The GHG Protocol's Corporate Value Chain (Scope 3) Accounting and Reporting Standard is being revised for the first time since 2011. It is the world's most widely used framework for measuring value chain emissions and the methodology AASB S2 explicitly mandates. On 31 March 2026, the GHG Protocol published its Phase 1 Progress Update. A draft, not a final standard, but the clearest signal yet of where Scope 3 reporting is headed. A public consultation draft is expected mid-2026, with the final revised standard targeted for late 2027 and likely to take effect from 2028.

The proposed changes include a 95% inclusion rule, mandatory disaggregation of Scope 3 emissions by data quality tier, and new third-party verification labelling. For Australian AASB S2 reporters, the Phase 1 update is not an abstract overseas development, it is a direct preview of how Scope 3 disclosure is likely to change.

What's changing in the GHG Protocol Scope 3 Standard?

The 95% inclusion rule: quantifying what you exclude

Historically firms have been given the autonomy of deciding what they include and exclude from Scope 3 reporting, allowing emissions that were deemed immaterial or outside of their direct control to be excluded.

The key proposal is that companies would need to account for at least 95% of required Scope 3 emissions with exclusions capped at 5% and quantitatively justified. In practice, this means companies must estimate 100% of their required Scope 3 emissions in order to demonstrate that what they exclude sits within the 5% cap — a qualitative description of materiality will no longer be sufficient. 

The revised approach ensures that all activities attributable to the firm's business will be accounted for in the scope 3 inventory with the exclusion for minor emissions. This gives more emphasis on “customers” of emissions to play their role in decarbonisation. 

Requiring companies to report at least 95% of their scope 3 emissions ensures more complete, consistent, and transparent reporting by setting a clear threshold for what can be excluded.

Data quality tiers: primary, secondary and spend-based

Another major change is that Scope 3 emissions would need to be disaggregated by data quality for each category, with the goal of improving transparency and comparability. The Phase 1 update is consulting on two options that are structured around: 

• Data specificity (measured or specific, other, spend-based) 
• Data source and calculation method (primary, secondary, spend-based) 

Both share the same direction: primary or measured data at the top, spend-based at the bottom, with an "unclassified" catch-all for emissions a company is unable to disaggregate.

Although this aims to improve how companies collate and report data, the practical effect is that spend-based estimates which are currently the default for most Australian reporters will be publicly labelled as the lowest-quality tier, creating visible pressure to shift high-impact categories onto primary or specific supplier data. This is a significant challenge in practice since more specific supplier data largely doesn't exist in the market today, and where it does, it isn't generally accessible to reporters.

The "unclassified" tier is intended as a catch-all for emissions a company cannot disaggregate, but without clear disclosure rules around its use, it risks becoming a loophole for firms to choose not to classify their data. This isn't recommended, even lower-tier classified data, including spend-based, is more useful to assurers and investors than an unclassified aggregate that hides how the number was built.

Verification labelling: verified, partially verified, not verified

A separate proposal would require companies to state whether their reported Scope 3 data is verified by a third party, using labels such as verified, partially verified, or not verified. In practice, that would push Scope 3 reporting away from a single aggregate disclosure and toward a more layered disclosure structure that shows both data quality and assurance status.

What does this mean for Australian firms?

The 95% rule changes the conversation about materiality

The 95% rule will reshape how firms approach materiality. Under AASB S2 today, many Australian firms have leaned on qualitative relevance assessments to scope down their Scope 3 reporting. A prescriptive 95% inclusion threshold narrows that flexibility considerably. Reported Scope 3 totals are likely to rise across the ASX as companies include previously excluded categories, and base year recalculations should be expected when the revised standard takes effect. The first priority for many firms will be reviewing whether current exclusions rely on assumptions that may not hold under the revised framework.

Today’s investments in data architecture will pay dividends later

The disaggregation requirement means emissions systems need to track how each data point was calculated, not just what the number is. Spreadsheet-based approaches will struggle to meet the evidentiary burden, particularly as limited assurance moves toward reasonable assurance by 1 July 2030. Those putting in the work today to understand, map and properly tag their Scope 3 emissions will be well positioned when expectations tighten.

