New Report Highlights Risks of Unreliable Supplier Data for Companies' Carbon Emissions Calculations

The Dangers of Unreliable Supplier Data: Insights from the 2026 Carbon Action Report

In a recently published report by EcoVadis and Kearney, significant concerns surrounding the accuracy of supplier carbon data have come to light. This report emphasizes the vulnerabilities organizations face when relying on questionable data sources for assessing their Scope 3 emissions, essentially the indirect emissions stemming from their supply chain activities.

The Underestimation Crisis

Based on their analysis of over 56,000 businesses, EcoVadis uncovered that only a mere 4% utilize primary supplier data when computing their Scope 3 emissions. The majority lean on industry averages or, alarmingly, fail to report their Scope 3 emissions altogether. This reliance may lead companies to underestimate their actual carbon footprint by as much as threefold. As supply chain disruptions escalate, such inaccuracies could present financial repercussions upwards of $135 million annually by 2030 for large enterprises.

Rising Climate-related Costs

The financial strain caused by climate-related challenges is becoming increasingly evident in business operations. A staggering 94% of North American companies reported experiencing cost increases due to physical climate impacts last year. Factors contributing to these rising costs include supply chain disruptions, spikes in commodity prices, and damage to vital infrastructure. Furthermore, regulatory frameworks are tightening. In Europe, the Carbon Border Adjustment Mechanism (CBAM) seeks to balance the playing field by requiring companies to account for the carbon embedded in imported goods starting in 2027. Likewise, California's SB 253 mandates that large corporations report their operational emissions later this year, with a follow-up on Scope 3 emissions set for 2027.

The Fragility Gap

EcoVadis refers to the disparity between perceived supply chain resilience and actual exposure as the "Fragility Gap." This gap highlights the risks companies take when basing critical business decisions on questionable carbon data. "Organizations are making crucial sourcing decisions based on untrustworthy carbon data, leading to potential blind spots in risk management," states Pierre-François Thaler, Co-Founder and Co-CEO of EcoVadis. Businesses that take the initiative to source verified data ahead of disruptions will be better positioned to manage their supply chains efficiently.

Supplier Engagement and Carbon Maturity

Despite the evident risks, engagement with suppliers regarding carbon emissions remains woefully inadequate, with only 7% of companies currently liaising with suppliers on these matters. However, those that utilize verified data have noted a substantial increase in engagement, being eight times more likely to connect with their suppliers about carbon issues. As businesses mature in their carbon management practices, they demonstrate a remarkable ability to reduce operational emissions more effectively, sometimes by as much as seven times faster than their counterparts. Additionally, firms sharing verified emissions data attract nearly threefold the buyer connections compared to those relying on less reliable data.

The Path Forward

Angela Hultberg, Global Head of Sustainability at Kearney, emphasizes the urgency for companies to invest in accurate data collection: "The businesses that tackle data challenges now will outperform their competitors in the coming years." To truly make an impact, companies should focus on high-emission suppliers, equipping themselves with legitimate contractual agreements and effective incentives.

In conclusion, while the initial phase of acquiring better data may temporarily expand an organization's emissions footprint, it sets the groundwork for improved decision-making, leading to actual reductions and showcasing the return on sustainability investment. For further insights and strategies, download the full 2026 Carbon Action Report from EcoVadis.

About EcoVadis and Kearney

EcoVadis is recognized as a leader in sustainability intelligence, equipping businesses with the tools to understand their supply chain performance while addressing regulatory risks and building resilient value chains. In collaboration with Kearney, a renowned management consulting firm, the report aims to establish a clear guideline for organizations aiming to navigate the complex realm of corporate sustainability successfully.