Get readyto decarbonise
handbook on
supplier
engagement

Introduction

1

Step 1

Step 2

Step 3Gaining visibility
on greenhouse gas(GHG) emissions
at corporate level
and throughout
your supply chain 2

Defining
GHG emission
reduction targets

Setting up
your supplierengagement
programme

Step 4

Step 5

Step 6

Kicking-off
your supplierengagement

Collaboratively
driving progresswith your suppliersStandardisingand scaling

4

6

7

Closing5

911

Get ready to decarbonise
Handbook on supplier engagement

Introduction
A significant share of a company’s
emissions arises through its supply
chain. Against this background,launching a supplier greenhousegas (GHG) emission reduction
programme is a strong
demonstration of a company’s
ambitions to combat climate change
and its consequences. Engaging
suppliers in reducing GHG
emissions is the key to creating
more sustainable supply chains.

As a company in the chemical sector, given the complexityof the topic in general, you will come across plenty of expected
and unexpected challenges when setting up and running suchan emission reduction programme. One big challenge will bethat data that you request is unavailable or that the supplier lacks
reliable data. We aim to help you foresee and overcome thesechallenges with this handbook.

This implementation journey comprises the following steps:
1		Identify GHG emissions in your company and supply chain.
2		Define GHG emission reduction targets.
3		Prepare suppliers to engage in a GHG reduction programme.
4		Communicate to secure buy-in.
5		Collaborate with suppliers to successfully run the

programme.
6		Standardise and scale the programme.

This handbook complements the e-learning “Get Readyto Decarbonise” available on the TfS Academy. The course
outlines a chemical company’s journey in implementing a
supplier decarbonisation programme. This handbook
enhances the course by providing more details.

How to use this guide:
The Get Ready to Decarbonise Handbook on Supplier
Engagement provides you with step-by-step guidance forcreating visibility on your own company’s GHG emissions andthose of your supply chain, to advice on where to start and how
to scale up engagement with your supplier. The guideline is built
on best practice from TfS member companies. By following
the steps from 1 to 6 and applying it to your own company, you
can establish a meaningful supplier engagement plan with aguaranteed beneficial outcome.

The TfS Academy is our one-stop learning hub
providing TfS members and their suppliers withe-learning, guides, and other tools.

1Get ready to decarbonise
Handbook on supplier engagement

Step 1:Gain visibility
on GHG emissions
at corporate
level andthroughout yoursupply chain
Within step 1 you gain information on the GHG emissions
at corporate level and throughout your supply chain.
Figure: Overview of scopes and emissions across the value chain – TfS

1.1 Transparency at corporate level
Once the decision has been made to reduce GHG emissions,several internal activities need to be started or enhanced. Thesemay include Board engagement, establishing a first roadmap,
and identification of internal sponsors and a dedicated project
team with governance rules and responsibilities.
The most comprehensive approach is to create transparency
on Scope 1, Scope 2, and Scope 3 GHG emissions at company
level. This is often referred to as the “Company Carbon Footprint(CCF)”. Many companies already assess their GHG emissions
for Scope 1, or Scope 1 and 2, which means that they do notstart from zero. Consider which efforts your company has taken
already before embarking on any of the next steps.

In a next step, it is beneficial to work towards gaining
transparency of GHG emissions across all scopes, including scope 3. Here it makes sense to start with Category 3.1
Purchased Goods and Services of GHG emissions in yoursupply chain. Although Scope 3.1 is typically the main
contributor to GHG emissions and the primary focus of the
procurement organisation, other supplier categories cancontribute considerably and should therefore also be considered. These include suppliers from Category 3.4 “Upstream
Transportation and Distribution”.

1.2 Transparency at
procurement levela. Assessing GHG emissions in Scope 3
category 1 “purchased goods & services”
There are various methods to collect and process data.
Those using ‘secondary’ data do not require the involvementof suppliers and are, therefore, more easily carried out.
Others rely on supplier-provided information, also known
as ‘primary’ data. A hybrid of both methods is also possible.
The estimates will provide you with a first idea of the emissions
structure in a very efficient way.