Supplier engagement shifts from a procurement task to a strategic capability Limiting the use of corporate-average supplier data where a supplier's entire business emissions is applied to estimate the firm's purchased goods and services combined with the push toward primary, supplier-specific data, means procurement teams must build supplier engagement into onboarding, contracts, and Tier 1 relationships. For Australian firms with concentrated supplier bases or strong commercial leverage, this is an opportunity to shape supplier decarbonisation rather than respond to it.

How the revisions interact with AASB S2

AASB S2 explicitly mandates the GHG Protocol as the measurement methodology for Scope 3, which means changes to the Protocol flow directly through to what conformant disclosure looks like under Australia's mandatory climate reporting regime. The direction of travel matters now, even though the standard itself is not expected to take effect until 2028 or later. There is a recent precedent for how this is likely to play out. In December 2025, the AASB issued amendments to AASB S2 that copied a set of changes the ISSB had just made to IFRS S2. Those amendments take effect from 1 January 2027, with early adoption optional. That same pattern of waiting for international change, mirroring it locally, and allowing firms to opt in early is the most likely template for how Australia will pick up the Phase 1 revisions.

Why Australian reporters should act now, not in 2028

The timing actually works in Australia's favour. Group 1 entities are already reporting under AASB S2, and Group 2 and Group 3 reporters are still building their systems. Companies preparing now have the opportunity to design their data architecture, supplier engagement programs, and governance processes against the revised standard from the outset, rather than retrofitting later when the rules are locked in. Executive teams should treat the current update as an early signal to test assumptions before the final standard is issued, rather than waiting for the consultation draft to land.

What companies should be doing now

For reporters yet to publish their first-year report, the focus should be on establishing robust, supportable reporting foundations that will hold up under tighter rules. For second-year reporters, maturing understanding and measurement of Scope 3 emissions is the next step. 

Regardless of your group, critical actions are worth attention now:

1. Identify who owns  Scope 3 boundary-setting, measurement, and reporting decisions
2. Understand current Scope 3 exclusions against the proposed 95% threshold and quantify what needs to be expanded
3. Document which categories rely on spend-based versus supplier-specific data

Where .Carbon fits

Trace built .Carbon, our integrated carbon emissions measurement tool and sustainability reporting tool for Australian organisations navigating AASB S2. It gives practitioners Scope 1, 2, and 3 quantification, scenario modelling, AASB S2-aligned disclosure scaffolding, and progress tracking against targets. With the Phase 1 revisions focusing on completeness, data-quality and verification expectations, now is the time to move away from spreadsheets and into a structure that is sustainable.

Get your Scope 3 reporting AASB S2-ready with Trace

Trace helps Australian firms prepare Scope 3 emissions disclosures that are structured for assurance under ASSA 5010, aligned to AASB S2 and the GHG Protocol, before the Phase 1 revisions take effect.

We can help you:

• Quantify Scope 1, 2 and 3 emissions 
• Build AASB S2-aligned disclosures with the data tagging needed for limited and reasonable assurance
• Assess whether your current exclusions and materiality assumptions will hold under the revised standard

Book a 30-minute .Carbon walkthrough to see how we can support your reporting requirements.

Scope 3 Emissions: Why This Is Now a Supply Chain and Procurement Problem for Australian Businesses

For most of the past decade, Scope 3 emissions have sat in the sustainability team's domain. They appeared in voluntary disclosures, were estimated using spend-based proxies, and were treated as a reporting exercise rather than an operational priority. Procurement teams were occasionally asked to include sustainability questions in tender documents. Supply chain leaders were sometimes consulted on transport emissions. But the overwhelming majority of Scope 3 activity was managed at arm's length from the functions that actually control the supply chain decisions driving those emissions.

