Cascading Scope 3 Targets Beyond Tier 1

How to secure accurate carbon data, and real reductions, deeper in the supply chain.

1. A Practical Challenge

   
   

In early 2025 I was asked by a leading Italian company to help them deliver on a newly approved net-zero commitment.

The procurement team had collected supplier questionnaires for years, but progress had stalled:

• Tier 1 coverage plateaued at ~60 %.

• Tier 2 and Tier 3 were almost invisible, especially outside the EU.

• Data formats varied so widely that consolidation took more time than analysis.

The brief was clear: equip suppliers with the knowledge, templates and contractual hooks required for robust, decision-ready Scope 3 data.

2. Why Disclosure Stalls After Tier 1

First, let's look at what I believe are some of the most common causes that lead to this issue. Most businesses rely on contractual supplier information (CSI) under the GHG Protocol to build a spend-based model for Scope 3, Category 1 (“Purchased goods and services”). That works acceptably for a high-level baseline, but it has three structural limitations once you target science-based reductions:

Limitation	Consequence
Data stops at Tier 1	Emissions embedded in raw materials or semi-finished parts remain somewhat of a black box.
Spend ≠ emissions	Commodity price swings distort the carbon signal, creating false trends.
Voluntary disclosure fatigue	Suppliers prioritise questionnaires from their largest or most vocal customers; response rates flatten over time.

Without a deliberate push past Tier 1, even the best-intentioned 1.5 °C roadmap is at risk of becoming a paper exercise.

3. A Contract-Based “Carbon Data Handshake”

Procurement contracts are the most reliable lever a buying organisation possesses. We therefore drafted a two-section Schedule that is now appended to every new purchase order (and rolled-over framework agreement). The clause goes something like this:

1. Data Provision Clause

   • Suppliers must deliver an annual cradle-to-gate GHG inventory for the goods or services supplied, following ISO 14064-1 or the GHG Protocol Product Standard.

   • The report is due 90 days after each calendar year-end and must include activity data, emission factors and allocation methods.

   • Data must be uploaded via the client’s supplier portal in a standard template (.xlsx + .csv).

2. Continuous-Improvement Clause

   • Suppliers commit to set or validate a science-based target (SBTi or equivalent) within 24 months of contract signature.

   • Failure to do so triggers a 1 % price holdback that is released upon compliance.

   • For suppliers below €XXX million, the client offers free access to an online training academy.

Tip for practitioners: Ensure the clause is concise (no more than two pages) and refer to external standards by their specific dates (e.g., “ISO 14064-1:2018”) to allow the legal review to concentrate on business terms rather than technical annexes.

4. Upskilling Suppliers at Scale

   
   

Naturally, a contractual requirement is only as effective as the support that accompanies it. We therefore deployed a three-step enablement programme:

Step	Duration	Content	Output
Kick-off webinars	2 × 60 min, three languages	Why the data matters; overview of template; Q&A	Recorded sessions + slide deck
Self-paced e-learning	3 weeks	Modules: Introduction to GHG accounting; Primary vs. secondary data; Setting an SBT	Completion badge
Virtual clinics	Weekly, 4 weeks	Live drop-in to troubleshoot real datasets	Clean template ready for upload

Participation was optional, yet over 80 % of Tier 1 and 45 % of Tier 2 suppliers attended at least one component. Feedback scores averaged 4.6/5, mainly because the material spoke the language of cost, quality and delivery, not abstract climate theory.

5. Legal and Regional Considerations

   
   

Cascading Scope 3 expectations across jurisdictions raises compliance questions. We addressed four common concerns with the client’s legal counsel:

Risk	Mitigation
Competition law (EU & US)	Data is shared only supplier → buyer, never horizontally; rankings are visible only to the supplier concerned.
Data-privacy (GDPR)	Carbon data are corporate, not personal, so GDPR does not apply; nevertheless, the portal logs user consent.
Trade-secret protection	Where a supplier fears disclosing confidential process data, the template allows black-boxing of activity data so long as the resulting emission factor is transparent and verifiable by an independent auditor.
Sanctions & export controls	Contracts include a standard clause requiring disclosure to comply with local law before data transfer.

Always consult local counsel before transposing the Schedule to a new country.

6. Performance Metrics to Watch

The client now tracks a concise set of KPIs every quarter:

KPI	Target	Comment
Supplier data-coverage (Tier 1)	≥ 90 % by spend	Completeness before accuracy, fill the gaps first.
Supplier data-coverage (Tier 2)	≥ 60 % by spend within 2 years	Tier 2 is harder; targets should recognise ramp-up time.
Primary-data share	≥ 50 % of Scope 3, Cat 1 emissions	Spend-based data is acceptable for low-risk items only.
Supplier SBT adoption	100 % of strategic suppliers by 2027	Strategic = top 75 % of Scope 3 emissions or spend.

Progress is reviewed at executive level alongside traditional cost and quality metrics—an essential signal that carbon data is not a side project.

7. Conclusion

Scope 3 targets that stop at Tier 1 rarely deliver the emissions curve required by the Science Based Targets initiative or forthcoming CSRD disclosure rules. A contract-anchored data handshake, backed by practical supplier support and transparent progress tracking, helps move beyond incremental response rates to measurable carbon reductions.

Feel free to adapt the clauses and training approach outlined here. If you require a copy of the Schedule template or the dashboard field list, get in touch.

Authored by Luca Bisio, Net Zero and Climate Risk Consulting.