2

Get ready to decarbonise
Handbook on supplier engagement

There are two methods that are commonly used for calculation:
Average-data method: The average data method estimatesemissions for purchased goods and services by collecting
data on the physical properties - often mass or volume (e.g.,kilograms or litres) - or other relevant units of goods or services
purchased. This data is multiplied by the relevant secondary(e.g., industry average) emission factors, which can be takenfrom databases (e.g., Ecoinvent.org or carbonfootprint.com).
Most of the spend should be approached at first by this method.
Example: 1,000 Kg of ethylene x 1.45 Kg of Co2 e per Kg =1,450 Kg of CO2 e
Spend-based method: The spend-based method
estimates emissions for purchased goods and services bycollecting data on the economic value of goods and services
purchased, multiplying it by relevant secondary (e.g., industry
average) emission factors. These data are also called Environmentally Extended Input-Output (EEIO) and can be collectedfrom different databases (e.g., from the UK Department forEnvironment, Food and Rural Affairs (DEFRA), or the U.S.
Environmental Protection Agency). The spend-based method
could be a solution when you miss information regarding theunits of measurement or when you need to evaluate specificindirect categories (e.g., marketing services or consulting)
Example: 1,000 EUR of petrochemicals x 0.5814 Kg of CO2 e
per EUR = 581.4 Kg of CO2 eb. Identify emission-intensive product categories
and suppliers• Hybrid data collection method: uses a combinationof supplier-provided data, where available, and secondary
data to fill the gaps. This method involves:•	Collecting allocated scope 1 and scope 2 emission data
directly from suppliers.
•	Calculating upstream emissions of purchased goods andservices from suppliers’ activity data and multiplying thatby the amounts used by the company.
•	Using secondary data to calculate upstream emissions
wherever supplier-specific data is not available.

Once you have estimated the amount of GHG emissions
in your supply chain, you can progress to its emission
structure. This includes understanding highly emission-intensive
purchasing categories, based on purchased quantities orcontributing Scope 3 emissions. These categories are often
CATEGORY 1 Purchased Goods and Services
referred to as “hotspots”.

• Supplier-specific method – collects
cradle-to-gate
GHG
inventory datafromgoods or services suppliers.
Weproduct-levelpropose thefollowing
vocabulary
anddefinitions:• Hybrid method – uses a combination of supplier-specific activity data (where available) and secondary data to fill•	Total emissions = Product quantity multiplied by
The definitions of the above listed methods are sourced fromthe gaps. This method involves:emission factor.
the GHG Protocol.
• collecting allocated scope 1 and scope 2 emission data directly from suppliers;•	Hotspot = Intense generation of carbon emissions• calculating upstream emissions of goods and services from suppliers’ activity data on the amount of materials,
within a specific scope.
The same calculation methods are also valid for
Scope 3.2
fuel, electricity, used, distance transported, and waste generated from the production of goods and services and“Capital Goods” emissions.
applying appropriate emission factors; andOncehighlyemissivecategories
are identified,hierarchy• using secondary data to calculate
upstream
emissionswhereversupplier-specificdata is notaavailable.
ofemissions
suppliers
theservices
category
is possible
to(e.g.,thekilograms
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for within
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next step.
they are not included in this handbook.
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average emissions per monetary value of goods).
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12

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2. tree
3. mountains
4. glass bottle
5. plastic bottle
6. aluminium can
7. factory
8. lorry
9. cloud
10. recycling bin
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reversed)
12. wind turbines
13. chicken
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15. cow 2
16. shop17.6factory showing carbon
1emissions (carbon
emissions are shown inorange)3

7. factory

8. lorry
In some companies, the sustainability department can
9. cloud
10. recycling bin
11. recycling bin (colours
provide GHG emission data for the accounting exercise.
Figure [1.1] Different data types used for different calculation methods 12.reversed)
wind turbines
A consulting company could otherwise support the
13. chicken
14. cow 1
process if internal resources are not sufficient.
15. cow 2
4

5

6

4

5

7

8

9

Product life cycle stages

Supplier-Specific Data:

4

7

The following methods include supplier-provided information,
also referred to as primary data. If available, choose this option
as it provides the highest quality data. Such data may later
enhance your first estimates based on one of the above options.
• Supplier-specific method: collects product-level cradleto-gate GHG inventory data from purchased goods orservices from suppliers. The TfS Product Carbon Footprint
Guideline is your best choice for calculation guidance in thiscase. If supplier-specific data is limited or unavailable, thehybrid data collection method allows you to proceed. Adding
supplier-provided data later is possible to enhance your firstestimates.

