Scope3: TOP 5 Supply Chain Challenges in 2025

Sustainability is no longer just a checklist item. This business imperative reshapes supply chains worldwide. However, the road to sustainability is fraught with challenges, especially when it comes to tracking and managing Scope 3 emissions.

Scope 3 emissions, which account for 75% of a company’s total emissions on average, include all indirect emissions across the value chain that are not directly controlled by the organization. These emissions are difficult to measure due to the intricate web of supplier and customer relationships and extended business workstreams.

A recent report by the MIT Center for Transportation & Logistics highlights key obstacles and emerging solutions in addressing these emissions.

Here are the TOP 5 takeaways from 2024 State of Supply Chain Sustainability Report that supply chain leaders must consider:

1. Accurate Emissions Accounting is a Must

Understanding and monitoring carbon footprints is the first step toward reducing greenhouse gas emissions. While organizations have made strides in calculating Scope 1 and Scope 2 emissions, Scope 3 emissions remain elusive due to outdated and error-prone accounting methods.

Current methodologies must evolve to provide accurate data that regulatory bodies can rely on and to ensure companies are rewarded for sustainable practices rather than penalized due to inaccuracies. Companies need to rethink emissions accounting processes, adopting flexible and precise tools tailored to their unique supply chain complexities.

2. Data Quality Issues Prevail

Inconsistent and incongruent data sources are major roadblocks in accurate emissions reporting. These discrepancies often lead to skewed results, rendering emissions inventories unreliable.

Outlier detection is critical for improving data quality, yet it remains a manual and time-intensive process. The report emphasizes the potential of algorithms, such as those proposed by the MIT Sustainable Supply Chain Lab, to automate outlier detection and enhance data precision. This can significantly reduce reporting errors and build trust in emissions metrics.

3. Standardization Across Sectors

The absence of a unified framework for Scope 3 emissions tracking creates inefficiencies and confusion. Different industries require tailored tracking methods, but a common baseline for defining and reporting Scope 3 emissions is essential.

The report advocates for establishing global standards to simplify compliance. For instance, harmonized guidelines would allow organizations to provide consistent data to the European Union and California, among others, without duplicating efforts. This is particularly critical as regulatory scrutiny intensifies across regions.

4. Simplify Life-Cycle Emissions Reporting

The spend-based method, which estimates emissions based on economic value data, is widely used but lacks precision. More accurate reporting methods, such as life-cycle analysis, require sensitive data from suppliers, posing privacy and logistical challenges.

To overcome this, advancements in emissions-tracking technologies are needed. The MIT Sustainable Supply Chain Lab is focusing on developing tools that enhance the accessibility and accuracy of life-cycle emissions tracking. These tools can empower companies to modify data collection practices and utilize real, precise emissions data for better decision-making.

5. Machine Learning to the Rescue

Traditional emissions-tracking methods often rely on outdated estimates and periodic reporting. Machine learning offers a transformative alternative by analyzing multiple data streams to provide near-real-time updates on emissions levels.

ML not only improves accuracy but also enables organizations to identify pollution sources, monitor emissions continuously, and make timely interventions. By leveraging ML, companies can transition from reactive to proactive sustainability strategies, aligning operations with global climate goals.

The Path Forward

The challenges of Scope 3 emissions tracking are complex but all of them can be solved. Adopting advanced technologies, improving standardization and data quality can make significant strides in sustainability.

Here’s what companies can do:

• Invest in Technology: Embrace machine learning and emissions-tracking tools to streamline data collection and analysis.
• Collaborate for Standards: Work with industry peers and regulatory bodies to develop global guidelines for Scope 3 emissions reporting.
• Rethink Processes: Update emissions accounting methodologies to ensure accuracy and adaptability.

Sustainability efforts often hit a wall when it comes to Scope 3 emissions, but innovation and collaboration can turn challenges into opportunities. Supply chain leaders must champion these advancements and align their strategies with long-term environmental goals.