Supply-chain Sustainability Remains a Key Priority for Companies Despite Regulatory Uncertainty

Global companies continue to treat sustainability in their supply chains as a strategic priority, even in the backdrop of shifting regulatory landscapes and economic uncertainty, according to the 2025 “State of Supply Chain Sustainability” report from the MIT Sustainable Supply Chain Lab in collaboration with the CSCMP.

Continued Commitment Amid Regulatory Flux

Despite a year marked by regulatory volatility, such as prominent jurisdictions revisiting or pausing major sustainability legislation, most companies have maintained pace or increased efforts in supply-chain sustainability.

The MIT report, based on survey responses from more than 1,200 supply-chain professionals in nearly 100 countries, found that about 85% of firms report either maintaining or increasing their supply-chain sustainability activities.

More specifically, most respondents reported no change in their sustainability commitments even with policy shifts. The findings suggest that the impetus for supply-chain sustainability is less linked to government mandates and more to investor expectations, market forces, and corporate reputational priorities.

Measuring the Hardest Emissions Remains a Major Barrier

While many corporate sustainability programmes persist, the report highlights a significant structural weakness: companies’ ability to measure and act on indirect (Scope 3) emissions, those occurring upstream in supply chains. Because Scope 3 can account for as much as three-quarters of a company’s total greenhouse-gas footprint, inadequate measurement creates blind spots in decarbonisation efforts.

A large majority of respondents pointed to limited or absent supplier-level data as the greatest obstacle to calculating these emissions. In North America, approximately half of companies still rely on spreadsheets for tracking emissions, while only about a third of European firms do so. Europe appears to have more advanced tool-use, such as life-cycle assessment software.

The report warns that relying on oversimplified approaches, such as economic spend-based emissions estimates, carries the risk of producing misleading metrics and poor decisions. “You get what you measure,” it notes.

Regional Variation in Drivers and Capabilities

The report identifies distinct regional dynamics in how companies approach sustainability in supply chains. In Europe, regulatory pressure, such as the Corporate Sustainability Reporting Directive (CSRD), remains a primary driver, while in North America, the most influential pressures come from investors, board-level strategy, and reputational risk rather than legislation.

In practice, European firms are more likely to collect supplier-specific emissions data and use advanced analytic tools, while North American firms are more likely to use industry averages or financial proxies for emissions. The latter approach is inherently limited because it prioritises cost or spend rather than actual emissions intensity.

Procurement, Engagement, and Collaboration Remain Under-Leveraged

When it comes to action, many companies report that they are requiring sustainability criteria in procurement and asking suppliers to report emissions data. However, more advanced mechanisms, such as offering long-term contracts tied to sustainability performance, financial incentives, or penalties for suppliers, remain relatively rare.
Participation in industry collaborations is showing stronger momentum: most companies involved in such alliances report stronger supplier alignment, better shared emissions data, and cost benefits. Many also cite gains from shared expertise and resources, showing that collective initiatives can amplify sustainability outcomes while reducing duplication of effort.

Implications for Industry Stakeholders

For businesses across procurement, logistics, operations, and sustainability functions, the report offers several practical takeaways in the context of net-zero transitions:

• Data infrastructure matters: Without accurate, supplier-specific data and appropriate metrics, companies may underestimate emissions and misdirect mitigation investment. Tools such as life-cycle assessment platforms will increasingly differentiate firms with higher maturity.

• Scope 3 cannot be ignored: Given its outsized share of total emissions and the difficulty of measurement, firms must treat Scope 3 as a strategic risk and operational focus. That means working upstream with suppliers, setting realistic targets, and investing in systems to collect and verify data.

• Regional and regulatory awareness is key: Companies operating globally need to tailor their strategies. European firms face more direct regulatory mandates, while North American firms may rely more on investor-driven or board-driven imperatives.

• Procurement as a lever: Embedding sustainability into procurement decisions, supplier selection, contract structure, and performance criteria, sends a clear signal and begins to align incentives across the value chain.

• Collaboration offers scalable benefits: Participating in industry alliances or shared data platforms allows smaller firms, or firms with limited resources, to gain access to supplier networks, shared tools, and best practices at lower cost and risk.

• Adjustment of timelines and targets: Some firms are relaxing their net-zero or emissions-reduction timelines because of operational or financial constraints, and because insufficient upstream data creates uncertainty. This suggests that realistic, phased targets may better serve enduring progress than overly aggressive but under-supported goals.

What This Means for the Net-Zero Transition

From a broader perspective of the energy transition and net-zero ambitions, the continued emphasis on supply-chain sustainability is encouraging. Companies are increasingly recognising that their operational footprint is embedded not only within their own facilities but across global supplier networks, transport logistics, and product life-cycles. Yet the measurement and data-governance gap remains a meaningful barrier to converting commitment into verified outcomes. Without clear visibility into supplier emissions, companies risk delegitimising their sustainability claims or failing to decarbonise their full footprint.

For investors, regulators, and supply-chain professionals alike, the report underscores a turning point: sustainability is no longer a peripheral “nice-to-have” but a driver of resilience, cost-efficiency, and competitive value in supply-chain operations. Firms that strengthen their measurement, supplier engagement, and procurement practices will be better placed to navigate evolving regulatory requirements, market expectations, and climate-risk disclosures.

Source: www.esgdive.com