That is changing, and it is changing fast. Australia's mandatory climate reporting regime, introduced under the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 and governed by AASB S2, is phasing in requirements that make Scope 3 emissions disclosure a legal obligation for thousands of Australian businesses. Group 1 entities, those with over $500 million in revenue or $1 billion in assets, began reporting Scope 1 and 2 emissions from January 2025, with Scope 3 mandatory from their second reporting year. Group 2 entities follow from July 2026. Group 3 entities from July 2027. Within two years, virtually every large and mid-sized business in Australia will be required to measure, report, and subject to assurance their value chain emissions.

This is not a sustainability challenge that can be solved by the sustainability team alone. Scope 3 emissions, by definition, are generated across the supply chain. They sit in purchased goods and services, upstream and downstream transportation, waste generated in operations, business travel, use of sold products, and end-of-life treatment. For most organisations, Scope 3 represents somewhere between 70% and 90% of total greenhouse gas emissions. The decisions that drive those emissions are procurement decisions, logistics decisions, product design decisions, and supplier management decisions. Which means this is now, unavoidably, a supply chain and procurement problem.

What Scope 3 Actually Covers

The Greenhouse Gas Protocol defines 15 categories of Scope 3 emissions, split between upstream (supply side) and downstream (customer and end-of-life side). Not all categories are material for every organisation, and the reporting standards do not require equal depth of measurement across all 15. But understanding the categories is essential for determining where to focus.

On the upstream side, purchased goods and services is almost always the largest category. This covers the cradle-to-gate emissions embedded in everything an organisation buys, from raw materials and components to professional services and office supplies. For a retailer, this is the emissions profile of every product on the shelf. For a manufacturer, it includes every input material. For a services business, it includes everything from IT hardware to cleaning contracts. Capital goods, fuel and energy-related activities not included in Scope 1 or 2, upstream transportation and distribution, waste generated in operations, and business travel round out the upstream categories.

On the downstream side, the material categories depend heavily on the business model. For a manufacturer, use of sold products and end-of-life treatment of sold products can be enormous. For a property company, downstream leased assets may dominate. For a franchisor, franchisee emissions are the key category.

The practical implication is clear. Any organisation that wants to measure, let alone reduce, its Scope 3 emissions needs to engage deeply with its supply chain. There is no shortcut that avoids this. Spend-based estimates using industry-average emission factors will satisfy minimum reporting requirements in the short term, but they do not provide the granularity needed to identify reduction opportunities, set credible targets, or demonstrate progress over time.

Why This Hits Procurement First

Procurement is the function that selects suppliers, negotiates contracts, defines specifications, and manages the commercial relationships across the supply base. If Scope 3 emissions are driven by what an organisation buys, from whom, at what specification, and through what supply chain, then procurement is the primary lever for influencing those emissions.

This creates several practical requirements that most procurement functions have not yet absorbed.

Supplier emissions data collection becomes a procurement obligation. To report Scope 3 with any accuracy beyond spend-based estimates, organisations need primary emissions data from their suppliers. This means building data collection into supplier onboarding, contract requirements, and performance management. It means defining what data is needed, in what format, at what frequency, and with what level of verification. For many suppliers, particularly smaller businesses, this is new territory, and the requesting organisation may need to provide support, tools, or at minimum clear guidance on what is expected.

Evaluation criteria need to incorporate emissions. As Scope 3 reporting matures and assurance requirements tighten, the emissions profile of a supplier's product or service will need to be a genuine factor in procurement decisions, not just a line item in a sustainability questionnaire that nobody reads after the tender is awarded. This does not mean that emissions will or should override price, quality, or delivery in every procurement. It means that emissions need to be visible, measured, and considered as part of the total cost and total value assessment.

Category strategies need a carbon lens. The categories where an organisation's Scope 3 emissions are concentrated should be reflected in category management priorities. If 40% of your Scope 3 footprint sits in one or two procurement categories, those categories need dedicated attention, with targets, supplier engagement plans, and alternative sourcing strategies that address the emissions profile alongside cost, quality, and supply risk.

