Embed Scope 3 decarbonization in procurement practices

In November & December 2024, WBCSD conducted a three-part Masterclass Series on Unlocking Supply Chain Decarbonization. This first session presented insights from Proxima’s Scope 3 Maturity Benchmark Report and included a case study from AstraZeneca. This document summarizes the key learnings from the session into one actionable guide.

Scope 3 emissions, often constituting up to 80% of an organization’s total carbon footprint, present a complex challenge. Proxima’s 2024 Benchmark Report collects the Scope 3 decarbonization experiences of 170 participating companies. It provides a vision of current practices and identifies significant lags such as those in operational execution and procurement resource investment

Key Findings from Proxima’s Report:

• Despite 70% of surveyed organizations having defined Scope 3 targets, only 28% of them integrated these into actionable procurement plans, underscoring a critical lag in execution

• Common barriers such as a lack of standardized supplier data were reported by 62% of organizations, hindering effective emissions tracking

• Companies in the top 25% of Scope 3 management maturity demonstrated up to 40% faster progress toward net-zero goals compared to their peers

• The report revealed promising results from companies that embraced collaborative supplier programs, which yielded an average reduction of 15% in upstream emissions

Proxima’s Scope 3 Maturity Benchmark Report offers practical strategies for embedding decarbonization into procurement, emphasizing the need for cross-functional collaboration and innovative tools to drive sustainability.

• Capacity Building: Upskilling procurement and existing supplier teams to include Scope 3 targets in contracts, KPIs, and training is essential to embed sustainability. Mechanisms such as “sustainability champions” and internal communication pipelines ensure alignment.

  • Incorporate Scope 3 decarbonization into more roles and enhance carbon literacy training: build Scope 3 into Category Managers, Supplier Managers and Business Stakeholder’s roles.

• Technology and Tools as Enablers: Use digital tools for diagnostic assessments and technology platforms to collect and analyze supplier emissions data. These tools enable tailored roadmaps to bridge operational gaps. 34% of companies that adopted digital solutions and data-driven decision-making reported significant improvements in Scope 3 visibility.

  • Build carbon emissions evaluations into decision making through increased weighting in commercial evaluations and commercial incentives linked to emissions reduction.

• Supplier Engagement Programs: Develop robust emissions reduction agreements with key suppliers; Nearly half (45%) of top-performing organizations have implemented such initiatives, fostering a collaborative approach to sustainability.

AstraZeneca: Journey Toward Net Zero: Masterclass Case Study Insights

During the WBCSD Masterclass, AstraZeneca presented their strategic approach to achieving Net Zero through supplier engagement and sustainability integration.

AstraZeneca has set an ambitious goal of ensuring that 95% of its supplier spend is with partners committed to science-based targets by 2025. The company has made progress, with two-thirds of its supplier spend now directed toward suppliers committed to climate action on SBTI.

Universal challenges such as supplier data availability and accuracy remain; however, AstraZeneca emphasizes the importance of prioritizing measurable indicators of supplier sustainability to maintain momentum despite data limitations.

The company’s success is driven by several key approaches:

• Leveraging industry networks: AstraZeneca actively participates in collaborations such as the Sustainable Procurement Pledge (SPP) and the Pharmaceutical Supply Chain Initiative (PSCI) to share best practices and improve access to renewable energy

• Leadership and team strength: key drivers include the Chief Procurement Officer, supported by a resilient Sustainable Procurement team. The Sustainable Procurement team has expanded its scope to work closely with the Global Procurement team, embedding sustainability across supplier relationships

• Diverse communication and engagement: utilize diverse communication, engagement and training strategies, delivered over extended periods, to ensure all team members are informed and equipped to contribute to sustainability objectives

Sustainability Impact

Adopting sustainable procurement practices has the potential to drive significant climate and business impacts while requiring thoughtful implementation and strategic investment.

Climate Impact

Scope 3 Organizations leveraging this framework can address emissions from purchased goods, upstream transportation, and downstream logistics, which align with GHG Protocol Scope 3 Categories 1, 4, and 9.

Business Impact

Benefits

Beyond environmental outcomes, the business case for sustainable procurement is equally compelling.

• Enhanced operational efficiency arises from streamlined supplier networks, which simultaneously reduce material waste and optimize supply chains

• Sustainability-aligned corporate values improves employee engagement, fostering a sense of purpose and cohesion

• Cost savings from energy-efficient supply chains and reduced material waste

• The active participation from leadership, such as integrating carbon targets into board-level scorecards, helps secure the necessary funding and drive momentum

• Organizations benefit from increased procurement efficiency, operational resilience, and reputational gains, positioning themselves as sustainability leaders in their respective industries

Costs

The journey to a net-zero supply chain involves moderate investments in technology and training, although subsidies like renewable energy grants can help offset these expenses.

The indicative abatement cost is estimated at $50–$150 per metric ton of CO2e, varying based on sector and geographical factors. This financial investment not only facilitates emissions reduction but also sets the stage for long-term cost efficiencies.

Typical business profile

Companies engaged in Scope 3 decarbonization efforts (sector-agnostic).

Approach

Step-by-step approach

The Path Forward: Proxima’s Framework

Proxima’s Report presents a structured roadmap to help organizations embed net-zero goals into their procurement strategies, organized into eight actionable phases:

1. Phase 1: Ensure procurement objectives are fully integrated with the overarching business strategy

2. Phase 2: Enhance visibility into emissions by categorizing key material suppliers to target impactful strategies and actions

3. Phase 3: Establish clear and measurable emissions reduction targets

4. Phase 4: Determine functional enablers such as key capabilities needed from procurement functions

5. Phase 5: Identify decarbonization levers

6. Phase 6: Develop a comprehensive plan that combines decarbonization levers and enablers

7. Phase 7: Identify resources required to drive change

8. Phase 8: Effectively communicate the planned changes to all relevant stakeholders

Key parameters to consider

To ensure successful adoption, organizations must address several critical factors:

• Solution maturity: Established frameworks and technologies are available to support these efforts

• Lifetime: Sustainability strategies must align with long-term organizational objectives and allow for continuous improvement

• Technical constraints: Transparent supplier data and robust reporting mechanisms are essential for tracking progress

• Sector-specific considerations: Emissions profiles vary across industries, requiring tailored approaches

• Subsidies: Eligibility for government or industry-specific decarbonization grants

Stakeholders involved

Chief Procurement Officer (CPO): Driving progress and maintaining focus on sustainability despite competing pressures

Sustainable Procurement team: Embedding sustainability with suppliers and supporting global procurement

Board: Engaged in sustainability, securing funding, and driving success

Supplier networks: Key partners in decarbonization initiatives

Implementation and Operations Tips

Key Takeaways from the Masterclass:

During the Masterclass, participants highlighted the importance of:

• Enablers such as technology to have a structured and efficient approach for data collection (the maturity of the suppliers should be taken into account when choosing the right tech tools)

• Implementing or updating a strong suppliers code of conduct

• North stars acting as reference points such as the climate drive and sector initiatives

• Dedicated sustainability courses for capacity building, especially for material suppliers

• Beginning with pilot projects to demonstrate feasibility and benefits

• Ensuring executive buy-in to sustain resource allocation

• Leveraging cross-functional teams to embed scope 3 considerations across operations. Sustainability should be integrated into everyone's role