How Procurement Can Get Ahead of Incoming Sustainability Regulations

Sustainability regulations are getting stricter. For procurement and supply chain professionals, the pressure to track, report and reduce emissions has never been higher.

The numbers speak for themselves. 

91% of organizations track Scope 1 emissions, 88% track Scope 2, but only 70% cover Scope 3 — the most complex and far-reaching category, reveals a survey by Supply Chain Brain commissioned by GEP.

Even more concerning, more than a quarter of businesses still don't measure Scope 3 emissions at all.

Yet Scope 3, which includes indirect emissions from suppliers and logistics partners, is exactly where regulators are tightening the screws. 

The European Union’s Corporate Sustainability Reporting Directive (CSRD) and the U.S. Securities and Exchange Commission’s (SEC) proposed climate disclosure rules will demand detailed emissions data—right down to supplier contributions. 

Procurement leaders who wait to act risk being caught unprepared when compliance deadlines hit.

The Data Dilemma: Measuring and Managing Scope 3 Emissions

Most organizations aren’t ready for full-scale Scope 3 tracking. 

The biggest hurdle? Bad data. 

Nearly half (49.5%) of procurement professionals say poor data quality is their top challenge in sustainability reporting. Without precise, standardized data from suppliers, emissions estimates are little more than guesswork.

Right now, many businesses rely on spend-based calculations, where emissions are estimated based on financial transactions. But regulators are pushing for activity-based calculations, which require actual emissions data from suppliers.

The problem? Suppliers—especially in lower tiers—often lack the technology or expertise to provide this information.

How Procurement Can Fix It

• Push for supplier transparency

Procurement teams must mandate emissions tracking as part of supplier contracts.

• Invest in digital tools

AI-powered platforms can automate data collection, flag inconsistencies and provide real-time emissions insights.

• Adopt hybrid measurement approaches

A combination of spend-based and activity-based data can provide a clearer picture while suppliers improve reporting capabilities.

Bridging the Gap: Supplier Engagement and Accountability

It’s one thing to measure Scope 3 emissions - it’s another to actually reduce them. Yet GEP’s survey shows 27.3% of companies aren’t taking any action to cut their Scope 3 footprint.
Why? Because supplier engagement is tough. Many suppliers lack the resources or incentives to prioritize sustainability, and procurement teams often struggle to enforce standards without jeopardizing relationships.

A Better Approach to Supplier Collaboration 

• Move from risk management to partnership

Instead of punishing non-compliant suppliers, companies should work with them—providing training, funding pilot programs or co-investing in sustainable technologies.

• Tie sustainability to contract renewals

Procurement teams should give preference to suppliers that demonstrate measurable progress in emissions reduction.

• Create hotspot action plans

The survey found that 31.3% of businesses are focusing on high-impact categories first—a practical strategy to drive meaningful reductions quickly.

Technology as an Enabler: Turning Compliance into a Competitive Edge 

Despite the regulatory pressure, only 30.3% of businesses already have tools in place with established baselines, targets and performance tracking. 

AI-driven procurement platforms can automate emissions tracking, centralize supplier data and generate compliance-ready reports in real time. This is crucial because the regulatory bar will only rise.

Key Tech-Enabled Strategies for Procurement

• Use predictive analytics 

To identify at-risk suppliers before they fall behind on compliance.

• Leverage blockchain for verifiable emissions tracking

Ensuring supplier-reported data is accurate and tamper-proof.

• Automate reporting

To eliminate manual errors and streamline compliance with multiple regulatory bodies.

Organizations that take this approach won’t just meet compliance requirements—they’ll gain a competitive edge in an increasingly sustainability-conscious market.

The Reporting Reckoning: Getting Your Sustainability Story Straight 

Reporting frameworks like the Global Reporting Initiative (GRI) and Task Force on Climate-related Financial Disclosures (TCFD) are becoming standard. Meanwhile, governments worldwide are moving toward mandatory, real-time emissions disclosures. Businesses relying on manual, ad hoc reporting will struggle to keep up.

Should You Outsource Sustainability Reporting? 

• If you lack internal expertise

Outsourcing to a sustainability consultancy may be the best option.

• If you already have sustainability teams

Investing in an automated reporting system can reduce costs and improve accuracy.

• Hybrid models are emerging  

Many organizations are outsourcing some elements while building in-house capabilities for long-term sustainability leadership.

Preparing for the Next Wave of Sustainability Mandates

Procurement leaders can no longer afford to take a wait-and-see approach to sustainability regulations. The numbers from the GEP survey make it clear—many companies are still unprepared, and compliance deadlines are approaching fast.

How to Stay Ahead:

• Prioritize Scope 3 measurement

Hybrid approaches (spend- and activity-based) will provide the best insights.

• Engage suppliers as partners, not just vendors

Sustainability must be a shared goal, not a procurement checkbox.

• Leverage AI and automation

The right tools can make compliance seamless while unlocking competitive advantages.

• Develop a structured reporting strategy

Businesses that build scalable, audit-ready reporting systems now will avoid last-minute compliance scrambles.

Taking action today isn’t just about compliance with regulations. It’s also how you get a foot in the door to shape the future of sustainable procurement.

Is your organization ready? Download the GEP bulletin Getting Ready for Big Shifts in Sustainability Regulations and find out how you stack up.