With 80-90% of total corporate emissions coming from the supply chain, procurement must play a leading role in the drive to decarbonization. Leadership often gives them ambitious sustainability targets.
But the resources and capabilities to achieve these goals are often missing. In fact, 93% of IT teams say modernizing procurement technology is a priority, yet only 37% have automated even basic supplier selection. Meanwhile, 47% of companies are still managing ESG data in spreadsheets.
At the same time, carbon pricing is having an increasingly big impact on procurement, with regulations like CBAM causing carbon costs to rise. Research shows that carbon pricing could create costs equivalent to 50% of EBITDA by 2030 for companies in sectors such as mining, metals and utilities.
In short, the gap between what procurement teams are expected to deliver on decarbonization and what they’re equipped to deliver is often significant — and rising carbon prices are making it all the more urgent to deal with this issue.
Carbon costs are hitting the bottom line
For procurement teams in carbon-intensive industries, carbon pricing isn’t a theoretical concern. These costs are already hitting businesses today, and are set to increase significantly going forward.
Take steel, for example. The EU’s CBAM (Carbon Border Adjustment Mechanism) is raising the cost of purchasing steel, aluminum, and cement in line with the EU’s domestic carbon price. As steel emits approximately 2.6 tons of CO₂ per ton produced, this means if carbon prices reach €149 per ton of CO₂ by 2030, as Bloomberg NEF projects, that translates into potential additional costs of €387 per ton of steel.
For companies purchasing steel on an industrial scale — often tens of thousands of tons annually — these escalating costs could leave them dangerously exposed. As BCG-WEF research shows, the impact of carbon pricing alone could create additional costs equivalent to 50% of EBITDA by 2030 for companies in carbon-intensive sectors.
Financial markets have started pricing this carbon risk into their lending decisions, meaning each extra ton of emissions increases the overall cost of capital by an average of 18.5%. Financial institutions are raising interest rates for unsustainable businesses because they believe the latter will be vulnerable to increased carbon costs further down the line.
Then there’s the risk of complete market exclusion for unsustainable suppliers — something which is already happening. As of early 2025, major companies including Miele, Deutsche Bahn, BASF, and Evonik have begun excluding suppliers from tenders and RFPs if they cannot share their product carbon footprint data.
Why procurement teams are stuck
Senior leadership teams typically expect procurement to take the lead in managing Scope 3 emissions and set ambitious targets. But this is often not accompanied by the infrastructure, resources, or decision-making authority necessary to meet these goals. Procurement teams are being asked to manage sustainability as a new remit, but few have fully adapted to it.
The complexity of modern supply chains makes this challenge even more daunting. Modern supply chains involve hundreds or even thousands of suppliers across multiple tiers and regions. Each supplier has its own sub-suppliers, manufacturing processes, and carbon footprints that vary by location and scale. This is why, according to the carbmee Sustainability Intelligence Report 2025, 53% of organizations point to the complexity of their supply chain as a major challenge in their sustainability journey.
The data problem compounds these difficulties. In a BCG survey, executives admitted to error rates as high as 40% in their emissions calculations. Procurement teams can’t make good decisions with bad data. Yet this is exactly what many are being asked to do.
Procurement teams need reliable data and advanced AI tools to factor carbon costs and sustainability into sourcing decisions and meet their regulatory reporting obligations. But all too often, the tools, automation, and infrastructure simply aren’t there.
The cost of treating carbon pricing as a “future problem”
Some companies are taking a “wait and see” approach to carbon pricing. Why invest now when we don’t know how carbon regulations will evolve?
This might save money in the short term, but it’s an extremely risky gamble. Companies that wait will face three problems:
- Higher costs with fewer options: If sudden carbon price hikes hit, the best low-carbon suppliers will already be locked into relationships with early movers. Laggards will scramble for remaining capacity at premium prices.
- Capability gaps that take years to close: Building accurate carbon data systems, establishing supplier engagement processes, and integrating carbon intelligence into procurement workflows doesn’t happen overnight. Competitors building these capabilities now are creating advantages that will be difficult to replicate.
- Unpredictable financial and operational risk: Acting only when forced means exposure to sudden cost shocks, supply chain disruption, and margin pressure that’s difficult to pass to customers.
The window is narrowing. Companies that fail to adapt to carbon pricing will find themselves systematically choosing suppliers that look cheap today but become expensive tomorrow.
There is a better way forward: using carbon intelligence to align sustainability and business advantage
Here’s the good news: procurement teams that embrace sustainability the right way are discovering exciting benefits.
Companies that integrate carbon intelligence into procurement are already seeing multiple benefits: sustainable suppliers often deliver better value, carbon data can reveal hidden inefficiencies worth millions in savings, and meeting sustainability regulations can drive supplier innovation rather than simply adding costs.
It’s a misconception that green goods must be costlier. Regulations such as CBAM are beginning to make carbon-intensive products more expensive. Moreover, when products are greener, they reduce costs associated with high energy use, such as the hidden costs of suboptimal materials or inefficient logistics — incentivizing suppliers to deliver a lower-cost product.
Procurement leaders may believe there is usually a trade-off between cost targets and sustainability targets. But it doesn’t have to be this way. The companies succeeding in this transformation share a common approach: they’re using data-driven carbon intelligence to identify where sustainability and profitability align.
The complete guide, “Carbon Management: The Hidden Source of Procurement Savings,” breaks down five strategies procurement teams are using to turn carbon management from a compliance burden into a competitive advantage:
- Focus on the 20% of suppliers driving 80% of emissions
- Treat carbon as a fifth dimension of landed cost
- Embed granular carbon data into procurement workflows
- Adjust strategy based on supplier switching complexity
- Make suppliers compete on sustainability, not just price
These strategies work together to help procurement teams reduce emissions and improve the bottom line at the same time. With the right strategic approach and technology foundation, sustainability can transform from a pressure point into a source of competitive advantage.
Download the full guide to discover how leading procurement teams are getting ahead of carbon costs — and turning them into a competitive edge.
