Supply Chain Decarbonisation and Scope 3 Emissions

Quick Answer

Supply chain decarbonisation is the process of reducing greenhouse gas emissions embedded in the goods, services, materials, logistics and outsourced activities an organisation depends on.

It is a core part of sustainability reporting and ESG disclosure in the UK, because Scope 3 value-chain emissions can represent 70-90% of an organisation’s carbon footprint according to the Carbon Trust, and are a required disclosure under UK SRS S2, the GHG Protocol Corporate Value Chain (Scope 3) Standard, the NHS 2027 Carbon Reduction Plan (CRP) Requirements (effective 1 April 2027) and most global ESG frameworks.

Credible supply chain decarbonisation combines a Scope 3 baseline, prioritised supplier engagement, procurement integration and transparent, auditable data the same governance disciplines that underpin credible sustainability reporting.

Key Takeaways

• Supply chain decarbonisation is the value-chain execution layer of sustainability reporting – the practical work that makes Scope 3 disclosure.
• Scope 3 Category 1 (purchased goods and services) typically dominates the ESG footprint. The GHG Protocol defines it as all upstream cradle-to-gate emissions from products and services purchased in the reporting year.
• According to CDP and Boston Consulting Group (2024), corporates’ supply-chain Scope 3 emissions are, on average, 26 times greater than direct operational emissions.
• UK SRS S2, published by the Department for Business and Trade on 25 February 2026, requires Scope 3 emissions disclosure (with year-two transitional relief) and is proposed by the FCA (CP26/5) to become mandatory for approximately 515 in-scope UK-listed companies from 1 January 2027.
• UK lenders now use ESG and Scope 3 data in credit decisions – Grant Thornton’s 2024 UK mid-market lender survey found 73% have a formal ESG lending strategy and 81% say ESG status will increasingly influence appetite to lend.
• Best practice follows an eight-step framework: baseline, prioritise, choose the right data method, engage internally, set supplier expectations, build supplier capability, embed carbon into procurement, monitor and improve.
• Supplier engagement is measurably more effective with financial incentives. CDP’s Strengthening the Chain report (2024) found suppliers were 52% more likely to reduce annual emissions when buyers offered financial incentives compared with training alone.
• NHS suppliers face new Scope 3 disclosure requirements from 1 April 2027. Under the NHS 2027 Carbon Reduction Plan Requirements (published 9 June 2026), suppliers bidding for NHS contracts of £5 million per annum or above must publicly report Scope 1, 2 and all relevant Scope 3 emissions under the GHG Protocol, plus a board-approved Carbon Reduction Plan committing to net zero by 2050 or earlier.

Introduction – Why Supply Chain Decarbonisation Now?

The Numbers Behind Supply Chain Decarbonisation

The UK decarbonisation agenda has moved well beyond reducing energy use in owned buildings and vehicles. The more difficult and more consequential challenge is the carbon embedded in purchased materials, outsourced services, logistics, capital goods and supplier operations. That value-chain carbon is now the largest single component of most organisations’ sustainability reporting, and the most exposed part of an ESG disclosure to investor, lender and customer scrutiny.

The Science Based Targets initiative (SBTi) organises supplier engagement around selecting suppliers, securing internal buy-in, implementing targets, enabling supplier performance, and monitoring progress.

For UK organisations, five forces are now converging and pulling supply-chain data into the heart of ESG reporting:

