Shaping the Path Toward Net Zero Through Supplier Engagement

Abstract

In response to the climate crisis, companies are committing to net-zero greenhouse gas (GHG) emissions. Yet decarbonization remains challenging in globally dispersed supply chains, where upstream indirect emissions throughout the value chain (called Scope 3) can be up to 28 times higher than direct emissions. Drawing on data from twenty-five global firms, this article identifies five mechanisms companies use to engage suppliers: codes of conduct, financial instruments, digital platforms, supplier training, and co-innovation. It analyzes these mechanisms and explores the extent to which companies implement them beyond tier 1 suppliers to support the path toward net-zero GHG emissions.