Contract terms need to evolve. Contracts with key suppliers will increasingly need to include emissions reporting obligations, performance expectations, and potentially reduction trajectories. This is not about imposing punitive requirements on small suppliers. It is about embedding emissions accountability into the commercial framework in the same way that quality, safety, and delivery performance are already embedded.

Why This Hits Supply Chain Operations Second

Beyond procurement, supply chain operations drive Scope 3 emissions through logistics, warehousing, waste, and the physical movement of goods through the value chain.

Transport and distribution emissions sit across both upstream (inbound logistics managed by suppliers) and downstream (outbound logistics to customers). The mode of transport, the distance travelled, vehicle utilisation, fuel type, and network design all influence the emissions profile. For organisations with significant freight activity, transport is one of the most actionable Scope 3 categories because the levers are relatively well understood: modal shift from road to rail or sea, route optimisation, fleet electrification or transition to lower-emission fuels, load consolidation, and network redesign to reduce total kilometres travelled.

Waste generated in operations is another category where supply chain decisions directly influence emissions. Packaging design, material selection, waste segregation infrastructure, and the availability of circular or recycling pathways all determine whether waste generates landfill methane or is diverted to lower-emission recovery processes. For organisations with significant packaging, construction waste, or food waste streams, this category can represent a material portion of Scope 3.

Warehousing and distribution centre operations contribute through energy consumption (which may fall under Scope 2 if the organisation operates its own facilities, or Scope 3 if outsourced to a 3PL). The energy efficiency of the facility, the source of electricity, refrigeration requirements, and material handling equipment all influence the emissions profile.

The Data Challenge

The single biggest barrier to meaningful Scope 3 management is data. Most organisations do not have supplier-level emissions data for the majority of their supply base. They rely on spend-based estimates, which apply a generic emissions factor per dollar of procurement spend in a given category. This approach produces a directional estimate of Scope 3 magnitude but is almost useless for identifying specific reduction opportunities, comparing suppliers, or tracking progress over time.

Moving from spend-based estimates to activity-based or supplier-specific data is a multi-year journey. It requires investment in data collection systems, supplier engagement, internal capability, and a realistic assessment of where to start.

The practical approach is to prioritise. Identify the procurement categories and suppliers that represent the largest portion of your Scope 3 footprint, typically the top 20 to 30 suppliers will account for 60% to 80% of supply chain emissions, and focus data collection efforts there first. Engage those suppliers directly, explain what data is needed and why, and work with them to establish reporting mechanisms. For the long tail of smaller suppliers, spend-based estimates will remain the default for some time, and that is acceptable under the reporting standards provided the methodology is disclosed and consistent.

The technology landscape for Scope 3 data management is maturing but still fragmented. There are platform-based solutions that aggregate supplier data, calculate emissions using multiple methodologies, and integrate with procurement and ERP systems. There are also industry-specific initiatives developing sector emission factors and data-sharing protocols. The right approach depends on the organisation's scale, complexity, existing systems, and the maturity of its supplier base.

What Boards and CFOs Need to Understand

Scope 3 is not a sustainability team deliverable. It is a cross-functional programme that requires investment, governance, and executive sponsorship. Boards and CFOs need to understand several things.

The reporting obligation is real and enforceable. Mandatory climate reporting under AASB S2 carries compliance obligations equivalent to financial reporting. Non-compliance penalties mirror those under the Corporations Act. Disclosures will be subject to assurance, progressing from limited to reasonable assurance over a phased timeline. This is not a voluntary reporting exercise.

The data will be imperfect for some time, and that is expected. The standards acknowledge that Scope 3 measurement is inherently more complex and less precise than Scope 1 and 2. There is a three-year protection from litigation specifically related to Scope 3 disclosures, recognising the immaturity of data and methodologies. The obligation is to make reasonable efforts, disclose the methodology used, and improve data quality over time.

Scope 3 creates strategic risk and opportunity simultaneously. Organisations that understand their value chain emissions can identify transition risks (exposure to future carbon pricing, regulatory tightening, or customer requirements), manage those risks proactively, and capture the efficiency gains that often accompany decarbonisation. Organisations that treat Scope 3 purely as a compliance burden will do the minimum, spend the money, and miss the strategic value.