• Reporting requirements – SECR remains in place, and the finalised UK Sustainability Reporting Standards (UK SRS S1 and S2), published by the Department for Business and Trade on 25 February 2026, are available for voluntary use. Under FCA consultation CP26/5, UK SRS S2 climate disclosures (excluding Scope 3) are proposed to be mandatory for approximately 515 UK-listed companies within UK Listing Rules categories UKLR 6, 16 and 22 for accounting periods beginning on or after 1 January 2027, with Scope 3 subject to comply-or-explain transitional relief and UK SRS S1 applying on comply-or-explain from 1 January 2029. For all other UK organisations, UK SRS remains voluntary although large private companies are expected to fall in scope under the Government’s Modernising Corporate Reporting (MCR) consultation from 2028 or later.
• Procurement policy – the UK public sector has embedded carbon requirements into procurement through PPN 006 (published 17 February 2025), giving buyers contractual mechanisms to obtain supplier disclosures.
• Investor and customer pressure – financed emissions rules and supply-chain due diligence mean lender and customer questions increasingly cascade down every tier of the supply base.
• Access to affordable finance – UK lenders now treat sustainability performance as a formal credit-risk factor. In Grant Thornton’s 2024 survey of nearly 50 UK-based mid-market lenders, 73% reported having a formal ESG lending strategy in place (up from 57% in 2022) and 81% said a firm’s ESG status will increasingly influence appetite to lend over the next five years. Because banks themselves must disclose their financed emissions under Scope 3 Category 15 of the GHG Protocol, they need Scope 1, 2 and material Scope 3 data including supply-chain emissions from their borrowers to complete their own sustainability reporting.
• NHS procurement – new 2027 Carbon Reduction Plan Requirements. From 1 April 2027, all NHS contracts of £5 million per annum or above (including VAT) will require suppliers to submit a 2027 NHS Carbon Reduction Plan covering Scope 1, 2 and all relevant Scope 3 emissions under the GHG Protocol Corporate Value Chain (Scope 3) Standard, with a global geographical boundary and independently third-party validated targets. Lower-value contracts above the published procurement thresholds require the 2024 Carbon Reduction Plan (aligned to central government PPN 006).

The Borrowing Connection – Why Supply-Chain Data Is Now a Financing Issue

This financing force turns supply chain decarbonisation from a reporting exercise into a financing dependency. Sustainability-Linked Loans (SLLs) now typically ratchet interest margins by 5-25 basis points against Sustainability Performance Targets, and some UK banks offer built-in Green Loan discounts of up to 0.3% for eligible green assets. Strong ESG performance including credible supply-chain decarbonisation evidence is measurably cheaper to finance; weak performance carries a “brown premium”.

For a fuller analysis of how UK lender behaviour is shifting, see our companion market briefing – How Sustainability Reporting and ESG Are Reshaping Access to Business Borrowing.

Watch: Our 2-minute overview of how supply chain decarbonisation and Scope 3 emissions data now shape UK sustainability reporting and ESG disclosure.

What Is Supply Chain Decarbonisation?

Supply chain decarbonisation means reducing emissions across the full chain of activities that enable an organisation to buy, use, sell, operate and dispose of products and services. In practice, it means understanding the carbon impacts of what is bought, who it is bought from, how it is made, how it is transported, how it is used and what happens at end of life.

The World Economic Forum defines decarbonisation as a reduction in the carbon intensity of linked processes such as a supply chain and defines the supply chain as the system of organisations, technologies and activities involved in delivering the product lifecycle.

For UK organisations focused on purchased goods and services, this usually means prioritising procurement categories such as:

• Building materials and construction works
• Engineering, professional and outsourced services
• Facilities management
• IT and digital services
• Food and hospitality
• Transport and logistics
• Waste and water services
• Energy-related services and outsourced operations.

ISO 20400 defines sustainable procurement as buying goods and services in a way that meets organisational needs while benefiting society and minimising environmental impact and emphasises that purchasing decisions affect the economy, environment and society beyond the buying organisation.

How Supply Chain Decarbonisation Fits into Sustainability Reporting and ESG

Supply chain decarbonisation is not a separate discipline from sustainability reporting – it is the value-chain execution layer that generates the data an ESG disclosure depends on. Every major sustainability reporting framework requires or expects value-chain (Scope 3) disclosure, but each looks at it through a slightly different lens.

Practical implication for sustainability reporting teams: the quality of supply-chain data, its coverage, method and evidence are now one of the most visible signals of ESG credibility in a published sustainability report.

