Why Scope 3 Emissions Are Now a Procurement Challenge for Pharma Companies
California's Climate Corporate Data Accountability Act (SB 253) requires large companies to disclose their greenhouse…
Why Scope 3 Emissions Are Now a Procurement Challenge for Pharma Companies
California SB 253 is reshaping pharma procurement. Better Scope 3 emissions data has now become essential for compliance and supply chain resilience.
Jhalak Jain
Most pharmaceutical companies can tell you exactly how much they spend on raw materials, manufacturing, and logistics. But ask how much carbon is generated across that supply chain, and the answer is often far less clear.
That gap in visibility is becoming a business risk.
California’s Climate Corporate Data Accountability Act (SB 253) will require large companies doing business in the state to disclose their greenhouse gas emissions, including Scope 3 emissions. These are the indirect emissions generated across a company’s value chain, from suppliers and manufacturers to transportation and distribution partners.
For pharmaceutical companies, this presents a unique challenge. The industry relies on complex global supply chains, contract manufacturing networks, and temperature-controlled logistics systems. Understanding emissions across all these moving parts is easier said than done.
Why California's SB 253 Matters to Pharma
SB 253 applies to companies with more than $1 billion in annual revenue that operate in California. Beginning with 2026 data, these companies will need to report Scope 1, Scope 2, and Scope 3 emissions.
While the regulation targets large organizations, its impact extends much further.
Large pharmaceutical companies cannot report accurate Scope 3 emissions without data from their suppliers. This means manufacturers, logistics providers, packaging vendors, API suppliers, and other partners will increasingly be asked to share emissions-related information.
For procurement teams, emissions data is quickly becoming as important as cost, quality, and delivery performance.
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Why Scope 3 Emissions Are Difficult to Measure?
Despite growing pressure to improve reporting, many pharmaceutical companies struggle to obtain reliable Scope 3 data. There are several reasons for this:
1. Spend-based calculations:
Many companies still rely on spend-based estimates, where emissions are calculated using supplier spending and industry averages. While this approach can produce a reportable number, it often misses what is actually driving emissions.
2. Fragmented Information:
Emissions data is often scattered across procurement systems, logistics records, supplier reports, and sustainability platforms. Bringing all this information together remains one of the industry’s biggest challenges.
For companies that continue to rely on spreadsheets and manual reporting processes, scaling these efforts can become increasingly difficult as reporting requirements grow.
3. Cold chain logistics, which keep medicines at controlled temperatures during storage and transportation, can be highly emissions-intensive. Refrigerant leaks, inefficient equipment, and long-distance transportation routes can significantly increase a product’s carbon footprint.
Due to these factors, even though two suppliers may provide the same product at the same cost but have very different carbon footprints depending on their energy sources, manufacturing processes, transportation methods, or refrigeration systems.
Building Better Visibility Across the Supply Chain
Improving Scope 3 reporting is not simply about meeting disclosure requirements. It is about gaining a clearer understanding of supplier risk, operational efficiency, and long-term resilience. Here are six practical steps procurement teams can take:
1. Identify suppliers with the highest emissions exposure
Evaluate suppliers based on factors such as manufacturing processes, energy sources, transportation methods, geography, and cold chain dependency. In many supply chains, a small group of suppliers contributes a disproportionately large share of total emissions.
2. Collect activity-level data
Instead of stopping at spend-based estimates, collect operational data such as shipment distances, transport modes, fuel types, facility energy consumption, refrigerant inventories, and leakage rates. This creates a more accurate and defensible emissions inventory.
3. Measure supplier performance beyond cost and delivery
Supplier scorecards should increasingly include emissions-related indicators. Assess suppliers based on carbon intensity, reporting capabilities, climate preparedness, and progress toward emissions reduction goals. This helps identify suppliers that may pose future compliance, operational, or reputational risks.
4. Build emissions reporting into procurement processes
Sustainability data should be gathered through the same channels used for other business-critical information. Include emissions reporting requirements in supplier onboarding, RFPs, contracts, and periodic performance reviews. Establishing expectations early creates greater transparency and accountability across the supply chain.
5. Integrate emissions data into procurement dashboards
Emissions data becomes most useful when it is visible alongside traditional procurement metrics such as cost, quality, supplier performance, and delivery timelines. A centralized dashboard allows teams to identify high-risk suppliers, monitor progress, and make sourcing decisions with a fuller understanding of both business and environmental impacts.
6. Develop a supplier transition and engagement strategy
Not every supplier will be equally prepared for growing disclosure expectations. Segment suppliers based on their level of maturity and engagement. Some may require support to improve reporting capabilities, while others may need clear timelines for emissions reductions. A structured engagement plan helps companies move beyond compliance and drive meaningful improvements across their supply chains.
What This Looks Like in Practice
Consider a pharmaceutical company conducting its first supply chain emissions assessment. The review reveals that a handful of suppliers account for a significant portion of its Scope 3 footprint. By focusing engagement efforts on these suppliers, the company can identify opportunities to improve efficiency, reduce emissions, and strengthen reporting quality.
In another scenario, a manufacturer discovers that key cold chain partners rely on refrigeration systems that may soon face regulatory restrictions. Identifying this risk early provides time to plan upgrades and avoid future disruptions.
These examples highlight an important point: better emissions data is not just about compliance. It can help companies identify operational risks, strengthen supplier relationships, and build more resilient supply chains.
Looking Ahead
California’s SB 253 is part of a broader shift toward greater climate transparency. Similar disclosure requirements are emerging globally, and expectations from investors, customers, and regulators continue to grow.
For pharmaceutical companies, Scope 3 emissions are no longer just a sustainability issue. They are increasingly becoming a procurement and supply chain issue.
Organizations that begin building better supplier visibility today will be in a stronger position to meet reporting requirements, reduce risk, and uncover opportunities for long-term operational improvements.
How Emit Earth Can Help
Understanding Scope 3 emissions requires reliable data, clear methodologies, and the ability to turn information into action.
Emit Earth helps organizations measure supply chain emissions, identify hotspots, engage suppliers, and build reporting frameworks aligned with evolving climate disclosure requirements. By transforming complex supply chain data into practical insights, businesses can move beyond reporting and start making informed decisions that reduce emissions and strengthen resilience.
