom Is Turning To Supply Chain Leaders On Climate

When Willem Uijen took the helm as Unilever’s chief supply chain officer in January 2025, he inherited responsibility for operations spanning nearly 200 countries and a network of 52,000 suppliers. But his most challenging brief had little to do with logistics: cutting the consumer goods giant’s Scope 3 emissions, which dwarf the company’s direct operational footprint by a factor of 26. The expanded mandate reflects a broader shift elevating supply chain leaders from operational roles to strategic climate architects.

That ratio isn’t unique to Unilever. According to research from Boston Consulting Group and CDP covering thousands of companies, supply chain emissions average 26 times greater than direct operational emissions. For financial services firms, the figure approaches 100%. This mathematical reality has thrust supply chain leaders into an unfamiliar role: orchestrating their organizations’ most consequential climate strategies while still delivering on traditional cost, quality, and speed metrics.

The shift carries tangible consequences. At one public sector agency analyzed by PwC, just 20 suppliers accounted for 94% of Scope 3 emissions. Focusing climate efforts on those relationships could halve the agency’s supply chain footprint within a decade. Yet most companies haven’t identified their critical emitters. Only 38% currently track Scope 3 emissions at all, according to an IBM survey of over 3,000 executives.

Beyond The Factory Gates

For decades, corporate climate strategy focused on what companies could directly control: factory emissions, fleet fuel consumption, office electricity. These Scope 1 and Scope 2 emissions proved relatively straightforward to measure and manage. Install solar panels, switch to electric vehicles, buy renewable energy certificates.

Supply chain emissions resist such tidy solutions. Research from MIT’s Sustainable Supply Chain Lab shows Scope 3 typically represents 75% of total corporate emissions, climbing above 90% for sectors like food, fashion, and consumer electronics. Yet companies prove 2.4 times more likely to set targets for operational emissions than supply chain emissions. Only 15% of firms disclosing through CDP have established Scope 3 targets.

The gap stems from genuine complexity. When Procter & Gamble and Tupperware compared their logistics data, they discovered complementary inefficiencies: Tupperware’s trucks ran at 80% volume capacity but only 30% weight capacity, while P&G’s hit 95% weight but just 50% volume. Real-time data sharing enabled load consolidation that cut transport emissions by 200 metric tonnes of CO2 and reduced costs by 17%. Most companies lack visibility to spot such opportunities.

The 80/20 Rule For Emissions

Supply chain leaders have learned to apply Pareto principles to climate work. PwC’s analysis across multiple industries consistently finds that 80% of supply chain emissions come from roughly 20% of purchases. This concentration creates actionable leverage points.

At pharmaceutical companies, the pattern holds despite complex manufacturing requirements. Major firms including AstraZeneca now engage suppliers around energy use and climate performance targets, though the sector faces unique challenges. Pharmaceutical manufacturing demands reliable power and controlled environments, making direct renewable integration technically complex and often requiring investment in energy storage and advanced grid management.

Consumer goods companies have moved faster. Nestlé, Coca-Cola, and PepsiCo now require supplier engagement representing 70% of emissions, with expectations that suppliers set science-based targets. Walmart’s Project Gigaton, launched in 2017, exceeded its goal to eliminate one billion metric tonnes from the supply chain in 2024, six years ahead of the original 2030 target. The program rewards participating suppliers with preferential treatment and growth opportunities, transforming climate action from compliance cost to competitive advantage.

The strategies deployed reveal what works. Research analyzing 42 interviews with senior managers at purchasing and supplying firms identified six effective engagement approaches: clear communication of expectations, building trust through consistent interaction, providing technical support and guidance, using suppliers’ data effectively, refining programs through feedback loops, and developing meaningful incentive structures.

Technology’s Double Edge

The technical infrastructure for tracking supply chain emissions has evolved rapidly, yet fundamental data challenges persist. Current calculation methods rely heavily on spend-based approaches that multiply purchase amounts by industry-average emission factors. A study of Australian firms found wide discrepancies in reported emissions for identical activities when using these averages versus primary data.

The market has responded with sophisticated platforms. IBM Envizi’s Supply Chain Intelligence module, Microsoft Sustainability Cloud, and specialized providers like Sweep and IntegrityNext offer centralized systems for collecting and analyzing emissions data. The ESG data management platform market grew 38% in 2024, according to Verdantix, with AI and machine learning increasingly deployed to identify emission hotspots and predict risks.

At Körber, a German engineering group, supply chain leaders embedded sustainability monitoring across 10,000 suppliers through their digital ecosystem. Real-time insights enable targeted risk mitigation while tracking compliance with evolving regulations on deforestation and product-level emissions.

But technology creates new problems alongside solutions. MIT researchers warn that over-reliance on modeling can shift management attention from actual improvements to model optimization, particularly when executive compensation ties to modeled outputs. When companies lack statistical expertise, extrapolating from small supplier samples produces unreliable baselines.

The practical solution emerging from leading practitioners: start with primary data from the 20% of suppliers driving 80% of emissions, use industry averages for the long tail, and continuously upgrade data quality as supplier capabilities develop. This pragmatic approach allows supply chain leaders to generate actionable insights without waiting for perfect information.