Understanding Scope 3 Emissions and Category 1

Scope 1, 2 and 3 – What Each Covers

The GHG Protocol classifies emissions into three scopes, and every credible sustainability report uses this structure:

• Scope 1 – direct emissions from owned or controlled sources.
• Scope 2 – indirect emissions from purchased energy.
• Scope 3 – all other indirect emissions in the value chain, split into 15 categories including purchased goods and services, capital goods, fuel- and energy-related activities, upstream transportation, waste, business travel, employee commuting, use of sold products and end-of-life treatment.

For a more detailed explanation of the emissions scopes read our explainer Scope 1, 2 and 3 Emissions Explained.

Category 1 Purchased Goods and Services

According to the GHG Protocol Category 1 guidance, Scope 3 Category 1 covers all upstream cradle-to-gate emissions from the production of products (goods and services) purchased or acquired by the reporting company in the reporting year. It includes upstream emissions not otherwise reported in Categories 2-8. Transport of purchased products from a tier-one supplier to the reporting company (in vehicles not owned or controlled by the reporting company) is accounted for under Category 4 (Upstream transportation and distribution).

Category 1 dominates most ESG footprints because it reflects the emissions embedded in the organisation’s purchasing decisions, extraction, production, and transportation of goods and services purchased or acquired by the reporting company. For many organisations, these emissions are larger than owned operations because carbon-intensive activity has been outsourced to suppliers.

The scale of the challenge is well-evidenced. According to CDP and Boston Consulting Group’s 2024 report Scope 3 Upstream: Big Challenges, Simple Remedies, in 2023 corporates reported that their Scope 3 supply chain emissions were, on average, 26 times greater than their combined Scope 1 and 2 operational emissions, yet only 15% had set a Scope 3 target.

The UK Regulatory and Market Context

UK organisations should treat supplier decarbonisation as part of a broader sustainability reporting, procurement and ESG landscape.

NHS 2027 Carbon Reduction Plan Requirements – What Suppliers Must Do

The NHS Net Zero Supplier Roadmap sets out the phased steps that suppliers to the NHS must take to align with the NHS net zero ambition, and the 2027 NHS Carbon Reduction Plan Requirements are the next major milestone in that roadmap. Published by NHS England on 9 June 2026, the NHS 2027 Carbon Reduction Plan Requirements for the procurement of NHS goods, services and works replace the previous NHS CRP guidance from 1 April 2027. They set the most demanding Scope 3 supplier requirements in the UK public sector and apply to all NHS organisations commissioning or purchasing goods, services or works.

The policy applies in two tiers:

What the 2027 NHS CRP Requires

To comply, suppliers must produce a Carbon Reduction Plan that:

• Confirms a commitment to net zero by 2050 or earlier for the whole organisation.
• Reports Scope 1, 2 and all relevant Scope 3 emissions under the GHG Protocol Corporate Value Chain (Scope 3) Standard (15 categories), with explanation for any categories deemed not relevant.
• Reports emissions in CO₂e across the 7 Kyoto Protocol greenhouse gases (CO₂, CH₄, N₂O, HFCs, PFCs, SF₆, NF₃).
• Uses a global geographical boundary for both the net zero commitment and emissions reporting.
• Sets out environmental management measures the supplier will apply when performing the contract.
• Is board approved (or director approved where no board is in place).
• Is clearly signposted and published on the supplier’s website.

NHS recommended best practice goes further and encourages:

• Net zero by 2045 or earlier
• Parent-entity reporting inclusive of the supplier engaging with the NHS
• Independently third-party validated targets (e.g. SBTi validation)
• Disclosure of the expected percentage of the net zero target that will be achieved through offsetting.

Together with PPN 01/24 (Carbon Reduction Contract Schedule) and PPN 006 (Carbon Reduction Plans), the NHS 2027 CRP Requirements complete the UK public sector’s contractual toolkit for embedding supplier decarbonisation into procurement.

An Eight-Step Best Practice Framework

Step 1 – Build a Scope 3 Baseline

Most UK organisations discover their real Scope 3 footprint only after the first screening exercise and the number is almost always larger than expected. In practice, a robust baseline uses spend-based screening for all 15 GHG Protocol categories in year one, then progressively upgrades priority categories to activity-based or supplier-specific data in subsequent years.

