Supply Chain Energy Transition (Scope 3)

Business Case

Brand reputation

Transitioning suppliers to renewable energy delivers measurable Scope 3 emissions reductions that strengthen the credibility of the buyer's climate commitments, supporting public reporting, stakeholder confidence and positioning as a climate leader in the eyes of customers, investors and regulators.

Financial resilience

Energy is a significant input cost for most suppliers. Supporting suppliers in transitioning to renewable energy reduces their operating costs and exposure to energy price volatility, which in turn stabilizes procurement pricing and strengthens supplier financial resilience.

Legal and regulatory compliance

Governments, investors and B2B buyers increasingly require evidence of renewable‑energy transition across the value chain. Supporting suppliers’ energy transition helps companies stay ahead of regulatory expectations (e.g., renewable‑energy procurement mandates, carbon‑pricing frameworks). Strong supply‑chain renewable‑energy performance improves readiness for emerging rules such as CBAM, CSRD and zero‑carbon procurement policies.

Market access

Companies that can demonstrate supply chain renewable energy transition gain competitive advantage in tenders, particularly with institutional buyers and government procurement bodies that evaluate supply chain sustainability.

Operational continuity

Suppliers dependent on fossil fuels face increasing cost volatility, geopolitical supply disruptions and regulatory risk. Helping suppliers transition strengthens the long-term viability and competitiveness of your supplier base.

Strategy & Planning

Assessment

Initial Action

Identify procurement categories / suppliers with the highest energy intensity and dependency on fossil fuel-based energy, to prioritize supplier engagement on energy transition.

Intermediate Progress

Assess the energy-related risk and energy-cost exposure across priority supplier categories, evaluating the proportion of supplier spend concentrated in regions with high fossil fuel dependency, volatile energy markets or limited renewable energy access.

Advanced Practice

Conduct comprehensive assessment of energy transition progress across the supplier base, identifying:

  • remaining gaps and suppliers that have not yet begun transitioning and their technological readiness
  • how energy is impacting/driving the cost of the product and parts from suppliers
  • how both existing energy prices and future prices will affect progress

Policy

Initial Action

Establish expectations for suppliers to disclose their energy sources via Supplier Code of Conducts and other instruments and work toward increasing their renewable energy percentage.

Intermediate Progress

Require suppliers in energy-intensive categories to have a renewable energy procurement plan or commitment, as well as to report on annual energy‑mix changes with evidence.

Advanced Practice

Require strategic suppliers to report on renewable energy procurement progress annually with third‑party verification of renewable‑energy claims and maintain trajectory toward agreed transition milestones.

Targets

Initial Action

Set targets for percentage of suppliers disclosing energy procurement data, including percentage of renewable vs fossil based energy.

Intermediate Progress

Set targets for percentage of supplier spend in priority categories covered by suppliers with renewable energy commitments.

Advanced Practice

Set targets for percentage of strategic suppliers with renewable energy procurement commitments aligned with RE100 or equivalent, with preference for on-site and new-build PPAs, along with requirements of evidence and timelines while remaining sensitive to supplier size and capacity.

Supplier Selection

Screening

Initial Action

Include energy related questions in RFPs, such as:

  • percentage of electricity coming from renewable sources
  • renewable energy commitment or targets
Intermediate Progress

Request evidence of renewable energy procurement progress from suppliers, including current renewable percentage, transition plans, facility‑level energy mixes (including electricity vs heat vs fuel sources) and investment committed.

Advanced Practice

Require suppliers to demonstrate a renewable energy commitment and active transition progress with third‑party verification of renewable‑energy claims as a prerequisite to participate in RFP.

Selection

Initial Action

Prioritize suppliers that demonstrate renewable energy procurement or commitments with credible documentation.

Intermediate Progress

Allocate points in selection criteria for suppliers.

  • demonstrating renewable energy procurement progress and credible transition plans
  • verified increases in renewable‑energy share year‑over‑year
  • commitment to renewable‑heat transitions, not only electricity
Advanced Practice

Select suppliers with verified RE100 or equivalent commitments, achieving ** >80–100% renewable electricity and demonstrated transition progress.

Contracts

Initial Action

Include contractual clauses requiring suppliers to disclose their energy mix and renewable energy percentage.

Intermediate Progress

Include clauses requiring suppliers to report on renewable energy procurement progress annually and eventually to achieve a certain percentage of renewable energy by a specific year.

Advanced Practice

Include contractual 100% renewable energy procurement milestones for suppliers, with annual progress reporting requirements and consequences for lack of progress.

