We see it a lot: many small and medium-sized Enterprises (SMEs) find the term 'Scope 3 emissions' complex and intimidating. In simple terms, these are the indirect greenhouse gas emissions that occur in your company’s value chain. Unlike Scope 1 (direct emissions from your own operations) and Scope 2 (emissions from purchased energy), Scope 3.1 includes all other emissions you are indirectly responsible for, most notably from your suppliers.
Tackling this challenge is no longer optional. The EU's Green Deal has introduced numerous policy initiatives aimed at reducing climate impact, preventing greenwashing, and channelling investment into sustainable activities, such as the CSRD, EU Taxonomy, and Digital Product Passport. Beyond just following these rules, understanding your carbon footprint comprehensively is crucial because clients and tenders are increasingly demanding transparency. Therefore, effective supplier engagement for Scope 3 data is a cornerstone of this process, not just for compliance but for building a more resilient and sustainable business.
To make life a bit easier, we have put together a 5-step guide to help your SME successfully collect Scope 3.1 data and turn a reporting burden into a strategic advantage.
Step 1: Prioritising your suppliers for maximum impact
The most effective way to decarbonise your supply chain is to prioritise. Your supply chain is likely extensive, and trying to engage every supplier simultaneously can be overwhelming. The GHG Protocol, a global standard for carbon accounting, provides guidance on different emission categories that can help you focus your efforts. A great place to start is by identifying suppliers with the biggest impact.
Here are a few pragmatic ways to prioritise:
- Spend-based analysis: start with the suppliers you spend the most money with. This is often the simplest method and can quickly highlight significant contributors to your footprint.
- Importance to your business: identify suppliers who are essential for your products or services. Engaging them is not only important for data collection, but also for long-term risk management.
- Emission-intensive industries: Focus on suppliers operating in sectors known for high emissions, such as manufacturing, logistics, and raw material extraction.
Start with a manageable group, perhaps your top 10-20 suppliers. This allows you to refine your process before scaling up. The goal is to make progress, not to achieve perfection on day one.
Step 2: Building a collaborative communication strategy
How you communicate your request for data is just as important as what you request. We learned that a mandate can sometimes create friction, which you always want to avoid. On the other hand, a collaborative approach towards your supplier can even improve your partnership. Your suppliers are likely SMEs themselves, facing similar resource constraints; understanding that, helps a lot.
Frame your outreach as a shared journey:
- Explain your 'why': start by sharing your company's sustainability goals. Explain that as a key partner, their collaboration is crucial for mutual success. Your supplier will become part of your sustainability journey which could ensure a long term relationship. Secondly, the supplier will be prepared for other clients requesting CO2-data and therefore expanding its clientele.
- Be clear and concise: clearly state what information you need (e.g., their energy use in kWh, fuel consumption in litres, or total emissions in CO2e) and why it's important for your carbon accounting.
- Provide a realistic timeline: give your suppliers ample time to respond and be transparent about your own reporting deadlines.
- Designate a point of contact: offer a dedicated person on your team who can answer their questions and provide support.
By positioning the data request as part of a larger partnership, you move from a transactional relationship to a collaborative one. If you need help developing this strategy, Hedgehog offers expert Scope 3 consulting.
Step 3: Simplifying the data collection process
To get good data, you need to make the process as simple as possible for your suppliers. A lengthy, complicated questionnaire will likely be ignored. Instead, create a straightforward scope 3 data template or survey.
A good data collection tool should include:
- Simple instructions: explain any technical terms in plain language.
- Specific questions: ask for data points you can use, such as kilowatt-hours of electricity, liters of fuel, or total weight of goods shipped.
- Flexibility in data types: allow suppliers to provide either activity-based data (like kWh of energy used), which is more accurate, or spend-based data (total cost of services), which can be used for estimation. Our guide on "Choosing the right carbon accounting method" can help clarify these options. Also, your support to your supplier is important in this decision.
- An offer of support: reiterate that you are available to help them through the process.
Step 4: From mandate to partnership, offering support
Many of your suppliers may be new to carbon accounting. Offering support is a powerful way to strengthen your relationship and improve the quality of the data you receive.
Consider these ways to help:
- Educational resources: share helpful guides, articles, or webinars that explain the basics of carbon accounting for SMEs.
- Share your own experience: be open about your own challenges and successes in measuring your footprint. This builds trust and shows that you’re in it together.
- Highlight mutual benefits: explain how this data can help them too, by becoming a future-proof business, ready for compliance and meeting the demands of their other customers.
By investing in your suppliers' capabilities, you are investing in the resilience of your own supply chain. This approach aligns with guidance from organisations like the Carbon Disclosure Project (CDP), which encourages collaborative climate action.
Step 5: Handling data gaps: what to do when suppliers can't respond?
We see it a lot. It is almost certain that some suppliers won't be able to provide the data you need, at least not initially. This is normal and should not halt your progress. The GHG Protocol allows for the use of estimation methods to fill these gaps.
Here are the most common approaches:
- Spend-based method: This is the most accessible starting point. You can take the amount of money you spent with a supplier and multiply it by an industry-average emission factor. These factors are available from reputable sources, such as the UK’s DEFRA database, co2emissiefactoren.nl and Ecoinvent.
- Average-data method: Use secondary data, such as average emissions for a specific product or service, to create an estimate.
The goal is to create a complete, albeit partially estimated, footprint. This provides a baseline that you can refine over time as you receive more accurate data from suppliers. Tools like the Hedgehog Carbon Platform are designed to handle these calculations, allowing you to use a mix of real and estimated data seamlessly. For more insight, see our article on "Selecting the right emission database for carbon footprint calculations."
Conclusion: Beyond data collection to sustainable partnerships
Effective supplier engagement for scope 3 data is more than a reporting exercise; it is a fundamental part of building a modern, resilient business. By prioritising suppliers, communicating collaboratively, simplifying the process, and offering support, you can turn a daunting task into a strategic opportunity.
Remember that this is a journey of continuous improvement. Start with the data you can get, use estimations to fill the gaps, and work with your suppliers to improve data quality over time. In doing so, you not only achieve compliance but also foster stronger partnerships and drive supply chain decarbonisation.
Ready to start your journey towards supply chain decarbonisation? Contact Hedgehog for expert Scope 3 consulting or explore our Hedgehog Carbon Platformto simplify your data collection and reporting.
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