Practical tools UK organisations use: DESNZ Government Conversion Factors for Scope 1 and 2 and for some Scope 3 categories; the Ecoinvent, EEIO or DEFRA-derived spend factors for Category 1; and CDP’s Supply Chain questionnaire for supplier-reported data.

Common mistakes to avoid:

• Over-scoping year one. Trying to calculate all 15 Scope 3 categories to product-level accuracy in the first cycle is almost always counter-productive. Screen first, refine later.
• Ignoring the SBTi materiality threshold. Under the SBTi Corporate Near-Term Criteria (v5.1), where Scope 3 represents 40% or more of total Scope 1+2+3 emissions, near-term Scope 3 targets must cover at least 67% of total Scope 3 emissions. Long-term (net-zero) targets raise coverage to 90%. For most UK organisations, this threshold is exceeded – so Scope 3 targets are effectively mandatory for SBTi validation.
• Undocumented assumptions. Every proxy, emission factor and boundary decision should be traceable. Auditors, lenders and NHS procurement teams will ask.

Step 2 – Prioritise Categories and Suppliers

Not every supplier deserves the same treatment. The 80/20 rule usually applies, a small number of suppliers or categories typically drive most of your Scope 3 footprint. For UK organisations, high-impact categories often include construction, and infrastructure works (embodied carbon), IT hardware and cloud services, engineering consultancy, professional services, and food/hospitality.

Practical segmentation framework:

Common mistakes to avoid:

• Treating tier-1 suppliers as the whole supply chain. For most organisations, upstream tier-2 and tier-3 suppliers hold the largest emissions but you can only reach them through your tier-1 relationships.
• Ignoring low-spend, high-carbon categories. Some categories (e.g. flights, refrigerants, waste) have high emissions per pound of spend and often get missed by spend-only ranking.

Step 3 – Choose the Right Data Method

The GHG Protocol Category 1 guidance recognises four calculation approaches, in order of specificity to the individual supplier:

• Supplier-specific method – collects product-level cradle-to-gate GHG inventory data directly from suppliers. Strongest evidence and highest procurement decision utility.
• Hybrid method – combines supplier-specific activity data (where available) with secondary data to fill gaps. The best route for most UK organisations.
• Average-data method – applies average emissions data per unit of good or service based on secondary databases.
• Spend-based method – applies emission factors per unit of monetary spend. Useful for screening but weakest for tracking real reductions because it moves with prices rather than operational change.

In practice, UK organisations should apply a tiered approach: spend-based across all Scope 3 categories in year one; hybrid and supplier-specific for material Category 1 suppliers by year two; and product-specific EPDs (Environmental Product Declarations) for key materials in construction, manufacturing and packaging by year three.

Common mistakes to avoid:

• Chasing supplier-specific data everywhere. The effort is only justified where the category is material and the supplier is capable.
• Trusting supplier-declared numbers without evidence. Ask for the methodology, boundary, verification status and reporting period behind every supplier-reported figure.
• Reporting spend-based reductions as decarbonisation. If your spend went down because prices fell, your carbon didn’t reduce – it just looks like it did.

Step 4 – Engage Internally Before Engaging Suppliers

Supplier decarbonisation is cross-functional, and the SBTi is explicit that supplier engagement targets should not be decided by sustainability teams in isolation. Governance failure at this stage is the single most common reason UK Scope 3 programmes stall.

Who needs to be in the room:

• Procurement – owns supplier relationships, tender terms, contract renewal timing.
• Finance – owns spend data, budgeting, cost implications of carbon requirements.
• Legal – shapes contract clauses (e.g. PPN 01/24 Carbon Reduction Contract Schedule), data protection and confidentiality provisions.
• Sustainability/ESG – provides technical carbon accounting expertise and framework alignment.
• Operations and product teams – understand where materials come from and how they’re used.
• Senior leadership and the board – sponsor the programme and unlock resource.

