Marybeth Collins
Scope 3 emissions — the greenhouse gases generated across a company’s full value chain, from purchased goods and services to logistics, use of sold products, and end-of-life treatment — account for approximately 88% of total business emissions. According to CDP’s supply chain research, the figure is even more striking when you strip away operational emissions and look at the ratio: supply chain emissions are on average 26x greater than what a company generates from its own operations. That number has been known for years. Most procurement teams are familiar with it. What’s changing in 2026 is the legal architecture around it.
For a long time, Scope 3 existed in a regulatory gray zone. It was important for sustainability strategy, helpful for understanding supply chain risk, and expected in disclosure frameworks like CDP. But it wasn’t mandatory in most jurisdictions, and the methodological flexibility in how it could be calculated gave companies enough room to report numbers that were directionally credible without being operationally precise.
That flexibility is narrowing fast. California’s SB 253 requires large companies doing business in the state to disclose their full Scope 1, 2, and 3 emissions on a third-party-assured basis. The threshold is $1 billion in annual revenue. The California Air Resources Board (CARB) is still finalizing materiality guidance for Scope 3, with rulemaking expected to open public comment in 2026, but the direction is clear: comprehensiveness is the expectation, and companies that have been omitting categories without documented justification are building exposure.
The EU’s Carbon Border Adjustment Mechanism (CBAM) entered its definitive phase in January 2026 as well, converting what was a reporting exercise during the 2023 to 2025 transitional period into a financial one. Importers now purchase CBAM certificates priced at the quarterly EU ETS auction clearing price. For 2026, that price has been tracking between 70 ($83) and 100 ($118) euros per tonne of CO2. The penalty for non-compliance is 100 ($118) euros per excess tonne. For companies importing steel, aluminum, cement, or fertilizers at scale, the difference between verified emissions data and default values is no longer an accounting question. It is a cost-of-goods-sold problem.
The Measurement Problem Is Now a Legal Problem
About 70% of Scope 3 carbon inventories fail at the verification stage, not because companies haven’t made an effort, but because the governance architecture underneath the numbers isn’t built to withstand external scrutiny. The GHG Protocol puts the upstream data problem in plain terms: 83% of companies struggle to access accurate emissions data from their supply chains. The most common failure modes are data collected primarily through spend-based estimates rather than activity-based data, category matrices without documented justification, and inventories that aren’t integrated into operational decision-making. The result is a number that satisfies a disclosure checkbox but can’t be defended in an audit.
There is a structural flaw embedded in spend-based methods that most procurement teams haven’t fully confronted. When a company multiplies purchasing spend by a sector-average emission factor, it cannot reduce its reported Scope 3 footprint by switching to a lower-carbon supplier within the same sector. The sector average applies regardless. Switching to a greener steel supplier produces the same reported number as staying with a high-emission one, because the methodology doesn’t capture firm-level differences in production efficiency or energy mix. That perverse incentive disappears only when companies move to activity-based, supplier-specific data. Under CBAM, it also disappears in a more direct way: verified supplier emissions create the cost differential, and companies that can’t demonstrate actual emissions are stuck with default values that may substantially overstate carbon intensity relative to their actual supply base.
This matters for procurement teams specifically because Scope 3 measurement depends almost entirely on supplier engagement. A company can control its Scope 1 and Scope 2 through internal operational changes. Scope 3 requires suppliers to provide accurate, verifiable emissions data, and most supplier bases are at wildly different stages of measurement maturity. In 2025, 330 leading corporate buyers requested environmental disclosure from approximately 70,000 suppliers through CDP’s Supply Chain program, representing roughly a fifth of global market capitalization. That scale of demand is creating pressure across supplier networks. Microsoft, Telstra, and Pfizer have each embedded annual CDP disclosure requirements directly into their supplier codes of conduct. The suppliers that can respond with verified, activity-based data are increasingly differentiated from those that can’t.
The Paradox That Procurement Teams Need to Explain
There’s a dynamic in Scope 3 measurement that creates a specific communications challenge: reported emissions often increase as measurement improves. When a company moves from spend-based estimates to supplier-specific, activity-based data, it almost invariably finds that actual emissions are higher than the estimates suggested. Coverage expands. Data quality improves. The number goes up. Internally, that’s progress. Externally, it looks like performance deteriorated.
Despite the scale of the problem, only 15% of companies disclosing through CDP are actively targeting their value chains in their emissions reduction efforts, according to CDP’s supply chain research. That gap is not primarily a motivation failure. It reflects how hard the measurement problem is, and how few organizations have built the internal systems to track and explain Scope 3 movement in a way that distinguishes genuine emissions trends from data coverage changes.
Procurement teams own the supplier relationships that generate this data. They’re increasingly in the position of explaining not just the numbers but the methodology behind them, to sustainability teams, to finance, to investors, and now to regulators. That’s a new communication responsibility that most procurement functions weren’t designed for. CDP notes that supply chain climate-related risk costs nearly three times more to absorb reactively than to mitigate proactively. The teams managing this well aren’t trying to achieve comprehensive coverage across every supplier at once. They’re starting with the highest-spend, highest-emission categories and building toward precision there first, rather than spreading effort evenly across a supplier base too large to engage meaningfully. A credible, activity-based number for 60% of supply chain emissions is more defensible in front of a regulator or an auditor than a spend-based estimate for 100%.
The Decision Now on the Table
For procurement leaders, 2026 is the year to make a deliberate choice about Scope 3 data strategy. The regulatory requirements are mandatory. The choice is between a reactive posture — scrambling to produce required data under California and EU deadlines, often falling back on default values that inflate CBAM costs and weaken audit credibility — and a proactive one, where the supplier engagement program and data infrastructure are built to produce defensible numbers that support both compliance and commercial decisions.
CBAM’s definitive phase has introduced a dynamic that VECTRA International describes precisely: companies discovering that their “cheapest” suppliers are no longer cheapest once carbon costs are factored in. The organizations best positioned in this environment are not those with the most ambitious sustainability reports. They are the ones that built supplier-level emissions data early enough to distinguish low-carbon sources from high-carbon ones, and to use that differentiation in sourcing decisions before a financial obligation forced the exercise. The window for an orderly build is getting shorter. Companies that made that investment two years ago are already seeing the return in lower CBAM exposure, stronger CDP scores, and supplier relationships built around data rather than questionnaire compliance.