The investment required is not trivial. Building the supplier data collection capability, the internal analytical capacity, the governance framework, and the cross-functional coordination to manage Scope 3 effectively requires dedicated resources. For large, complex organisations, this is a programme of work that takes two to three years to reach maturity, and it needs to start now if it has not already.

What Good Looks Like

Organisations that are managing Scope 3 well share several characteristics.

They have governance that connects sustainability, procurement, and supply chain. Scope 3 is not siloed in a sustainability function. There is a cross-functional steering group or working group that includes procurement, supply chain, finance, and sustainability, with clear accountability and reporting lines to the executive team.

They have prioritised based on materiality. They have completed a Scope 3 screening using spend-based estimates to identify the largest categories and the suppliers that contribute most to the footprint. Detailed data collection and reduction planning is concentrated on these material categories first, not spread thinly across the entire supply base.

They are engaging suppliers as partners, not policing them. The most effective organisations are working with their key suppliers to build capability, share tools, and develop joint reduction plans. They recognise that many suppliers, particularly mid-market and SME suppliers, do not yet have the systems or expertise to measure and report their own emissions, and they are providing practical support to bridge that gap.

They are embedding emissions into procurement decisions, not bolting them on. Emissions data is visible alongside cost, quality, and delivery data in category reviews and sourcing decisions. It is weighted appropriately in tender evaluations, and it is referenced in contract negotiations. This does not mean every procurement decision is optimised for emissions. It means emissions are a factor that is considered, not ignored.

They are setting realistic targets. Rather than headline commitments that are disconnected from operational reality, they are setting Scope 3 reduction targets that are grounded in the actual levers available: supplier switching, specification changes, logistics optimisation, packaging redesign, and energy transition across the supply base.

How Trace Consultants Can Help

Trace works with Australian organisations to connect Scope 3 obligations to supply chain and procurement strategy, ensuring that emissions management is embedded in the functions that actually control the levers.

Scope 3 materiality assessment and supply chain mapping. We conduct structured assessments to identify where Scope 3 emissions concentrate across your supply chain, which categories and suppliers are material, and where the data gaps are. This provides the foundation for a targeted programme of work rather than an unfocused compliance exercise.

Procurement strategy and category management. We integrate emissions considerations into procurement strategy, category plans, and sourcing processes, ensuring that Scope 3 is a genuine input to supplier selection, contract design, and performance management without derailing commercial outcomes.

Supply chain optimisation for emissions reduction. We identify and quantify the operational levers available across logistics, warehousing, packaging, and waste, where supply chain design and operational decisions directly influence Scope 3 performance.

Supplier engagement programme design. We design supplier engagement frameworks that are practical, proportionate, and aligned to your data maturity, helping you collect the right data from the right suppliers without creating an administrative burden that neither party can sustain.

Explore our Supply Chain Sustainability services →Explore our Procurement services →Speak to an expert at Trace →

Getting Started

The starting point is a Scope 3 screening. If you have not already estimated your Scope 3 footprint at a category level, that is the first step. It does not need to be precise. It needs to be directional enough to tell you where the material emissions sit and where to focus your effort.

From there, the work is about building the systems, processes, and supplier relationships that allow you to move from estimates to actual data, and from reporting to reduction. The organisations that start this work now will be better positioned when assurance requirements tighten, when customers and investors start benchmarking Scope 3 performance, and when the competitive landscape shifts to reward supply chains that can demonstrate genuine decarbonisation progress.

The regulatory mandate is clear. The commercial logic is sound. And the supply chain is where the work needs to happen.

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Scope 3 Emissions: What Australian Procurement Teams Actually Need to Do

For most Australian businesses, the largest portion of their carbon footprint does not come from their own operations. It comes from their supply chain.