Practical UK pattern: Set up a monthly cross-functional Scope 3 steering group with a named executive sponsor. Assign clear ownership: procurement leads supplier engagement, sustainability owns methodology and reporting, finance approves budget and validates spend data.

Common mistakes to avoid:

• Sustainability teams engaging suppliers without procurement. Suppliers stop responding when they see two channels asking similar questions.
• No executive sponsor. Programmes without board-level accountability rarely survive their first budget cycle.
• Legal engaged too late. Getting contract clauses right before tender release saves months of retrofit.

Step 5 – Set Supplier Expectations

Once internal alignment is in place, define what “good” looks like for suppliers. This should be proportionate to supplier size and materiality and communicated as a phased journey rather than a single ask.

A tiered expectation framework for UK organisations:

Common mistakes to avoid:

• Blanket asks. Requiring the same disclosure from a £100k supplier as from a £10m supplier destroys the programme’s credibility.
• Unclear whether an expectation is a requirement or an aspiration. Suppliers respond very differently to “must” versus “should” – say which you mean, in writing.

Step 6 – Build Capability and Reduce Burden

Many suppliers, especially SMEs, may lack carbon accounting knowledge, resource or tools. SBTi warns that simply asking suppliers to set science-based targets is unlikely to drive enough action within five years without training, capacity-building and incentives.

Capability-building measures UK organisations should offer:

• Standardised carbon questionnaires with clear guidance notes (aligned to CDP or PPN 006 where possible to reduce survey fatigue).
• Office hours, webinars and Q&A sessions – the NHS England Sustainable Supplier Accelerator is a strong public-sector model.
• Signposting to free UK resources – the UK Business Climate Hub provides SME-friendly net zero support developed by the UK government, businesses and business groups.
• Peer-learning groups where mature suppliers mentor SMEs.
• Templates for baseline emissions, Carbon Reduction Plan structure, and target-setting.

Financial incentives materially outperform training alone. CDP’s Strengthening the Chain report (25 September 2024), based on data from 340+ corporate buyers, found suppliers were 52% more likely to reduce annual emissions when buyers offered financial incentives compared with training alone.

Common mistakes to avoid:

• Assuming supplier capability = supplier maturity. A large supplier may have poor carbon data; a small supplier may be exceptionally advanced.
• Passing survey fatigue down the chain. If your supplier fills in ten different customer questionnaires per year, they will start declining the least aligned.

Step 7 – Embed Carbon into Procurement and Contracts

Best practice moves carbon from an annual reporting exercise into the procurement lifecycle. In the UK, this means using tender questions, weighted evaluation criteria, supplier scorecards, contract schedules, performance reviews, change-control processes and contract renewal triggers.

The UK contractual toolkit:

• PPN 006 – mandatory Carbon Reduction Plans for major central government contracts (£5m+ per annum).
• PPN 01/24 Carbon Reduction Contract Schedule – an optional standard set of contract T&Cs supporting contract-specific decarbonisation objectives, supplier GHG reporting, supplier reduction targets and a supplier GHG emissions Reduction Plan.
• NHS 2027 Carbon Reduction Plan Requirements – for NHS supplier contracts of £5m per annum or above (see the NHS section above for full detail).
• Social Value 10% weighting – since April 2022, NHS procurements have applied a minimum 10% weighting on net zero and social value in evaluation.
• PAS 2080 – for buildings and infrastructure supplier contracts.

Private-sector organisations can adopt equivalent clauses, the PPN 01/24 schedule is publicly available and forms a strong template even outside the public sector.

Common mistakes to avoid:

• Adding carbon questions but not weighting them. If carbon has 5% of tender evaluation weight, procurement teams will treat it as decorative.
• No mechanism to enforce contract-term carbon commitments. Include annual carbon reporting as a contractual obligation with defined consequences for non-delivery.

Step 8 – Monitor, Verify and Improve

TEAM Energy’s sustainability consultants recommend a central, actively managed repository containing in-scope suppliers, identifiers, emissions or spend coverage, supplier categories, current Science Based Target status and climate maturity indicators, with systematic and auditable processes for maintaining data.