10

Calculation
Method

1

11

2

4

13

14

5

calculation methods – GHG Protocol

Spend-based method

15

12Supplier-specific data
7

16

Figure: Different data types used or different

9

6

11

Supplier-specific method

Average-data method

123All other upstream emissions
from production of product10

Hybrid method

8

17

8

10

11

12

13

14

15

16

Averagedata
172

16. shop
17. factory showing carbon
emissions (carbon
emissions are shown in
4
5orange)5

3

3

6

6

Supplier’s scope
1 & 2 emissions

1. wheat
2. tree
3. mountains
4. glass bottle
5. plastic bottle
6. aluminium can
7. factory
8. lorry
77
9. cloud
10. recycling bin
11. recycling bin (colours
reversed)
12. wind turbines
13. chicken
14. cow 1
15. cow 2
16. shop
17. factory showing carbon
emissions(carbon10
10
emissions are shown inorange)889

1. wheat
1. wheat
2. tree
2. tree
3. mountains 3. mountains
4. glass bottle 4. glass bottle
5. plastic bottle5. plastic bottle
6. aluminium can
6. aluminium can
7. factory
7. factory
8. lorry
8. lorry
9. cloud9. cloud
10. recycling bin
10. recycling bin
11.
recycling bin (colours
11. recycling bin(colours
reversed)
reversed)
12. wind turbines
12. wind turbines
13. chicken
13. chicken
14. cow 1
14. cow 1
15. cow 2
15. cow 2
16. shop
16. shop
17. factory
17. factory showing
carbonshowing carbon
emissions (carbon
emissions (carbon
emissionsemissions are shownin are shown inorange)orange)9Notes ondata used1111

Supplier-specific data

Supplier-specific data
or average
14data, or a combination of both

Average17data

2

All12data is12specific to the
supplier’s product

9

13

16

1

15

13

13

14

14

16

16

17

17

Supplier-specific data

15 1 & 2 15
Scopedata specific tosupplier’s product, all other
upstream emissions either
supplier specific or average

Average data

All emissions are based on
secondary process data

Average data

All emissions are based on
secondary EEIO data3

Get ready to decarbonise
Handbook on supplier engagement

Step 2: Define GHG emission reduction targets
2.1 Targets at your company level
After achieving transparency on the current GHG emissions
at your company level and supply chain (commonly referred
to as “Baseline”), emission reduction targets should be set atcompany level. These targets should ideally include all three
Scopes (1, 2 and 3). Addressing Scopes 1 and 2 is a great
start. The targets guarantee a comprehensive approach andwin credibility with investors, customers, and suppliers.
The company targets will often be translated into specificreduction targets per business area, business unit orgeographical split, or into targets according to the Green
House Gas Protocol (e.g., reduction targets for category
3.1 ‘Purchased Goods and Services’.

The current gold standard is to set
reductions targets in line with the Science
Based Target initiative (SBTi) framework,
demonstrating that company targets arein line with the Paris Agreement.
The target of the Paris Agreement is to
reduce global GHG emissions to limit the
global temperature increase in this century
to well-below 2 degrees Celsius whilepursuing efforts to limit the increase evenfurther to 1.5 degrees.

2.2 Targets at procurement level
a. Definition of targets and ambitions

c. Growing with experience

Once targets have been defined at company level, it is importantto align with the purchasing department to identify which efforts
are required of external stakeholders - especially suppliers. Thistarget-setting ambition should take account of the maturity of thepurchasing department, any support a sustainability department
may be able to provide, your business structure and resources.