Regulatory Pressure Mounts

The regulatory landscape has shifted from voluntary disclosure to mandatory reporting at unprecedented speed. The EU’s Corporate Sustainability Reporting Directive requires detailed accounting of value chain impacts. California’s Climate Corporate Data Accountability Act mandates emission disclosures despite federal ambivalence. Over 1,250 ESG regulations emerged globally between 2011 and 2023, with the pace accelerating.

Regulations now extend beyond carbon. The EU Deforestation Regulation forces companies to assess biodiversity and forest impacts across supply chains, pushing supply chain leaders into environmental domains they previously considered tangential. LRQA’s 2024 Supply Chain Risk Outlook found over 50% of assessed regions face high or extreme ESG violation risk, with traditional annual audits missing complex issues like wage fairness and inadequate grievance mechanisms.

The compliance burden falls heaviest on supply chain leaders. Research from the EU’s Corporate Sustainability Due Diligence Directive shows companies need continuous monitoring tools, worker hotlines, and real-time grievance mechanisms rather than annual snapshots. The shift demands different organizational capabilities.

What Actually Drives Progress

Despite urgency and regulatory pressure, most companies underperform on Scope 3. Analysis of firms disclosing through CDP identified three factors correlating with ambitious action: climate-responsible boards, systematic supplier engagement, and internal carbon pricing.

The board connection proves strongest. Companies with boards explicitly overseeing climate risks show significantly higher likelihood of comprehensive Scope 3 strategies. Those mandating internal carbon pricing for all business decisions demonstrate four times greater probability of having Scope 3 targets aligned with 1.5-degree warming limits.

Internal carbon pricing warrants particular attention. Disclosed upstream emissions from manufacturing, retail, and materials sectors alone suggest carbon liability exceeding $335 billion at the IMF’s proposed 2030 price of $75 per tonne. Yet fewer than one in ten investors require Scope 3 disclosure in investment policies, and only half of companies disclosing through CDP evaluate financial risks from upstream emissions.

The disconnect between material risk and investor oversight creates opportunity for supply chain leaders who can quantify climate exposure in financial terms. A survey by Egon Zehnder found 72% of chief supply chain officers cite cost pressure as their primary challenge, with 46% identifying evolving customer demands. Framing emissions reduction as cost management and revenue protection resonates with boards focused on financial performance.

From Strategy To Execution

The gap between intention and execution remains stark. EcoVadis conducted 49,000 sustainability ratings in 2024, finding over one-third of first-time rated companies scored below 45, indicating high to medium ESG risk. The situation worsens outside Europe, where regulatory frameworks provide less structure.

Yet companies excelling at Scope 3 reduction share common practices. They begin with rigorous baselining using primary data from major suppliers. They establish tiered engagement programs offering different levels of support based on supplier size and emissions impact. They provide technical assistance, sometimes including financing for renewable energy transitions. They integrate sustainability criteria into procurement scorecards with meaningful weight.

Research analyzing European companies from 2002-2023 found that proactive investment in Scope 3 reduction and enhanced supply chain transparency significantly improve ESG performance, with impact intensifying among higher performers. The conclusion: integrated strategies balancing financial commitment, operational transparency, and sustainable sourcing achieve measurable gains.

Danone’s “Partner for Growth” initiative illustrates the approach. The program focuses on emerging science, technology and sustainability, strengthening existing supplier relationships while forging new ones with startups and research institutions. Regular forums and joint innovation projects leverage supply chain expertise to tackle challenges like packaging recycling and methane reduction.

The Path Forward

For supply chain leaders, success requires reframing climate work as core operational improvement rather than separate sustainability initiative. The most effective practitioners view emissions reduction through the same analytical lens applied to cost reduction or quality improvement: identify concentrations, prioritize high-impact interventions, measure rigorously, iterate based on results.

The timeline for action continues compressing. Science Based Targets initiative guidance now emphasizes supplier engagement as critical for credible net-zero commitments. CDP and other disclosure frameworks increasingly require product-level carbon data, not just corporate aggregates. Major brands are establishing phased timelines: Tier 1 suppliers representing 70-80% of spend must disclose Scope 1 and 2 emissions by 2024-2025, provide product-level data by 2026-2028, with requirements extending to Tier 2 suppliers by 2028-2030.

Whether these timelines prove realistic matters less than the directional pressure they create. In a survey of 68 chief supply chain officers by Egon Zehnder, 81% identified driving transformation as their primary motivation, with 57% citing complex challenges. Climate strategy now sits at the intersection of both.

The transformation of supply chain leadership from operational efficiency to strategic sustainability reflects a fundamental shift in competitive dynamics. Research analyzing multi-tier supply chains found that 56-70% of Scope 3 emissions occur within the first two supply tiers, making them technically addressable through focused engagement. Companies viewing suppliers as innovation partners rather than compliance risks consistently outperform on both emissions reduction and cost management.

The boardroom increasingly recognizes this reality. As one executive observed, sustainability and efficiency have become inseparable dimensions of competitive advantage. Supply chain leaders occupy the critical junction where corporate commitments either translate into operational reality or remain aspirational statements. Their success in this expanded role will largely determine whether the corporate sector contributes meaningfully to climate goals or simply generates sophisticated disclosure of inadequate progress.