Navigating Sustainability Requirements in Suppliers’ Code of Conduct

As sustainability disclosure requirements are constantly evolving, it’s increasingly important for businesses to remain aware of these changes and prepare to comply. While the sustainability disclosure regulatory requirements typically impact larger companies, we are starting to see mid- and small-cap companies that typically operate as business-to-business suppliers be impacted by a new trend in this space. Larger, international companies are starting to update their Supplier Code of Conduct to require the measurement of GHG emissions, setting of climate targets, and procuring electricity from renewable energy sources.

Microsoft’s Supplier Code of Conduct: Key Sustainability Requirements 

One notable example of these requirements in practice is Microsoft’s Supplier Code of Conduct, in which chapter 6, provision 6.11 outlines three key sustainability requirements for suppliers.  

Specifically, suppliers must: 

1. Measure Scope 1, Scope 2, and Scope 3 GHG Emissions  
   Suppliers must consistently and accurately track and disclose their direct, indirect, and value-chain emissions. Assurance of these metrics from an independent, third-party can be required.
2. Reduce Emissions by 55% by 2030  
   Microsoft requires its suppliers to create and provide plans for significant reductions in their carbon footprint related to the products and services they provide. 
3. Transition to 100% Carbon-Free Electricity by 2030 
   Suppliers must ensure that the energy used to deliver their products and services is entirely sourced from carbon-free electricity. 

Meeting these requirements is no small task, but it’s becoming an essential aspect of doing business with today's increased focus on sustainability. Luckily, you don’t have to navigate how to meet supplier code of conduct requirements alone because Schellman can help you on your sustainability compliance journey. 

How Schellman Can Help with Sustainability Compliance

At Schellman, we understand the complexities and requirements of these evolving sustainability standards and can support your business in several key areas: 

• Measuring Your Emissions
  We can help assess and calculate your scope 1, scope 2, and scope 3 GHG emissions. 
• Providing Limited Assurance Over Metrics
  If your company measures emissions in-house, we offer limited assurance to validate your data.
• Developing a Sustainability Strategy
  We assist in setting realistic climate targets and planning for Microsoft’s required 55% emissions reduction by 2030. 

Managing sustainability compliance can feel overwhelming, but Schellman is here to help. If you need guidance on how to best meet Microsoft’s or another company’s supplier requirements or more information on any other sustainability regulation, reach out to a Schellman professional or fill out our Contact Us form to start the conversation.