Data quality should improve over time through:

• Primary data collection – moving priority categories from spend to activity to supplier-specific.
• For assurance, ISO 14064-3 verification remains the international standard for headline emissions figures; ISSA (UK) 5000 (effective 15 December 2026) is the emerging UK sustainability assurance standard that will apply to UK SRS-aligned disclosures
• Supplier follow-up – annual data refresh cycle, with defined escalation for non-responders.
• Transparent assumptions – every proxy, boundary and emission factor documented.
• Annual review – refresh the baseline, targets, methodology and supplier segmentation each year.

Governance rhythm UK organisations use:

• Monthly: cross-functional steering group; supplier data collection status; blockers.
• Quarterly: board update; risk register review; procurement pipeline alignment.
• Annually: full baseline refresh; assurance; disclosure updates; framework re-alignment; strategy review.

Common mistakes to avoid:

• Treating the baseline as fixed. GHG Protocol allows and expects restatement when methodology or boundary changes materially. Restate transparently.
• Waiting for perfect data before reporting. Publish with clear assumptions; improve year on year.
• No feedback loop to suppliers. Suppliers who see their data used and their performance recognised stay engaged; suppliers who do not, disengage.

Managing Suppliers for Scope 3 Reporting

A practical supplier data hierarchy and the evidence hierarchy your sustainability report will be judged on should look like this:

Supplier carbon footprints provide context on maturity; product-specific cradle-to-gate data is stronger evidence for Category 1 reporting and procurement decisions. This aligns with the GHG Protocol, which describes the supplier-specific method as collecting product-level cradle-to-gate GHG inventory data from suppliers, while hybrid methods combine supplier-specific activity data with secondary data for gaps.

Key Barriers and How Leading Organisations Overcome Them

CDP’s Strengthening the Chain report (25 September 2024), funded by HSBC and based on data from more than 340 corporate buyers in CDP’s Supply Chain Programme, reinforces the value of incentives: suppliers were 52% more likely to reduce annual emissions when buyers offered financial incentives compared with training alone. The same report evidenced that supplier engagement through CDP led to 43 million tonnes of emissions reductions reported by suppliers, more than the total annual emissions of Sweden.

Key Metrics and KPIs for Value-Chain Sustainability Reporting

A robust supplier decarbonisation programme should track both emissions outcomes and engagement progress, and these are the KPIs most likely to appear in a modern ESG disclosure.

SBTi’s Criteria Assessment Indicators (v1.7, April 2026) specifically recommend tracking supplier target status, current SBT status, emissions or spend coverage, categorisation information, climate maturity indicators and annual performance methodologies.

A Supply Chain Decarbonisation Maturity Model

Conclusion – From Reporting Supply-Chain Emissions to Reducing Them

Supply chain decarbonisation is now a core business discipline for UK organisations and a defining component of credible sustainability reporting and ESG disclosure.

The organisations that make real progress do three things well:

1. Focus on material suppliers not every supplier equally.
2. Improve data quality over time moving from spend-based estimates to supplier-specific and hybrid methods where it matters.
3. Turn supplier engagement into a structured commercial programme – embedded in procurement, contracts and business reviews, not a one-off questionnaire.

The clearest message is this: Scope 3 reduction is delivered through relationships but governed through data and procurement and disclosed through sustainability reporting.

Related TEAM Energy Resources

• Sustainability Reporting Frameworks – GRI, SASB, TCFD, ESRS, ISSB and CDP Compared
• UK Sustainability Reporting Standard (UK SRS): Consultation, Timeline & What Large UK Businesses Need to Know

Supply chain decarbonisation depends on the same underlying discipline as broader ESG disclosure reliable data, defined governance and transparent methodology. Our overview of sustainability reporting explains how organisations can structure that discipline in practice.

Frequently Asked Questions

What Is Supply Chain Decarbonisation?

Supply chain decarbonisation is the process of reducing greenhouse gas emissions embedded in the goods, services, materials, logistics and outsourced activities an organisation depends on from raw material extraction to end-of-life disposal.

