Guest post by: Toby Newman, CEO, Secaro
What’s changed?
The motivation for businesses to decarbonize supply chains has fundamentally shifted. Initially driven by values and customer pressure, there was a surge in net-zero pledges in 2020 and 2021. According to figures from the Science Based Target Initiative (SBTi), 727 companies had committed to setting net-zero targets by the end of 2021. And this was a key period of time for action as well. Data from Secaro showed a surge of decarbonization actions completed by businesses between 2022 and 2023.
By 2023, the focus shifted to new legislation and compliance, driven by the introduction of the Corporate Reporting Sustainability Directive (CSRD), the EU Carbon Border Adjustment Mechanism (CBAM), and the Corporate Sustainability Due Diligence Directive (CSDDD) in 2024. However, this legislation has since been simplified; scopes have been tightened, and implementation delayed. And data shared by Secaro customers in 2025 shows a slowdown in supply chain decarbonization actions, with overall completed actions on Secaro’s platform down 53% compared to data shared in 2024.
Businesses now need to see a clear business case. Decision making has shifted from the responsibility of a sustainability lead, into the hands of the CFO in many cases. If supply chain decarbonization cannot be shown to reduce costs, it’s off the agenda. But is this a problem?
The belief has always been that a ‘green premium’ could only be upheld for a short period of time. That sustainable business practice had to be the same as efficient, profitable operations to be effectively adopted at scale. This remains true. But there’s a new driver emerging that links both profitable and sustainable operations, and it’s set to drive supply chain decarbonization in a much more assertive way.
How do we save money?
Market conditions are tough. According to PwC’s Annual Outlook 2026, appropriately titled “Teetering Resilience”, US executives are predominately focusing on cost reductions and risk management. In its Global M&A trends report, the consultancy reported cautious corporate spending behavior in Europe. And in 2026, businesses are set to face higher insurance losses and carbon taxes. Insurance losses because of natural catastrophes reached approximately $107 billion in 2025 according to Swiss RE and the UK government has predicted that the EU carbon boarder levy could cost UK businesses £800 million a year.
It’s not surprising that ‘how do we save money?’ is the first question businesses are asking. Every supply chain decarbonization strategy must save costs, or it will not be successful. This is completely achievable.
Let’s start with energy as it’s a simple lever for businesses to pull. By implementing energy efficiency measures to reduce carbon emissions, energy costs fall too. This is particularly significant given current energy security risks and consequential volatility in pricing.
And it’s already proving a popular approach. The European Investment Bank revealed that approximately half of firms in both the EU and the US invested in energy efficiency in 2024 and 90% of supply chain emissions reduction actions recorded by businesses on Secaro’s platform between 2020 and 2025 focused on optimization and improving energy efficiency. These include actions related to lighting, e.g. switching to LEDs, the use of compressor systems, general energy management, and space conditioning. And these actions can have a significant impact on supply chain emissions when rolled out across multiple facilities.
The business case for renewable energy has also flipped. According to the International Renewable Energy Agency (IRENA), 91% of new renewable projects are now cheaper than fossil fuel alternatives. Businesses need to take a holistic approach that starts with efficiency, and then move to decarbonized fuels, so that the economics work.
It’s not just energy factors that can make supply chain decarbonization cost-effective. A significant share of Scope 3 supply chain emissions is linked to waste management. A 2025 UK government impact assessment estimated that waste-management costs are as high as £350 million per year for large businesses. By taking actions such as optimizing secondary and tertiary packaging; improving pallet and container preparation processes, businesses can reduce unnecessary waste, corresponding carbon emissions, and the associated costs.
The rise of new risks
2026 has brought a renewed focus on sustainability-related financial risks. It is a critical year for financial reporting, with International Financial Reporting Standards (IFRS) from the International Sustainability Standards Board (ISSB) being rolled out across most major economies and jurisdictions globally – with the notable exception of the U.S. – and the CSRD in Europe. Businesses must prepare to avoid direct compliance costs, indirect business impacts, and market risks further down the road. Through this, we are seeing sustainability evolve directly into a financial performance issue.
It also kicks off a five-year timeline to meet 2030 targets. If a company cannot produce a credible transition plan, and investors support the European Central Bank, failing to fulfil these targets might limit financial access for European businesses. Globally, there is a reputation risk and the chance of consumer sentiment shifting against a company’s goods or services.
And it’s not just finances or reputation on the line. Businesses are facing acute supply chain risks. Recent 2025–2026 industry data from global risk surveys show that companies across the US, UK and Europe are increasingly prioritizing supply chain risk and resilience management. Data shared by Secaro customers in 2025 demonstrated an increased focus on this supply chain risk, with 50% of surveyed suppliers having already undertaken water risk assessments.
This shift is both understandable and necessary. Impacts of extreme weather on business operations are growing. In the UK, a climate risk report from the Met Office revealed that weather-related business claims reached£109 million just in the first quarter of 2025 due to extreme weather and supply chain interruptions. Between 2026 and 2030, climate disasters are predicted to cause over $1 trillion in damages in the US, according to a new study from the University of Chicago. This data and research highlight the escalating financial exposure of supply chains to extreme weather events.
We’ve seen all this play out live for automaker Porsche. In 2024, the company’s aluminum alloy supply was stopped due to a flood at a major supplier’s facilities. This forced Porsche to stop production, take financial losses, and reduce its revenue and profit outlook for the year. The incident combines extreme weather risks – because of rising emissions – supply chain disruption, and financial and reputational risk, and it demonstrates the interconnected, myriad of risks businesses are facing.
Taking action
The dominant drivers for decarbonizing supply chains have shifted from values and environmental concerns to mitigating financial and operational risks. In 2026, businesses need to be focused on avoiding catastrophic disruptions, managing energy price volatility, preventing resource scarcity, and mitigating supply chain disruption. But, by focusing on these areas, supply chain decarbonization will happen as a positive, cost-effective by-product.
To build long-term resilience, organizations must move beyond reporting and into the detail of their data to capture a transparent view of their supply chains. This means looking at factory and product-level data, not just corporate level. It means avoiding data averages, which will skew the picture and are unverifiable for reporting anyway. Here, data quality becomes a risk-mitigation tool: avoiding compliance failures, audit issues, and greenwashing accusations.
It means intense collaboration with suppliers as these strategies will require considerable effort and change management on their part. By focusing on the largest suppliers first, businesses can make big strides quickly as they can be responsible for up to 80% of supply chain emissions. And collaboration will be critical. Not just between buyers and their supply chain, but also between peers, working together to access actions requiring higher investments, such as renewable energy projects.
With this approach, businesses can start asking ‘how can I make money from decarbonizing my supply chains?’ According to a survey by Morgan Stanley, 88% of companies say that sustainability initiatives create ‘long-term business value, including higher profits and revenue growth.’
Regardless of motivation, in 2026, businesses have the tools they need to build resilient, decarbonized supply chains that reduce operational costs, mitigate risks, and have a meaningful environmental impact.
