The adoption of the EU Climate Law by the European Parliament in June 2019 signaled, in no uncertain terms, a new era of regulatory expectations for greenhouse gas reporting. For large manufacturing firms, the change was both anticipated and, to some extent, quietly dreaded. After all, while many companies had long acknowledged the importance of tracking their direct emissions, the extension of formal obligations to supply chain greenhouse gas (GHG) reporting presented a far more complex challenge. There is, one could argue, something inherently daunting about the task of quantifying not just what happens within a company’s walls, but also what happens across hundreds—if not thousands—of supplier relationships scattered across jurisdictions and sectors.
Central to this evolving landscape is the requirement to map supplier GHG emissions using standardized tools. Eurostat’s emission factors, available as open data, now provide the baseline for such calculations. These factors are, for the most part, robust and widely accepted. Still, their integration into procurement workflows is anything but straightforward. Companies are expected to match supplier activities—ranging from raw material extraction to parts manufacturing and logistics—with the appropriate emission coefficients. This is no small undertaking. It requires cross-departmental coordination, supplier cooperation, and, not infrequently, investment in new data systems or analytical expertise that many firms had not fully budgeted for. Some have discovered, much to their frustration, that supplier data isn’t always available at the granularity they would have liked. And even when it is, inconsistencies in reporting formats or units can introduce further complications.
The emerging best practice involves building open-data procurement portals that record and display each supplier’s carbon intensity. These portals serve a dual purpose. On the one hand, they create a central repository of information that can be used for regulatory reporting. On the other, they function as a transparency tool, allowing firms to demonstrate, to both regulators and the public, their commitment to responsible sourcing. The process of designing such a portal, however, is rarely linear. Some firms, in their enthusiasm, have launched overly ambitious platforms that outpaced their internal capacity to populate and maintain them. Others, perhaps more cautiously, have taken incremental steps, piloting features with select supplier groups before scaling up.
What complicates matters further is the varying readiness of suppliers to participate. While some large, multinational suppliers have well-established GHG accounting practices, smaller firms often do not. And herein lies a tension that many manufacturers have yet to fully resolve. Should they invest in capacity-building efforts for these smaller suppliers, helping them measure and report their emissions? Or should they, perhaps reluctantly, consider shifting to suppliers who already meet the reporting standards? It’s not an easy decision, and views differ. Some procurement teams have voiced concern that prioritizing carbon reporting too heavily could limit supplier diversity or drive up costs. Others argue, with equal conviction, that there is no alternative if firms are to meet their climate compliance obligations credibly.
The European Parliament’s Climate Law further anticipates that companies will publish annual climate compliance summaries. These reports are expected to cover not just a firm’s direct emissions but also those embedded in its supply chain. Many companies have begun developing templates for these summaries, often modeled on the EU’s own reporting guidelines. A typical summary might include a breakdown of total emissions by category, commentary on year-on-year changes, and an explanation of any anomalies or gaps. Some firms have opted to go further, voluntarily including targets for future reductions or narratives about supplier engagement. It remains to be seen whether these additional disclosures will become the norm, or whether most companies will stick to the minimum requirements. One suspects, though, that stakeholder expectations will increasingly push firms toward greater transparency.
There is, perhaps inevitably, some quiet debate within industry circles about how prescriptive these reporting obligations should be. Some argue that flexibility is essential, given the diversity of supply chains and operational contexts. Others counter that without more standardized methodologies and reporting formats, the value of the data will be limited—both for regulators and for the public. It is a debate that will likely continue as the Climate Law’s provisions are implemented and refined. In the meantime, firms are, for the most part, focusing on building the infrastructure they need to meet the current requirements, even if those requirements feel, at times, like a moving target.
The creation of open-data procurement portals and climate compliance summaries, then, is not simply an administrative exercise. It represents, in a sense, a cultural shift—a rethinking of what corporate responsibility looks like in the context of climate change. There is no doubt that challenges remain. Data quality, supplier engagement, and internal capacity are all live issues. And while some firms have made impressive strides, others are still grappling with the basics. Yet what seems clear is that the EU’s Climate Law has, at the very least, set a new baseline for what is expected. How companies choose to meet—and perhaps exceed—these expectations will, in time, become a defining feature of their license to operate in Europe’s evolving regulatory environment.