Scope 3 emissions, the indirect emissions generated upstream and downstream in a company's value chain, typically account for 65 to 95 percent of total corporate emissions. They include the carbon embedded in purchased goods and services, the emissions from inbound and outbound logistics, the energy consumed in the use of sold products, and the end-of-life treatment of waste.

Until recently, Scope 3 was a reporting aspiration. Something forward-thinking companies measured voluntarily and disclosed in sustainability reports that most investors skimmed and few procurement teams read.

That has changed. Australia's mandatory climate-related financial disclosure regime, underpinned by AASB S1 and AASB S2, requires companies above defined thresholds to report Scope 1, 2 and 3 emissions as part of their annual financial reporting. Group 1 entities (those with revenue above $500 million or existing NGER obligations) commenced reporting in 2025, with Scope 3 required from their second year. Group 2 entities ($200 million revenue threshold) commence from July 2026. Group 3 ($50 million) follows in 2027.

The practical implication is clear. By mid-2026, a large proportion of Australia's major corporates will need credible Scope 3 emissions data. And the function that sits closest to the supply chain data needed to produce that number is procurement.

Why This Lands on Procurement

Scope 3 is fundamentally a supply chain measurement problem. The 15 categories defined under the GHG Protocol's Corporate Value Chain standard read like a procurement taxonomy: purchased goods and services, capital goods, fuel and energy-related activities, upstream transportation and distribution, waste generated in operations, business travel.

For most companies, "purchased goods and services" alone accounts for the majority of Scope 3 emissions. This means that the single most important data source for Scope 3 reporting is the procurement spend data, the supplier base, and the category structure that procurement manages.

The challenge is that procurement functions are not set up for this. They are structured around cost, quality, risk and supply security. Emissions data has not historically been part of the supplier management framework, the tender evaluation criteria, or the contract terms. Adding it now requires changes to processes, systems, supplier engagement and internal capability, all under time pressure.

The Data Challenge: Spend-Based vs Supplier-Specific

There are two broad approaches to calculating Scope 3 emissions from the supply chain, and the choice between them determines how much procurement needs to change.

Spend-based estimation uses industry-average emissions factors applied to procurement spend data. You take your spend by category, apply an emissions intensity factor (tonnes of CO2 equivalent per dollar of spend), and produce an estimate. This approach is quick, requires no supplier engagement, and can be done using existing procurement data.

It is also inaccurate. Spend-based factors are averages that do not reflect the actual emissions profile of your specific suppliers, your specific products, or your specific supply chain configuration. Two companies spending the same amount on the same category can have vastly different Scope 3 profiles depending on where they source, how products are manufactured, and what logistics routes are used.

For the first year or two of reporting, spend-based estimation may be sufficient. The legislation includes a "without undue cost or effort" qualifier, and the modified liability framework protects Scope 3 disclosures from private legal action in the first three years. But spend-based estimation is a starting point, not an end state.

Supplier-specific data is more accurate but much harder to obtain. It requires engaging directly with suppliers to collect their Scope 1 and 2 emissions data (which becomes your Scope 3), product-level carbon intensity data, or life-cycle assessment outputs. For a company with hundreds or thousands of suppliers, this is a significant data collection exercise.

The practical middle ground is to focus supplier-specific data collection on the suppliers and categories that matter most. Research consistently shows that a relatively small number of suppliers account for the majority of Scope 3 emissions. In some cases, 20 suppliers can represent 80 to 90 percent of supply chain emissions. Targeting those suppliers first produces a materially more accurate Scope 3 number without requiring engagement across the entire supplier base.

What Procurement Needs to Change

Moving from "procurement does not deal with emissions" to "procurement collects, validates and reports supply chain emissions data" requires changes in four areas.

Supplier onboarding and qualification. Emissions data collection needs to be embedded in the supplier qualification process. New suppliers should be asked, at the point of onboarding, to provide their emissions data or to confirm their willingness to participate in emissions data collection. For existing suppliers, a structured engagement programme is needed, starting with the highest-spend and highest-emissions categories.

