Carbon-free procurement: The role of the supply chain in achieving Net Zero targets

To align with global Net Zero ambitions, organisations must account for the carbon profile of every supply source contributing to a product or service. The supply chain often represents the largest share of a company’s total emissions, making procurement decisions a pivotal part of any environmental strategy.

In this article, Promena explores where carbon reduction meets procurement, and how digital contract management provides assurance and visibility throughout this process.

What is Net Zero emissions?

Before discussing the importance of a Net Zero strategy, it is essential to clarify what the concept means. Net Zero is central to today’s climate action and environmental responsibility agenda. In simple terms, achieving Net Zero emissions means reducing emissions across the entire value chain as far as possible, and balancing any remaining emissions through the permanent removal of an equivalent amount of greenhouse gases from the atmosphere.

Before the industrial era, the carbon cycle was naturally balanced. Forests, oceans and soils acted as carbon sinks that absorbed all the carbon emitted. Human activity—particularly the use of fossil fuels—has disrupted this balance. Greenhouse gases have accumulated in the atmosphere, trapping heat and accelerating climate change.

The importance of the supply chain in the Net Zero strategy

Operational emissions that organisations directly control represent only a fraction of their total carbon footprint. The majority often originates from suppliers. These indirect emissions, defined internationally as Scope 3 emissions, account for as much as 80% of total emissions in many sectors.

Research by the United Nations Development Programme (UNDP) on climate-resilient supply chains reinforces this view: without transforming the supply chain, Net Zero targets cannot be achieved. A supplier’s production methods, choice of energy sources, transportation modes and logistics patterns all have a direct impact on an organisation’s carbon performance. In this context, the supplier’s environmental performance becomes an integral component of the organisation’s own sustainability journey.

Procurement criteria are gaining a sustainability dimension

Price, quality and delivery time have long been central to procurement decisions. However, this trio is no longer sufficient for building a Net Zero–aligned supply ecosystem. When evaluating suppliers, organisations are placing increasing emphasis on:

• The characteristics of the energy sources used in production
• The sustainability of raw material inputs
• Waste management practices
• Short- and long-term commitments to reducing emissions
• Transparent data sharing across production and distribution processes

These criteria point to a new procurement culture, where competition is no longer assessed solely on price. Yet consistently monitoring these elements requires a structure that goes beyond manual management models. Organisations now need tools that consolidate dispersed data and enable them to track sustainability performance and compliance processes in a single place.

A broad perspective with ESG360 by Promena

Environmental clauses in contracts allow organisations to track only one aspect of the supply chain. Corporate sustainability, however, is far broader and encompasses social and governance considerations alongside environmental impacts.

ESG360 by Promena brings supplier assessment into this holistic perspective. The model enables organisations to evaluate suppliers’:

• Environmental impact
• Social performance
• Governance quality (ethical standards, risk mechanisms, reporting transparency)

within a single system.

This approach encourages viewing supplier relationships not as short-term transactions but as part of a long-term development journey. Sustainability commitments then move beyond “statements of intent” and become traceable and verifiable.

Controllability and predictability enabled by digitalisation

Digital supply chain management offers more than operational speed. It helps organisations build more resilient structures during periods of uncertainty. International research shows that supply chains strengthened with sustainability criteria adapt more effectively to market fluctuations.

Suppliers that prioritise renewable energy use, invest in carbon reduction or adopt circular economy models provide a more stable foundation in terms of both cost and operational continuity. Digitalisation makes this stability visible, supporting stronger and more informed decision-making.

Increased transparency in reporting processes

Monitoring progress towards Net Zero targets forms the basis of corporate reporting, as well as being key to operational success. Promena’s digital tools consolidate contract clauses, performance indicators, risk assessments and ESG (environmental, social and governance) data in one place. This creates a reliable foundation for both internal reporting and communication with external stakeholders.

Accurate and consistently monitored data strengthens regulatory compliance, builds investor confidence and supports transparent stakeholder relationships.

Net Zero is not possible without supply chain transformation

Today, Net Zero is no longer a far off objective; it’s an essential and immediate priority for organisations and the supply chain is the most critical area in achieving this target. Promena’s Contract Management and ESG360 modules support organisations in managing this transformation in a planned, measurable and sustainable way.

Integrating environmental criteria into supplier agreements, regularly monitoring performance and consolidating all data in a single hub enable concrete, verifiable steps towards Net Zero targets.

The sustainability journey in the supply chain should become an ongoing process requiring continuous monitoring. As procurement evolves rapidly, advances in technology and alternative energy sources offer new opportunities to reduce greenhouse gas emissions. Organisations must establish a solid baseline, actively monitor their progress and adapt their strategies as conditions change.

To transform your procurement processes into a Net Zero–aligned, traceable and digital structure, explore Promena’s solutions. Contact us to learn more about Contract Management and ESG360.