Supply Chain Analysis

For most organisations, the majority of emissions sit outside their own operations — in purchased goods and services, transport, travel and the use of what they sell. Supply chain analysis is the work of measuring those Scope 3 emissions, and doing it in a way that stays proportionate to the decisions it informs.

Why Scope 3 matters now

Scope 3 has moved from optional to expected. Under AASB S2 it becomes mandatory from an entity’s second reporting year. Large customers increasingly request supplier emissions data as a condition of tender. CDP and other voluntary frameworks score it directly. And for many organisations it is simply where the reduction opportunities are.

It is also the part of an inventory most likely to become unmanageable if approached without a clear scope.

Starting with materiality

We begin with a materiality assessment across the fifteen Scope 3 categories defined by the GHG Protocol Corporate Value Chain Standard. The purpose is to establish which categories are significant for your organisation, which can reasonably be screened out, and to document the basis for both.

That documented reasoning is as important as the numbers. An assurer, a customer or a regulator will ask why a category was excluded, and a defensible answer prepared at the outset is worth considerably more than one reconstructed later.

What we typically measure

  • Purchased goods and services — usually the largest category, and the one where method choice matters most
  • Capital goods — major purchases and capital works
  • Upstream transport and distribution — inbound freight and logistics
  • Business travel and employee commuting — flights, accommodation, mileage and mode mix
  • Waste generated in operations — by stream and disposal route
  • Fuel and energy related activities — transmission losses and upstream fuel extraction
  • Leased assets, franchises and investments — where operational control sits outside the reporting boundary
  • Downstream categories — use of sold products and end-of-life treatment, where relevant to your business

Spend-based, then supplier-specific

There are two broad ways to measure supply chain emissions, and most organisations need both in sequence.

Spend-based analysis uses procurement data and economic input-output factors to produce a first estimate across the whole supplier base. It is fast, it uses data your finance system already holds, and it reliably identifies where the emissions are concentrated. It is not precise, and it cannot detect a supplier improving their performance.

Supplier-specific data replaces those estimates with actual emissions data from individual suppliers. It is more accurate and responds to genuine improvement, but it requires supplier engagement, which takes time.

The practical approach is to run a spend-based analysis first, identify the suppliers responsible for the bulk of the footprint — often a surprisingly small number — and pursue supplier-specific data for those, leaving the long tail on spend-based factors.

Supplier engagement

Where supplier data is required, we can help design and run the request: what to ask for, how to phrase it so smaller suppliers can respond, how to handle those who cannot, and how to treat the responses consistently once they arrive.

We can also advise on the other side of that exchange — responding to emissions data requests you receive from your own customers, which is an increasingly common trigger for this work.

What you receive

  • A documented Scope 3 materiality assessment, with the reasoning for inclusion and exclusion
  • A Scope 3 inventory by category, with data quality labelled by source and method
  • Hotspot analysis identifying where emissions and reduction opportunities are concentrated
  • Supplier engagement materials, where supplier-specific data is being sought
  • A pathway for improving data quality over subsequent reporting years

How this connects to the rest of your reporting

Scope 3 sits outside NGER entirely — the scheme covers Scope 1 and Scope 2 only. For organisations facing mandatory climate disclosure, that gap is usually the largest piece of work between an existing NGER submission and a complete sustainability report.

Supply chain analysis can be delivered as part of a full carbon audit, or as a standalone piece of work where Scope 1 and 2 are already well established.

Talk to us

If a customer has asked for your emissions data, or your first Scope 3 reporting year is approaching, we can help you work out what is actually required before committing to a full exercise.

Get in touch