How to Conduct a Supply Chain Audit: A Step-by-Step Guide to Managing Scope 3 Emissions

Introduction

With the emissions reporting season upon us, many sustainability teams are analyzing their supply chain sustainability assessments for the past year. Whether you are a company requesting emissions data from your supply chain, or a company preparing to respond to an emissions data request, this article helps outline the key steps in supply chain emissions accounting to get you prepared for the next reporting cycle.

But First - Why are Supply Chain Emissions Inventories on the Rise?

A supply chain emissions inventory helps organizations pinpoint where product and service-level emissions occur in their supplier base. When done well, they can help to evaluate supplier sustainability performance, compare peer suppliers to one another, and identify opportunities for emissions reductions through procurement decision making

The challenge for many companies is that their supply chain emissions inventories have only ever included spend-based calculations, which estimate emissions based on the relative emissions intensity of a given activity or industry. As companies continue to advance their emissions reporting, target-setting, and green procurement projects, the value of supplier-specific emissions data has become increasingly valuable, which is fuelling sustainability data requests from sustainability and supply chain managers.

Step 1: Identify Key Suppliers and Map Your Supply Chain

If you are in a company looking to complete a supply chain emissions inventory, the foundation of the exercise is understanding which suppliers play the most significant role in your operations, and likely your GHG emissions inventory.

Actions:

• List all suppliers in your financial reporting system and their associated annual spend.

• Categorize your suppliers by industry, and map the flow of materials, products, and data from source to customer.

• Prioritize suppliers that are associated with the highest economic spend, and the highest expected emissions intensity.

• Determine a threshold for which your engagement efforts will follow while covering a strong majority of your supplier base (ex. Suppliers $>1MM in annual expenditure will be engaged)

Results:

Most companies find that a handful of suppliers account for the bulk of their Scope 3 emissions. By engaging with these key suppliers early, and mapping their relative significance, you can build strong relationships and share ideas that help influence major players in your supply chain, driving meaningful progress toward your carbon reduction goals.

Step 2: Collect Data on Supplier Emissions and Sustainability Practices

Once your supply chain is mapped, you’ll be able to request the relevant information on suppliers’ environmental performance.

Actions:

• Request company-allocated supplier GHG emissions data.

• Ask about environmental certifications, sustainability target-setting goals, and other emissions reduction initiatives.

• Use established frameworks such as the GHG-Protocol Scope 3 Guidance and CDP Supply Chain to guide consistent data collection.

Results:

Accurate, comparable data allows your organization to identify emissions hotspots within the supply chain. Because of the technical nuances involved in validating sustainability data, many companies choose to work with expert partners to support their supply chain sustainability assessments. Professional oversight ensures that the provided data aligns with strict GHG accounting methodologies and is robust enough to support future sustainability initiatives, like setting a Science-Based Targets Initiative (SBTi) aligned target.

Step 3: Assess Supply Chain Risks and Opportunities

With supplier data in hand, analyze the key environmental and operational risks within your value chain.

Actions:

• Identify suppliers with high (and low) carbon intensity or potential emissions compliance risks that may become financially material.

• Compare peer-to-peer supplier performance, and use the data to evaluate opportunities to reduce emissions through procurement changes

• Request that a Life Cycle Assessment (LCA) be completed for particularly important value chain products.

Results:

This step not only uncovers opportunities to reduce emissions but also identifies where sustainability investments can strengthen long-term business resilience, particularly in managing environmental risks and regulatory compliance. Building a more sustainable, low-impact supply chain also enhances your company’s appeal to other organizations seeking environmentally responsible partners.

Step 4: Collaborate with Suppliers and Implement Improvement Actions

Effective supply chain sustainability is an ongoing dialogue, not a one-time request. Success hinges on moving to a partnership mindset with suppliers, as supplier data collection and performance evaluation will be an annually recurring process.

Actions:

• Communicate how supplier performance directly impacts your corporate targets.

• Offer strategic guidance to help suppliers improve data quality and environmental performance.

• Establish clear milestones for your Scope 3 reductions and define the responsibilities required to meet your value-chain goals.

• Implement an incentive- based framework to recognize suppliers who demonstrate leadership in emissions-related performance.

Results:

By combining collaboration with structured action planning, organizations can move beyond measurement to meaningful impact. This approach embeds sustainability into supplier relationships, drives emissions reductions across the value chain, and ensures commitments translate into measurable progress.

Why Supply Chain Audits Matter for Scope 3 Emissions

For many organizations, Scope 3 emissions account for more than 80% of total greenhouse gas emissions. For companies just beginning their sustainability journey, the volume of data and the complexity of supplier engagement can be overwhelming.

Conducting a supply chain emissions inventory, or engaging a trusted partner to help measure and mitigate supply chain emissions, provides the insights needed to manage these impacts effectively.

At Carbonzero, we specialize in helping organizations:

• Quantify Scope 3 emissions in line with the GHG Protocol, the globally recognized standard for greenhouse gas accounting.

• Analyze supplier data to identify emissions hotspots and priority areas for improvement.

• Develop reduction strategies that align with Science-Based Targets and broader sustainability goals.

If your organization is looking to measure or reduce emissions across its supply chain, Carbonzero can help you take the next step. Whether organizations are seeking internal assurance or responding to data requests from customers upstream in their supply chain, a well-executed GHG inventory provides the insights needed to act with confidence.

Learn more about our Scope 3 and supply chain GHG accounting services at carbonzero.ca or connect with our team via the Contact Us page.