Introduction

The report explains how climate change is intensifying supply chain disruption through extreme weather, regulatory uncertainty and changing stakeholder expectations. More resilient companies tend to outperform during disruptions. Around US$162 billion in potential financial costs are linked to climate-related supply chain risks, yet only 30% of companies reporting to CDP identify upstream risks and 41% engage suppliers. The guidance presents seven practical approaches to strengthen supplier engagement and resilience.

Build a cross functional dream team

Successful supplier engagement relies on collaboration across sustainability, procurement and other internal teams. Procurement enables access to suppliers, while sustainability provides expertise on climate risks and emissions. Clear roles, shared KPIs and aligned processes improve consistency. Finance, operations and legal teams can support cost analysis, efficiency initiatives and contractual integration of climate requirements. Coordinated messaging and accessible tools improve supplier participation.

Have clear, measurable objectives for your supplier engagement efforts

Companies should define a clear supplier engagement goal aligned with net zero or scope 3 targets. Objectives may relate to supplier coverage, emissions reduction, renewable energy use or target-setting. Many sectors have significant emissions beyond tier 1, requiring broader engagement. Quantitative goals and interim KPIs allow progress tracking even when emissions data is incomplete, supported by phased implementation approaches.

Ask your suppliers to set targets

Suppliers are encouraged to start by calculating scope 1 and 2 emissions and estimating scope 3 impacts. Target-setting helps secure leadership buy-in and structure action. Near-term targets of 5–10 years are recommended initially, with longer-term goals added as capability improves. Options include internal SMART targets, public commitments or science-based targets. Larger suppliers are generally better positioned for formal validation, while SMEs may begin with simpler commitments.

Use available tools and data

Reliable supplier data is essential for tracking impact. Companies should avoid duplicative requests and use established frameworks such as CDP Supply Chain and SME Climate Hub. Data sources may include supplier websites, public target registries and procurement systems. Integrating climate data into existing platforms and providing clear guidance and training improves data quality and participation.

Prioritise suppliers by potential impact and readiness

Not all suppliers require the same level of engagement. Prioritisation should consider emissions contribution, spend, volume and material criticality. Spend-based hotspot analysis and sector guidance can help identify high-impact suppliers. Readiness indicators include emissions disclosure, target-setting, participation in sustainability initiatives and organisational capability. Suppliers can then be grouped to tailor engagement and support.

Find the right incentives

Incentives significantly increase supplier action. Suppliers are 4.3 times more likely to set science-based targets when buyers jointly invest in low-carbon R&D, and 3.2 times more likely when climate performance is recognised in award schemes. Financial incentives increase the likelihood of emissions reductions by 52%. Effective approaches include training, capacity-building, access to finance, renewable energy solutions, improved contract terms and recognition programmes.

Be prepared

Companies should anticipate supplier concerns and embed climate expectations into procurement documents and contracts. Common challenges include limited capacity, uncertainty and funding constraints. Education, simplified tools and staged requirements can address these barriers. Interim recognition may be appropriate where suppliers demonstrate progress without formal targets. Coordinated engagement through industry groups can increase influence.

Conclusion

Supplier engagement strengthens supply chain resilience by improving transparency, risk management and emissions performance. The seven approaches provide practical guidance for building scalable programmes aligned with climate and business objectives.