How suppliers should be supporting their customers’ carbon accounting

In terms of perception, it’s clearly helpful for companies to be seen to be green. The evidence shows this can help attract customers, new recruits and investment into an organisation. As such, it’s crucial that businesses are communicating their environmental credentials.  

But, whereas previously, the job of boosting a company’s reputation for corporate social responsibility (CSR) was seen as a job for the PR team, it’s now become a much broader operational requirement.  

All departments of an organisation are expected to take carbon emissions reporting seriously. As are a business’s suppliers, and this is changing the relationship many large organisations will have with their supply chain partners.  

New Regulations  

The wider reporting remit is a result of authorities looking to ensure organisations are not exaggerating their environmental credentials.  

This has led to a series of regulations being passed around the world, introducing new standards to ensure companies justify the statements they make in relation to their environmental, social and governance (ESG) activities.

Any large businesses operating in the EU may already have experienced this, as new directives have already been introduced on the continent which explicitly cover the way companies conduct their carbon accounting.  

Similar regulations are in the process of being introduced in the UK too. It’s now expected that by the end of 2025 sustainability reporting standards (SRS) will become mandatory for UK companies.   

Scope 3 Reporting  

To be compliant, organisations will be required to report on their energy use, from the heating of buildings, vehicle use and other areas. But they will also need to do the same with third party (Scope 3) carbon emissions when working with suppliers. This will include the emissions produced when an employee takes a business trip, for example.  

UK SRS will initially cover large private, publicly listed and financial services companies. However, those Scope 3 requirements will mean it has wider implications. It is likely that any CSR clauses in supplier contracts will need to be tightened up to ensure reports are readily available for carbon accounting purposes.  

For a company like Uber for Business, a supplier to more than 200,000 companies globally, it will mean providing every corporate client with a detailed breakdown of the carbon emissions produced on every single ride taken for business purposes.  

Access to supplier data 

For many suppliers like us, it hasn’t previously been necessary to provide this data, as the level of scrutiny on these matters has been low. So, it could be challenging for companies to access this type of CO2 reporting.    

To address this, it would make sense for suppliers to align with the Science Based Targets initiative (SBTi) and consider how it would be possible to support organisations that are looking to reach ambitious environmental goals. 

Given the importance now being placed on Scope 3 data, however, it might be that they need to develop new features to enable better sustainability reporting. For some, it could become a contractual objection.  

If customer agreements depend on a supplier’s capacity to deliver this type of carbon accounting data, it might be worth investing to create an engaging customer platform.

A digital dashboard, for example, would make it easier for businesses to see, and then share, CO2 emissions information.        

Carbon Reduction Plans 

In addition to making the data available, suppliers may also need to say what they are doing to reduce their carbon footprint.

For example, it is already the case that some suppliers to the NHS are required to present carbon reduction plans. What those plans look like for each supplier will vary. 

This could include making a commitment to switch to sustainable transport solutions, such as electric vehicles, or adopt closed loop manufacturing methods that increase the recycling of waste materials. 

As part of the goal of UK SRS is to prevent exaggerated claims, organisations will need to report on the progress of these plans and honestly disclose their achievements, and also their failures to meet targets. This is likely to further each supplier’s need for detailed carbon accounting. 

Carbon Accounting Support 

With commercial decisions hanging in the balance, it has never been more important for businesses to be able to communicate their environmental credentials.

Due to the importance now being placed on fair reporting, and the complexity involved, many businesses large and small are going to need support.  

They will need the help of professionals who can put solid carbon accounting processes in place. In addition to this they are also going to need the support of suppliers, who can offer transparency, demonstrate steps are being taken to improve sustainability and provide easy access to carbon emission information when required.