On October 28, the United Nations Framework Convention on Climate Change (UNFCCC) issued a stark synthesis report showing that current global pledges reduce emissions by just 2.6% — a fraction of the 43% needed by 2030 to limit warming to 1.5°C. For businesses, this is a wake-up call. The time for tangible action is now.

Imagine a maze representing the typical supply chain, filled with twists, turns and hidden social and environmental impacts. For apparel and consumer goods companies, for which more than 90% of emissions come from Scope 3 sources, traditional methods of calculating these emissions are like navigating this maze blindfolded.

As business leaders, we can no longer ignore our Scope 3 impact. Regulatory bodies worldwide are drafting frameworks that will likely require companies to disclose Scope 3 emissions along with the methodologies behind them. Investors are raising the bar, too, with a 2023 PwC survey showing that more than one-third of investors, together managing $14 trillion in assets, now consider Scope 3 reductions a top priority.

As global climate targets demand urgent action, and sustainability teams struggle with outdated, resource-intensive processes, the moment has arrived to pivot from legacy, spend-based GHG emissions models to precise, product-specific emissions measurement based on primary data. This shift can be transformative, empowering companies to not only track emissions more accurately but also drive real reductions across their supply chains on a global scale.

Outdated Tools Yield Inaccurate Results

Traditional models, based purely on spend, calculate emissions by correlating financial spending and the cost of a product with industry-average emissions factors. For example, emissions from packaging are estimated by applying a generic emissions factor per dollar spent. The spend-based model in Scope 3 accounting relies on broad sector averages, often failing to reflect the nuances of unique products and manufacturing processes.

This limitation makes it challenging to measure or demonstrate the impact of carbon reduction efforts. For instance, if a brand reduces the carbon footprint of a sweater by 20% but the cost of the bill of materials stays constant, the emissions remain unchanged in the model.

Another way of looking at it — a sweater whose bill of materials cost $50 could appear to have lower emissions than a $100 one, regardless of its actual supply chain efficiency.When this approach first emerged, it was a helpful way for companies to roughly estimate Scope 3 impact at a time when no other data was available. But today, the primary data businesses need to establish accurate measurements actually exist, and one-size-fits-all models that obscure emissions nuances across different suppliers, practices, and regions are no longer acceptable.  

Mapping Your True Emissions Landscape

COP29 has just wrapped, and with  emerging EU policies like the Corporate Sustainability Reporting Directive and potential shifts in U.S. environmental regulations, businesses don’t have the luxury of waiting to understand their true emissions.

Primary data transforms vague emissions estimates into clear, actionable insights, measuring actual flows across the supply chain. Primary data now enables companies to map their real emissions footprint, yielding a narrative where sustainability claims are substantiated by precise data rather than broad estimates.

A transparent Scope 3 approach also addresses climate challenges, builds public trust and mitigates greenwashing risks.  By accurately mapping emissions across the supply chain, brands can identify hotspots and work with suppliers to implement targeted improvements. There’s also a strong business case for supplier transparency: McKinsey has noted that companies actively tracking and acting on primary data are better positioned to secure green premiums and open new revenue streams.

Over the past year, we’ve seen the brands we work with shift towards suppliers with traceability programs and stronger environmental policies. For those looking to improve their environmental or social footprints, understanding the most impactful investment decisions hinges on understanding their own impact rather than industry average impacts — this is where primary data can play the strongest role.

From Compliance to Leading the Way

Companies that shift from spend-based to primary data models gain a richer, more accurate emissions profile, which can reveal unexpected inefficiencies, cost savings, and new opportunities for collaboration with supply chain partners and even with competitors that also want to improve their environmental impact. Primary data empowers sustainability teams to prioritize high-impact interventions, amplifying the value of every sustainability dollar spent and driving tangible results, including a lower impact on the environment, which can be promoted as responsible business.

As pressure builds to mandate Scope 3 reporting, companies that invest in gathering and making the most of primary data will be best positioned to demonstrate leadership in a future that requires sustainability as a responsible business practice. Primary data has the power to move companies beyond mere compliance, enabling them to create real environmental improvements. With a clear view of their supply chains, brands can prepare themselves to lead the charge toward a more sustainable future, telling a story of commitment, transparency, and progress towards better business practices.

Primary data also enhances business resilience in a rapidly changing market. With investors and increasingly educated consumers demanding transparency, companies demonstrating real progress can differentiate themselves from their competitors. When considering existing and potential value chain partners, primary data is quickly becoming an expectation among leading retailers and distributors, many of which now favor suppliers committed to robust environmental practices. Let’s never forget that your Scope 1 or 2 impacts may be someone else’s Scope 3 impacts. Providing primary impact data from the outset opens the door for manufacturing partners to partner with global brands and retailers in adhering to regulatory requirements.

For sustainability executives and their teams, shifting from spend-based models to primary data is more than just an upgrade. It’s a pivot that strategically positions companies as responsible actors and innovators ready to tackle the next generation of environmental challenges. Using primary data isn’t simply about meeting today’s regulatory demands; it’s about building a foundation for a future where businesses play an active role in creating a resilient, low-carbon economy.

Kevin Vranes is chief product officer of Worldly.