The race to net-zero carbon emissions is well underway, and for consumer packaged goods companies, it’s accelerating.
Many of the world’s largest companies have committed to reaching net zero by 2050, triggering a ripple effect throughout global supply chains. As these organizations act on their climate pledges, the responsibility to reduce emissions is cascading to suppliers at every level.
For most CPG brands, indirect emissions — those that occur across the supply chain — represent the majority of their carbon footprint. That includes everything from raw materials and manufacturing to packaging and logistics. Known as Scope 3 emissions, these are also the most difficult to measure and manage. But suppliers are now being told to track their emissions or risk being left behind.
This shift, driven by regulation and growing public pressure, investor scrutiny and retailer mandates, is redefining a successful CPG business. Carbon tracking is changing from a side initiative into a foundational business requirement.
The Demand for Carbon Accounting
The push for sustainability isn’t new, but it has reached a tipping point. Consumers are holding brands accountable, with over half saying they’re willing to spend more on environmentally friendly products. In North America, 81% of consumers said they would stop buying products from brands they learned were harming the environment.
Retailers are following suit. Tesco and Walmart have announced procurement policies aimed at reducing carbon emissions and promoting sustainability throughout their extended supply chains. These initiatives are requiring suppliers to track and disclose their Scope 1, 2, and 3 emissions regardless of location.
At the same time, global regulations are tightening. The European Union’s Corporate Sustainability Reporting Directive (CSRD) is leading the way, mandating emissions disclosures at the product and supply chain level, with penalties for non-compliance. In the U.S., federal environmental, social and governance (ESG) regulations such as the proposed SEC climate rules remain contested, while California (SB 253) and New York (A4123) have introduced climate disclosure laws. These states alone represent two of the eight largest economies in the world, and more are expected to follow.
The message is clear: Even companies with no direct federal obligations must implement emissions-tracking strategies to remain competitive in international markets and major retail ecosystems.
Tackling Scope 3
For CPG brands, Scope 3 emissions account for roughly 75% of total emissions and are a significant barrier to reaching net-zero. These emissions span every link in the supply chain, from upstream farming to downstream distribution, creating a complex and often fragmented data landscape.Yet more than half of companies still rely on spreadsheets and manual tools to navigate this complexity. These outdated methods are inefficient, error-prone, and difficult to scale. Establishing baselines, tracking reductions, or meeting compliance requirements without having accurate, standardized data becomes nearly impossible.
The beverage industry offers a valuable example. It’s resource-intensive by nature, with emissions stemming from agriculture, water use, packaging and outsourced production. Each stage generates unique data that must be tracked and analyzed. This can be an overwhelming task for many CPG brands, especially those just beginning their climate journey.
Manual systems also fail to provide the long-term insights needed for strategic action. Patterns are hard to detect, decision-making gets delayed, and human error occurs. By contrast, companies that digitize their carbon tracking shorten the learning curve and accelerate progress toward their sustainability goals.
Artificial intelligence-driven platforms are transforming carbon accounting by automating data collection and analysis. AI can integrate with procurement platforms, utility meters, logistics trackers and internet of things sensors to gather real-time data. AI also provides visibility into emissions across the supply chain. Advanced analytics can detect inefficiencies, identify high-emission areas, and forecast future emissions trends.
Accurate carbon tracking enables brands to meet growing stakeholder expectations, maintain access to key markets, and build resilience in the face of rising regulatory scrutiny. While the journey may be complex, the tools to succeed are more accessible than ever.
Technology makes it possible to move from reactive reporting to proactive reduction. And with pressure mounting from all sides, now is the time to act. CPG companies that invest in transparent, data-driven strategies will not only stay ahead of regulations, they’ll position themselves as partners of choice for global retailers and consumers alike.
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