Supplier Engagement

Goal Setting

Initial Action

Communicate renewable energy expectations to suppliers and establish joint transition plans with targets and timelines appropriate to their market.

Intermediate Progress

Set specific, time-bound renewable energy transition targets with strategic suppliers, covering contract-by-contract transition plans.

Advanced Practice

Develop multi-year renewable energy procurement roadmaps with suppliers covering contract-by-contract transition plans, helping suppliers to set RE100‑aligned or equivalent 100% renewable‑electricity milestones, validated annually.

Capacity Building

Initial Action

Provide training to suppliers on renewable energy procurement fundamentals, covering available mechanisms and how to evaluate options.

Intermediate Progress

Provide in-depth training to suppliers on renewable energy procurement mechanisms, contract negotiation and additionality considerations.

Advanced Practice

Provide advanced training to suppliers on building internal renewable energy procurement capability and embedding energy transition into their own operations.

Data

Initial Action

Request baseline energy procurement data from suppliers (electricity contracts, energy mix, current renewable percentage).

Intermediate Progress

Support suppliers in developing energy procurement tracking systems to monitor renewable percentage, contract status and transition progress, as well as to document evidence.

Advanced Practice

Create shared platform for energy source tracking and benchmarking across the supplier base.

Certifications

Initial Action

Share information on renewable energy programs (RE100).

Intermediate Progress

Support strategic or high-emission category suppliers with RE100 membership or equivalent commitment process.

Advanced Practice

Require and support in obtaining RE100 membership or equivalent verified renewable energy commitment for strategic suppliers.

Advisory

Initial Action

Provide guidance to suppliers on evaluating renewable energy procurement options available in their market and geography.

Intermediate Progress

Provide technical guidance to suppliers on selecting the most cost-effective and credible renewable energy procurement options for their operations.

Advanced Practice

Consult and work with suppliers on embedding renewable energy requirements into their own procurement practices.

Financial Support

Initial Action

Fund supplier access to renewable energy advisory services, procurement analysis tools and market information.

Intermediate Progress

Co‑fund feasibility studies for on‑site renewables or provide commercial incentives to suppliers for improvements in renewable energy procurement, such as price, volume, duration and preferred supplier status.

Advanced Practice

Co-invest in renewable energy infrastructure at strategic supplier locations.

Audits

Initial Action

Require suppliers to complete self-assessment questionnaires on energy procurement practices, covering current energy mix, renewable percentage and procurement mechanisms.

Intermediate Progress

Review supplier renewable energy documentation and verify procurement mechanisms match claims through on-site verification where appropriate.

Advanced Practice

Implement third-party verification programs for supplier renewable energy claims across the supply chain.

Project Partnerships & Innovation

Initial Action

Launch pilot projects with suppliers to explore aggregated renewable energy procurement opportunities or shared on-site generation.

Intermediate Progress

Support suppliers in forming renewable energy buying groups, aggregated procurement vehicles or shared transition models to access better pricing.

Advanced Practice

Lead industry collaborations with suppliers, utilities and sector peers to create aggregated renewable energy procurement vehicles that make the transition accessible to smaller suppliers.

Continuous Improvement

Metrics

Initial Action

Track the following:

  • percentage of suppliers that have disclosed energy procurement data
  • percentage of suppliers with any renewable energy procurement commitment
  • supplier participation in buyer renewable energy transition programs
Intermediate Progress

Track progress indicators such as:

  • supplier renewable energy percentage trends year over year
  • number of suppliers with active renewable energy procurement
  • percentage of supplier energy spend covered by renewable contracts
Advanced Practice

Track indicators such as:

  • percentage of strategic suppliers with verified RE100 or equivalent commitments
  • total renewable energy procurement volume across the supplier base

Scorecards

Initial Action

Include renewable energy indicators in supplier scorecards (renewable percentage, commitment status).

Intermediate Progress

Integrate renewable energy KPIs into supplier performance reviews and require corrective action plans for suppliers not meeting renewable energy commitments.

Advanced Practice

Weigh renewable energy performance in supplier scorecards, with top performers receiving preferential weighting in tenders and bottom performers required to submit improvement plans.

Impact Verification

Initial Action

Gather feedback from suppliers on effectiveness of renewable energy engagement programs and feasibility of transition targets.

Intermediate Progress

Assess whether supplier engagement initiatives are delivering measurable increases in renewable energy procurement across the supply chain.

Advanced Practice

Calculate Scope 3 emissions reductions attributable to supplier renewable energy transitions.

Sources consulted

GHG Emissions Reduction Renewable Energy Procurement (Scope 2)