With practice and experience, the approaches to define
emissions reduction targets will become more specific.
This may mean:•	Breakdown targets at a more detailed level (e.g., to definetargets at purchasing category or subcategory level, regionalor business unit, supplier and/ or product).
•	Focussing on high emission-related products or Product
Carbon Footprint (PCF) or specific customer requests. The
GHG Protocol provides guidance on the suitability of a PCF(region/technology/etc.).
•	Improve further GHG emissions data moving from secondary
and/or industry average data to a growing number of supplier-specific PCF data.

b. Setting targets
In a first approach, targets may include:•	Design: To design and establish an official supplierdecarbonisation programme in the supply chain.
•	Approach: To identify a first batch of suppliers with potential
to influence the reduction targets at procurement level(e.g., your identified hotspots) and agree with them on thenext steps. You will find more information about this approachin step 3.
•	Improve: Improvement of data quality (e.g., moving fromspend-based to weight-based calculation methods andfrom secondary to primary emission data).

4

Get ready to decarbonise
Handbook on supplier engagement

Step 3: Prepare suppliers to engage
in a GHG reduction programme
3.1 Internal organisation

3.2 Identification of key suppliers

To launch a successful supplier engagement programme, it is
crucial to be well prepared. External communication towards
suppliers is a strategic aspect that should be discussed andprepared. It is important to be clear on:•	The distribution of roles and responsibilities within theteams related to supplier contact and support. Roles andresponsibilities to consider:•	The programme manager might set up the programme
and team, define the strategy, issue internal communication,and deliver training to engage the whole procurement
organisation, and ensure alignment between internaland external stakeholders and alignment of actions withcorporate goals.
•	Sourcing managers ensure that suppliers understandtheir role and the expected actions. They support intechnical discussions and follow up with internal indicators
dedicated to GHG emissions.
•	The sustainability team support the supplier relationshipmanagers or sourcing managers with their technical expertise•	The governance set-up within the organisation.
•	The programme team and working methods.

Once an internal organisation around GHG-related supplierengagement is settled, your company should select several
key suppliers with whom to work on reduction targets.

Specific training about the general GHG emission reduction
topics and the expected steps should be provided to the relevant
people driving supplier communication and engagement.
The objective remains for many companies to broadly train
their procurement teams to make them more autonomous in thelong-term while dealing with supplier-related GHG emissions.
It is expected that this topic becomes a standard to be
discussed in operational business meetings and regularsupplier reviews.

The approach should be based on relevant criteria regarding the
programme itself, the purchasing structure, and its organisation.
The selected suppliers should be partners with whom therelationship allows for transparent and honest discussions
to “test the water” of planned approaches, learn from theirexperience, and get feedback and ideas about potential
reduction actions that were - until now - not known.
The following criteria can help you decide on suppliers to involve:•	Strategic relevance of the supplier for your company.
•	Whether the supplier is representative of the purchasing
category.
•	Size of the supplier (number of employees, turnover,global presence…).
•	Your capability to influence the supplier (due to the market
structure, the purchasing volume with the supplier or any
other influence factor).
•	Presence of a sustainability department at the supplierthat can provide support.
•	Current engagement of the supplier with the topic of GHG
emissions and estimated level of supplier’s maturity based on
previous communications and/or public information regarding
its performance (e.g., sustainability reports, SBTi Commitments, CDP, existing EcoVadis assessments or activities
on their Carbon Action Module, EPDs, association reports).
•	Known reduction potential with this supplier or category.
•	Ratio between effort and impact of the identified measures(to focus on quick wins).
•	Your relationship as a buyer with the supplier.
•	Estimation of the effort required based on several criteria(process, global collaboration level of suppliers to purchasing
requests, current communication level and fluidity with the
supplier…).

For many TfS Members, the firstsuppliers to be chosen were those
representing both a large volume of businessin their category (or of purchased volume)
and a large volume of GHG emissions
within the Scope 3 calculation. These two
criteria are the thresholds used. Initialefforts are often concentrated on those
suppliers with maturity on the topic (existingsustainability strategies, public engagementon GHG, subject to regulations, etc…).

