Net-Zero Challenge: The Supply Chain Opportunity

The report, co-authored by Boston Consulting Group as part of the Net-Zero Challenge series, explores the significant role that supply chain decarbonization can play in addressing global greenhouse gas emissions. It emphasizes that supply chain emissions, known as Scope 3 emissions, account for the majority of emissions for customer-facing companies, surpassing the direct emissions from their operations (Scope 1 and 2). Decarbonizing supply chains is presented as a pivotal opportunity for companies to enhance their climate impact significantly, with minimal increases in end-consumer costs.

One key finding is that eight major supply chains—food, construction, fashion, consumer goods, electronics, automotive, professional services, and freight—contribute over 50% of global greenhouse gas emissions. Many of these emissions are indirectly controlled by a small number of influential companies. The report highlights that achieving net-zero supply chains is feasible using existing and cost-effective measures such as improving efficiency, adopting renewable energy, and embracing circular economy practices. These actions could reduce emissions significantly with only a marginal increase in product costs for consumers, ranging from 1–4% in the medium term.

However, the report acknowledges that supply chain decarbonization poses significant challenges. These include obtaining reliable data from suppliers, setting clear reduction targets, and addressing fragmented supplier networks where emissions are deeply embedded. Some solutions may require collective action across entire industries to be effective.

To guide companies, the report identifies nine actionable steps for reducing supply chain emissions. These include establishing an emissions baseline, setting ambitious reduction targets, redesigning products and sourcing strategies, implementing strict procurement standards, co-funding abatement initiatives with suppliers, collaborating with industry peers to align sector-wide targets, increasing demand for green solutions to reduce costs, and instituting governance systems that integrate emissions as decision-making criteria.

This comprehensive framework highlights the transformative potential of supply chain decarbonization as a corporate climate strategy and underscores the necessity for coordinated effort across industries.