Highlights

Large companies generate most of their environmental and social impacts through supply chains, with 80–90% of greenhouse gas (GHG) emissions linked to suppliers’ extraction and production. Supply chains are cost-driven and complex, creating challenges for suppliers—particularly small and medium-sized enterprises (SMEs)—when meeting sustainability expectations. Most corporate supply chain goals “push” or “pull” suppliers towards compliance, with fewer than 10% adopting a partnership approach. Only 12% of companies include at least one people-centred supply chain goal, and fewer than 3% include goals on reskilling, upskilling, or improving working conditions.

Introduction

Supply chains involve extensive networks of suppliers, often many tiers removed from large companies. Chief procurement officers manage costs that represent 50–70% of operational expenditure and face limited visibility across complex supplier networks. Climate change and extreme weather continue to expose vulnerabilities. Many suppliers already operate under cost pressure and lack the resources or incentives to adopt environmental or social improvements without additional support from buyers.

The report highlights two major challenges: companies cannot meet environmental objectives without considering the needs of people in their supply chains; and supplier–buyer relationships are unequal, with SMEs often unable to absorb compliance costs. Achieving sustainable supply chain transitions therefore depends on recognising worker needs, fair conditions, and investment in skills, wages, and equipment.

Background

Most large companies track and set goals for reducing GHG emissions, with supply chain emissions averaging 26 times higher than operational emissions. Companies increasingly require suppliers to provide environmental data, commit to renewable energy, and comply with deforestation-free or traceability requirements.

However, only 1% of companies with supply chain deforestation goals offer financial or technical support to suppliers. SMEs face difficulties meeting these expectations, as their priorities often focus on cash flow, wages, workforce retention, and basic business survival. The report notes heightened environmental and social risks deeper in supply chains, including unsafe conditions, low wages, and exposure to climate hazards. Workers and SMEs often bear increased burdens when large companies introduce sustainability requirements without accompanying support.

Looking for people in corporate supply chain sustainability goals

The analysis reviewed approximately 1,000 supply chain goals from nearly 700 large companies. Only 12% of companies set people-centred goals, which include worker well-being, skills development, supplier diversity, wages, and safety. Most goals focus on emissions, compliance, or packaging.

Goal framing reveals the approach companies take: around 900 goals were “push” or “pull”, indicating requirements placed on suppliers; fewer than 10% were “partner” goals that provided explicit support. People-centred examples include commitments on economic empowerment, farmer income programmes, workplace rights, and skills development, though few include measurable targets.

Discussion: three partnership priorities for people-centred supply chain goals

The report outlines three guiding questions to embed partnerships and people into supply chain strategies.

Who is impacted by transitions?
Companies should map risks beyond Tier 1 to SMEs, workers, and communities, identifying “pain points” related to climate risk, unsafe conditions, resource constraints, and limited representation. Examples include Mars’ Shubh Mint programme in India and Tony’s Chocolonely’s long-term partnerships with farmer cooperatives.

What is in it for them?
Companies need to align supplier incentives with sustainability goals. SMEs value access to markets, skills, equipment, and price stability. Some already take climate action to attract customers. The report highlights IKEA’s renewable energy purchasing partnerships that reduce GHG emissions while benefiting suppliers with lower-cost clean electricity.

Where can we invest for mutual benefit?
Companies should consider new contracting models, shared financing, and collaborative investment mechanisms. The Apparel Impact Institute’s Fashion Climate Fund demonstrates how pooled capital can support suppliers’ factory upgrades with improved lending terms.

Challenges and future work

The report identifies a major blind spot: minimal focus on people-centred goals, including reskilling, supplier diversity, wages, working conditions, and community well-being. It challenges large companies to set at least one people-centred supply chain goal for 2030 and encourages investors, governments, and civil society to support stronger business cases and accountability.