Regarding the number of suppliers to onboard for this firstengagement activity, it is better to start small and grow in asecond step. This will enable you to develop expertise in yourinternal teams and guarantee safe and efficient capacity-building in a second step.
The first year may serve as a trial period, progressively testing
the robustness of the structure to guarantee the success ofthe supplier decarbonisation approach. In the following years
you would then continue to build capacity while deploying the
programme on a large scale (step 6).

The good practice establishedby most organisations is to have
conversations driven by the regularsourcing teams who manage therelationship with the relevant supplier.
This team is often supported by a central
sustainability or decarbonisation teamwhich is invited to join the technicaldiscussions. Depending on the company
structure, such topic experts may joinfrom the sustainability department or
are integrated within the procurement
department as experts.

5Get ready to decarbonise
Handbook on supplier engagement

Step 4: Communicate to secure buy-in
4.1 First official communication
to suppliers

4.2 Identification of suppliers’ maturity to define next steps

Once the first wave of suppliers has been identified andengagement with them has been internally prepared, it is timeto launch the initial supplier communication. This communication will enable you to emphasise the importance of the overall
programme and to anchor each operational request to suppliersin a global context.

Once an initial communication has been triggered, it isimportant to understand suppliers’ maturity to drive
decarbonisation before designing the relevant next steps.

This communication should be directed to decision-makers
and top managers at suppliers to ensure their awarenessand participation in the programme when it will be needed.
More pragmatically, it can consolidate the following information:•	Description of the project, its aims, and rationale.
•	The advantages of the initiative for suppliers.
•	Overall targets and the criteria on which suppliers will
be assessed in the future.
•	First estimation of high-level timelines (in the following months)
with expected participation from suppliers.
This first contact is intended to approach suppliers in acooperative way and should not mention any consequencesof non-participation. Penalisation should only be used as alast resort.

This can be done through a questionnaire sent to suppliers.
This may be a simple survey (identification of suppliers’ general
understanding and roadmaps) or more comprehensive withdetailed questions about their current GHG-related projects
and targets. You could also conduct technical interviews on
your supplier’s current emission level, how they calculate(or plan to calculate) their emissions, the consideration of the
TfS guidelines in the calculation, and the indicators used forreporting. However you approach it, the answers to anyquestions should allow comparison between suppliers.
If there is no internal work done by the supplier, a given
methodology can help.
We identify several possible paths to handle the next steps:

The “path with thematic”
 1 C ompile a list of relevant measures that are known as
generally having an impact on suppliers’ GHG emissions.
 2 Share a questionnaire with suppliers to identify whichmeasures have or have not already been undertaken.
 3 Provide specific help (Webinars, Workshops…) to suppliers
per type of measure. Include less mature suppliers.

The “human path”
 1 Sharea first general communication outlining yourdecarbonisation engagement and the expectedparticipation of your suppliers.
 2 Develop personal communications with a first waveof suppliers, asking open questions on how they tackle
GHG emission challenges.
 3 Consolidate innovative ideas stemming from yoursuppliers’ replies.
 4 Support and work collaboratively and individually withyour suppliers in the accomplishment of reduction targets
as business partner.

The “standard path”
1 S
 hare a very general questionnaire with your supplier
about their practices and current engagement level.
 2 Segment suppliers into company groups that belong
to a certain level of maturity.
 3 Communicate directly with suppliers and provide anynecessary support:		
a. Mature companies: Steer with specific PCFs enablinga deep understanding of actual emissions of purchased
goods. The Guideline on how to calculate a PCF areavailable on the TFS website: TfS Product Carbon
Footprint Guideline.

All these paths should be complementary, and be subject tospecific and individualised communication towards suppliers.
A mix of these approaches is also possible, but we suggest being
mindful of time and focus and avoid overwhelming suppliers withtoo many different communications and objectives.

		b. Less mature companies: Set an objective to perform
a calculation on Scope 1 and 2 for the upcoming year tofacilitate understanding of the structure of their emissions.