Tender evaluation criteria. For material categories, emissions intensity should be included as an evaluation criterion alongside price, quality and capability. This does not mean that the lowest-emissions supplier automatically wins. It means that emissions are visible in the evaluation, creating a mechanism for procurement to select lower-carbon supply where the commercial trade-off is acceptable.

Contract terms. Contracts with material suppliers should include clauses requiring the provision of emissions data on a defined schedule, in a defined format, with defined methodology. This is the mechanism that turns a voluntary data request into a contractual obligation. It needs to be proportionate (you cannot ask a small SME supplier for life-cycle assessment data) but it needs to exist for your top-tier suppliers.

Category strategy. The category planning process, where it exists, needs to incorporate an emissions dimension. Which categories have the highest emissions intensity? Where are the substitution opportunities (lower-carbon materials, shorter supply chains, different manufacturing processes)? Where does the emissions profile of a category affect the company's transition risk? These questions belong in category strategy, not in a separate sustainability workstream.

The Organisational Question: Procurement or Sustainability?

A common tension in Australian corporates is whether Scope 3 should be "owned" by the sustainability team or the procurement team. The answer is both, but with clear role separation.

The sustainability team owns the methodology, the reporting framework, the external assurance process and the target-setting. They define what needs to be measured and how it will be reported.

Procurement owns the data. They own the supplier relationships through which data is collected. They own the category strategies that determine where emissions reduction opportunities exist. They own the contract terms that create the obligation for suppliers to provide data.

Finance owns the disclosure. The climate statement sits within the annual financial report. Finance needs to be confident that the numbers are robust enough for external assurance.

Where this breaks down is when the sustainability team tries to collect supplier data without procurement's involvement (the suppliers do not respond because they have no commercial relationship with the sustainability team) or when procurement is asked to collect data without a clear methodology (the data comes back in inconsistent formats and cannot be aggregated).

The organisations that are handling this well have established a cross-functional working group with clear accountability: sustainability sets the rules, procurement collects the data, finance validates and reports.

Getting Started Without Boiling the Ocean

For companies that have not yet started, the path forward does not need to be overwhelming.

Step 1: Baseline using spend-based estimation. Use your existing procurement spend data and publicly available emissions factors to produce a first-cut Scope 3 estimate. This gives you a baseline and, more importantly, identifies which categories and suppliers are the largest contributors.

Step 2: Prioritise the top 20 to 50 suppliers. Based on the spend-based analysis, identify the suppliers that account for the majority of your estimated Scope 3 emissions. These are your priority engagement targets.

Step 3: Design the data collection process. Define what data you need from suppliers, in what format, at what frequency, and through what channel. Keep it simple initially. Many suppliers will not have their own emissions data. Providing them with a template and a methodology guide will accelerate the process.

Step 4: Embed in procurement process. Update your supplier onboarding, tender evaluation and contract templates to include emissions data requirements. This ensures that the data collection becomes systemic rather than a one-off project.

Step 5: Improve annually. Each reporting cycle, increase the proportion of your Scope 3 number that is based on supplier-specific data rather than spend-based estimation. The goal is progressive improvement in accuracy, not perfection in year one.

How Trace Consultants Can Help

Trace works with procurement and sustainability teams to build the supply chain data architecture and operational processes needed to meet Scope 3 reporting obligations, practically and proportionately.

Scope 3 procurement readiness assessment: We assess your current procurement processes, data systems and supplier engagement capability against the requirements of AASB S2, and produce a gap analysis and implementation roadmap.

Supplier emissions data strategy: We design the data collection framework, including which suppliers to target first, what data to request, how to standardise inputs, and how to integrate emissions data into existing procurement systems and reporting.

Category strategy integration: We help procurement teams embed emissions as a dimension of category strategy, identifying where supply chain decarbonisation aligns with commercial objectives and where trade-offs need to be managed.

Procurement process redesign: We update tender evaluation frameworks, contract templates and supplier qualification processes to include emissions data requirements in a way that is proportionate and operationally sustainable.

Explore our Procurement services →

Explore our Supply Chain Sustainability services →

Speak to an expert at Trace →

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