How Does Supply Chain Decarbonisation Relate to Sustainability Reporting and ESG?

Supply chain decarbonisation is the value-chain execution layer of sustainability reporting. Every major ESG framework GHG Protocol, UK SRS S2, TCFD (absorbed into IFRS S2), CDP, GRI, ESRS requires or expects disclosure of Scope 3 value-chain emissions.

What Is Scope 3 Category 1?

Scope 3 Category 1 covers all upstream (cradle-to-gate) emissions from the production of products (goods and services) purchased or acquired by the reporting company in the reporting year, per the GHG Protocol Corporate Value Chain (Scope 3) Standard. Transport of purchased products from a tier-one supplier to the reporting company is accounted for under Category 4.

Why Do Supply-Chain Emissions Matter So Much?

Because they are usually the largest part of the footprint. Scope 3 emissions can make up 70-90% of an organisation’s carbon footprint according to the Carbon Trust, and CDP/Boston Consulting Group’s 2024 analysis found supply-chain emissions were on average 26 times greater than combined Scope 1 and 2 operational emissions yet only 15% of CDP-disclosing corporates have set a Scope 3 target.

Does Supply Chain Decarbonisation Affect Access to Business Borrowing?

Yes. UK lenders now treat sustainability and value-chain performance as a formal credit-risk factor. Grant Thornton’s 2024 UK mid-market lender survey found that 73% of lenders have a formal ESG lending strategy and 81% say ESG status will increasingly influence their appetite to lend. Sustainability-Linked Loans typically ratchet interest margins by 5-25 basis points against Sustainability Performance Targets.

What Percentage of Scope 3 Do SBTi Targets Need to Cover?

Under the SBTi Corporate Near-Term Criteria (v5.1), where Scope 3 represents 40% or more of an organisation’s total emissions, near-term Scope 3 targets must cover at least 67% of total Scope 3 emissions. Long-term net-zero targets raise the coverage threshold to 90%.

When Was UK SRS Published and Who Must Comply?

UK SRS S1 and S2 were published by the Department for Business and Trade on 25 February 2026 and are currently available for voluntary use. Under FCA CP26/5, UK SRS S2 climate disclosures (excluding Scope 3) are proposed to be mandatory for approximately 515 UK-listed companies for accounting periods beginning on or after 1 January 2027; UK SRS S1 applies on a comply-or-explain basis from 1 January 2029.

What UK Procurement Policy Notes Are Relevant?

PPN 006 (published 17 February 2025) sets out how to take account of Carbon Reduction Plans in the procurement of major central government contracts above £5 million per annum. PPN 01/24 (published 18 March 2024) introduces an optional Carbon Reduction Contract Schedule for contract-specific decarbonisation objectives, supplier GHG reporting and monitoring.

What Are the NHS 2027 Carbon Reduction Plan Requirements?

The NHS 2027 Carbon Reduction Plan Requirements were published by NHS England on 9 June 2026 and take effect from 1 April 2027. They apply to all NHS organisations commissioning or purchasing goods, services and works in England. For contracts of £5 million per annum or above (including VAT), suppliers must submit a 2027 NHS CRP covering Scope 1, 2 and all relevant Scope 3 emissions under the GHG Protocol Corporate Value Chain (Scope 3) Standard, using a global geographical boundary, with board-approved net zero commitment by 2050 or earlier. For lower-value contracts above published procurement thresholds, a 2024 CRP aligned to central government PPN 006 applies. Assessment is pass-fail. The NHS recommends going further to net zero by 2045 or before, parent-entity reporting, and independently third-party validated targets.

For the full policy context, including all upcoming supplier milestones, see the NHS Net Zero Supplier Roadmap.

Author

Written by: TEAM Energy Sustainability Consultants.

Reviewed by senior TEAM Energy Sustainability Consultants with over 35 years of combined UK experience in carbon accounting, sustainability reporting, carbon reduction strategies, carbon reduction planning, SECR and ESOS. Technical review by Tim Holman, Head of Consultancy, MSc, MEng, CEng, MEI.