6Get ready to decarbonise
Handbook on supplier engagement

Step 5: Collaborate with suppliers
to successfully run the programme
5.1 Development of individual
contacts and alignment on
GHG strategies

5.2 Overcoming suppliers’ issues
and ensuring steady development
through partnerships

Suppliers may already have their own ideas, roadmaps
and challenges related to GHG emissions. It is therefore
recommended to approach suppliers with open questions
about how they tackle GHG emissions in their own scope.
Often suppliers have developed strong expertise in their field
which is also applicable to GHG challenges and its diverse
implications. At the same time, your company should be clear
about your goals and actions taken. The most successful
approach is to work with your supplier towards aligning existing
strategies and roadmaps related to GHG emission reductions,and to drive supply chain decarbonisation together. Your
company will benefit from this exchange, as it allows you toenrich your existing pool of ideas with new solutions and use
suppliers’ expertise as a resource.

In our experience, suppliers will openly share with you theissues they are facing. These may range from data security(suppliers may not want to disclose data and information for
confidentiality reasons) to operational topics while deploying
their decarbonisation action plan. It may also happen that thesuggested scope of suppliers’ activities does not match yourcompany’s expectations (e.g., a supplier may have launcheda Scope 3 reduction roadmap for a business unit or a region
that does not serve your company).

Your company should also provide transparency about theway supplier-provided PCFs will be assessed. The goal ofthese explanations is to orientate suppliers’ activities towards
value and develop the supply chain towards applying thegold standard for PCF calculation provided with the TfS
PCF Guideline.

A good practice is to keep regularcontact with suppliers to support
their initiatives, understand their issues,
bring traction towards reaching thetargets, and help suppliers find solutions.
This section emphasises the developmentof constructive partnerships and two-way
collaborative exchanges. This partnershipmay be informal, but could lead to theestablishment of a consortium through theidentification of complementary expertiseand solutions.

It is in this framework that your company should participate
to find tactical solutions helping to overcome the identified
issues (e.g., an NDA can be signed when data sharing is
considered sensitive) and invite suppliers to continue working
on reduction actions despite the identified issues.
The focus can also be on the identified ‘quick wins’ with theexperience gathered by the buying company (e.g., things to
beware of, common mistakes delaying projects, etc…).

Furthermore, it is important for your company to identify
and include the right contacts at the supplier in ongoing
communication and exchange, keeping sales staff and those
who can answer technical questions in the loop. This will
ensure integration of the topic in the overall business
relationship between the buying company and its suppliers.

7Get ready to decarbonise
Handbook on supplier engagement

5.3 Tracking of informationand progress

5.4 Collection of interesting
resources for suppliers

Discussions, as well as suppliers’ issues and their progress,
should be tracked by your company for steering and reporting
purposes. A defined governance structure can help ensure
ood quality exchanges both internally and with suppliers.
For example, a tracking system enables the purchasing
department to synchronise and share information with otherdepartments where needed.

It is useful to collect helpful resources that suppliers can draw
upon in case of questions or issues. These could be organisedby activities and/or challenges. The resources may also beorganised (and then distributed) according to the suppliers’
level of maturity.

Most efficiently, a digital system can be used (e.g., SRM or SAP)
to create and monitor status at group level. The supporting
system could also track the sphere of influence status of acompany (state-owned supplier, monopolistic situation),launched partnerships, and any other actions that are relevant
to save and track regarding purchasing related GHG emissions.

A variety of resources already exist. Among others, the following
tools can be used:• TfS Academy: A one-stop learning hub that provides TfS
member companies and their suppliers with e-learning,
guides, and other tools; the platform is free to use.
•	Other training and/or e-Learning: there may be othertraining or e-learning that you have found useful and would
recommend to your suppliers.
•	Documentation and publications: There may be documents
and publications that deal with specific topics that you may
want to share.
•	Other platforms dedicated to GHG topics providing
interesting tools and resources (e.g., Exponential Roadmap
Initiative, SME Climate Hub (focusing on small and medium
sized suppliers but with interesting and relevant material).
•	Shared experiences from your peers.
•	External LCA consultants familiar with TfS’s PCF
calculation guideline.
Relevant training about climate, and the possible measures
to take, are consolidated in an overview document of training
material for suppliers.
The list of possible resources could be an open databaseavailable to suppliers and classified based on thematic tags
to facilitate search.

