In the global race to combat climate change, businesses are grappling with the challenge of reducing their carbon footprints. While reducing direct emissions has been a focus for many, tackling or even understanding the indirect emissions from supply chains, known as Scope 3, remains a major hurdle. This is where Berlin-based climate tech company ClimateChoice steps in.
Scopes 1, 2, and 3: What are they?
To track progress toward net zero, companies assess greenhouse gas emissions across three Scopes.
Scope 1 refers to direct emissions from sources owned or controlled by the company, such as burning fuel in its vehicles.
Scope 2 covers indirect emissions from the generation of purchased energy, like the emissions from electricity used in company buildings.
Scope 3 includes all other indirect emissions along the company’s value chain, such as those from suppliers, product use and disposal.
Untangling the Scope 3 web
As the old adage goes, “you can’t manage what you can’t measure”. And, measuring Scope 3 emissions is notoriously fiddly. These emissions—everything from purchased goods, transportation and operations waste—account for the lion’s share of companies’ carbon footprints. According to the Carbon Trust, Scope 3 emissions can make up 70-90 percent of a business’s carbon footprint.
Collecting accurate and actionable data across diverse supply chain activities is a daunting task. A 2023 report by IBM found that just 38 percent of businesses were currently measuring their Scope 3 footprints. Taking data from 13 countries, the report drew from a sample of 3,250 business leaders and decision-makers. The study showed that the poor numbers weren’t necessarily due to a lack of interest in tracking Scope 3 or reducing emissions. 45 percent of companies in the study signalled confidence that they would be ready to report on their Scope 3 greenhouse emissions by the end of 2023.
Whilst “there is growing awareness and urgency around Scope 3 decarbonisation, driven by regulatory pressures such as CSRD, CBAM, and SEC climate disclosure rules”, Josepha Niebelschütz, Growth Marketing Lead of ClimateChoice explained to RESET that, “only about 40 percent of companies currently report any Scope 3 data. Even fewer have comprehensive, primary data from their suppliers.”
Companies are also often slowed by fragmented processes, a lack of standardisation and limited stakeholder collaboration. As a result, many who care about emissions reduction still struggle to align their supply chains with their net-zero goals.
The solution: An AI-driven climate intelligence platform
AI-powered climate intelligence platform ClimateChoice is trying to bridge the gap between climate-conscious ambition and actionable insight. The Berlin-based platform enables companies to collect and analyse such data, and then, crucially, empowers them to act upon the findings.
Vast numbers of climate-related data points are gathered from suppliers, which are then turned into individual ClimateChoice Scorecards. Businesses get a clearer picture of the supplier’s performance across five dimensions: CO2, emission trends over time, climate targets, strategy and governance and decarbonisation efforts.
An example view of The Climate Score which answers which and how suppliers help their customers reach their Scope 3 targets. This eliminates prohibitively time- and cost-consuming manual efforts—often based on inaccurate data—and allows companies to identify high-impact areas to actively target with emissions-reduction strategies.
ClimateChoice’s technology not only allows businesses to audit retrospective emissions but also empowers procurement teams to prioritise climate-conscious suppliers. Companies can make informed decisions that align with corporate sustainability targets. Meanwhile, suppliers are scrutinised and chosen based on their climate-friendly credentials.
Their flexible pricing model also makes the investment worthwhile for smaller companies. “By automating supplier engagement and climate data collection, our customers see a significant reduction in time and effort spent on manual processes”, Niebelschütz explains. The innovation impressed at the Green Startup Slam in 2024, winning it first prize in the Los Angeles event.
“No longer optional”
With growing pressure from stakeholders, regulators and consumers, businesses can no longer afford to overlook their supply chain emissions. According to Lara Obst, Co-Founder and Chief Climate Officer of ClimateChoice; “With new regulations like the European CSRD coming into effect, more than 50,000 companies will need to report and address [Scope 3] emissions from 2025 onwards.”
Tools like ClimateChoice’s Climate Intelligence Platform are not just helpful—they’re essential for navigating the complexities of Scope 3 decarbonisation.
“Decarbonising the supply chain is no longer optional—it’s essential for compliance and leadership in sustainability.”