8Get ready to decarbonise
Handbook on supplier engagement

Step 6: Standardiseand scale the programme
6.1 Definition of lessons
learned processYour company will have learnt important lessons from engaging
your first wave of suppliers. It makes sense to draw conclusions
from these learnings to be aware what has worked well - andshould therefore be further developed - and what should be
avoided in the future.
To do so, a return on experience could be performed based on:• Which activities have been a success?
•	Which activities are heading in the right direction and would
still need improvement?
• Which activities have failed?
The lessons learned with the first wave of suppliers should be
kept in mind to prepare the future purchasing standards of yourcompany, detailed in step 6.3 “Integration of the GHG theme inpurchasing standards”.

6.2 Scaling of the programme
Once lessons learnt have been consolidated, it is time foryour company to open the GHG emission reduction programme
to a second wave of suppliers.
This second wave can be identified based on the following
main criteria:• GHG emissions level.
• Purchasing volume.
• Supplier strategic aspects.
• Category-specific items and sourcing plans.
• Current workload at suppliers (to not overwhelm them,
if known).
The same criteria used and listed in Step 3.2 “Identificationof key suppliers” can be used again and thresholds adjusted
to identify new eligible suppliers.
It is advised that your company adjusts the number ofsuppliers for this second wave to internal capacities(resources, availability, expertise). This will ensure successfulprogramme development and credibility towards suppliers.

6.3 Integration of the GHG
theme in purchasing standards
Along with the opening of the programme to additional
suppliers, your company will have to ensure - through standards- that its expectations will be met. The bigger the programmeis, the bigger the standardisation required to ensure a common
direction taken by both your company and your suppliers.
This integration of the GHG theme into regular purchasing
activities can - and should - impact several policies andprocedures used in the procurement lifecycle:•	Specification designed around a certain expectation related
to GHG emissions (e.g., availability of a PCF, minimum
performance level related to this PCF…).
•	Tender and bidding processes favouring a mature supplierthrough a percentage in your award decision grid.
•	Regular suppliers’ performance review integrating specificobjectives towards GHG themes (reached reduction targets,availability of a PCF…).
•	Purchasing strategy integrating GHG themes as a standard
topic to agree on with suppliers.
•	Contracts including a clause to formalise the transparency
required and improvement obligations.
•	Reporting and the Key Performance Indicators (KPI) for
your company and/or suppliers challenging and, ideally,
incentivising performance on the GHG theme.
•	Inclusion of a carbon price to quantify the impact of CO2 inpurchasing decisions and management systems, enabling amonetary value to be attributed to climate risk and translatingthem into a uniform metric influencing decisions. (This often
remains a corporate decision and concerns more contributors
than the purchasing department alone).
According to the actual advancement of suppliers’ measures,
your company will most likely have two options to reach its
GHG reduction targets:•	Steer the gaps between suppliers’ roadmaps and its roadmap
with the objective to align.
•	Adjust targets towards what could be achievable and transfer
efforts between suppliers / purchasing categories / business
units / regions, etc… according to the targets structure.

9Get ready to decarbonise
Handbook on supplier engagement

6.4 Identification of supplier engagement key incentives
a. Supplier engagement possibilities
A key part of supplier engagement are incentives.
Therefore, it is important for your company to design which
benefits suppliers should be offered upon participating inyour emission reduction programme. This activity should
ideally be made at global procurement level to emphasise
its importance, and should be fully transparent.
Your company will need to lead many internal discussions
and bring relevant stakeholders on board. Do not be surprised
if you meet resistance - at least in the initial phase.
Incentivising could take the following forms:•	Minimum access requirements: Provide clarity tosuppliers on what is expected as a minimum in terms of
GHG emissions. They should be able to easily understandthat they should comply with specific criteria to do businesswith your company.
•	Performance-related incentives: Implement a performanceelement that relates to GHG emission reduction. This could
be a percentage value. Suppliers demonstrating good
performance shall be provided with more chance for reward(e.g., business).
•	Supplier Sustainability Awards or Supplier Innovation
Awards, or other good practice award: Present awards tothose suppliers who delivered outstanding performance in
reducing GHG emissions. Your company can also award a
supplier on their innovative approach or provide awards forgood practice that have enabled substantial reductions of
GHG emissions.
•	Supply chain financing programme: Provide financial
advantages when a supplier complies with a list of
expectations regarding reducing GHG emissions.
These incentives should be aligned with purchasing standards
in step 6.3 to give coherency to the overall approach.

b. Exemplary dynamics between buying
companies and suppliers
We propose a few scenarios that can help to project inwhich directions the relationship can go, in which we position
yourselves as the buying company.
You renew the business with a supplier having
insufficient activities on GHG.
You would like to renew a business contract with asupplier acting on a market with very few interesting players
and providing you with a raw material that is identified ashaving high GHG emissions. The supplier is financiallyvery competitive and reaches all operational expectations(Quality, Delivery times, payment conditions etc…) but has
not communicated any actions to reduce its GHG emissions
since they were first calculated three years ago. You decide
to set up an extraordinary meeting with the supplier’s top
management to highlight the importance of the GHG theme
and find a solution together. After discussions to identify how
you could incentivise the supplier to do more, you decideto renew the contract, increase its volume share and in turnformalise the supplier’s GHG action plan in the contract tomeet your climate targets.
You perform a tender with several suppliers withdifferent maturity level on GHG.
You are in search of a supplier to provide you with a raw
material that is identified as having high GHG emissions.
The identified supplier to be awarded the business is financiallyvery competitive and is already one of your regular suppliers
but hasn’t communicated any actions regarding GHG emissions.
As three other suppliers also meet the general quality and costs
requirements of this tender, you decide to enter negotiation withthe known supplier to include their efforts on the GHG theme asa condition of being awarded the business. The supplier refuses
the proposal and argues that business decisions should not
be driven by the GHG theme. You decide therefore to sign thecontract with a supplier bringing less cost savings but readyto commit on shared climate targets.

An unknown company shows up with an alternative
innovative product.
You purchase a raw material that is identified as having
high GHG emissions from a preferred supplier. An unknown
company contacts you, promoting a product innovation with
substantially less associated GHG emissions, representing
a radical rupture compared to the current purchased product.
After showing good results in first quality tests, the new
solution looks promising. Unfortunately, you are still
contractually engaged with your current supplier but decide
nevertheless to dedicate R&D resources and trigger upfront
investment to validate the solution in a possible serial
production and a prepare for future collaboration.
Your supplier shows promising GHG reduction
potential thanks to an alternative raw material.
After major investments in R&D, your regular supplierproviding you with a specific raw material succeeds in findingan alternative material reducing GHG emissions. After working
on its process, the supplier concludes that this new product isa good opportunity to reach your shared emission targets. The
initial product represents an important part of your emissions,but the new solution is more expensive. After showing goodresults in the first quality tests, the new solution looks promising.
You therefore decide to start the qualification process and plan
to redistribute the product share including this new solution.

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10Get ready to decarbonise
Handbook on supplier engagement

Closing
In this handbook, we describe a best-practice supply chain
decarbonisation journey based on TfS members’ knowhow andexperience. It is of course understood that this journey remains
challenging and things don’t always happen according to plan.

We therefore invite you to regularly check the latest publications on the
TfS Academy as we plan to publish more training related to GHG-emissions,
including “deep dives” on sections of this handbook to further share goodpractice. Our goal is to support TfS members, suppliers, and peers in in our
industry to overcome issues we all face when driving the decarbonisation of
our supply chains.

Access the TfS Academy

tfs-initiative.com/tfs-academy

Contact TfS

info@tfs-initiative.com
tfs-initiative.com

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