From invisible to invaluable: Can AI turn Scope 3 emissions into competitive advantage?

A food manufacturer reformulated a lasagne recipe, using an AI-powered chatbot, to cut costs and Scope 3 emissions by 18% without compromising quality and taste.

An industrial tech company applied AI algorithms to reduce material waste and lower customers’ production costs.

And a consumer goods giant leveraged AI to engage 70% of its suppliers in tracking emissions, inspiring a new level of collaboration across the value chain.

These case studies, featured in the new report from the Climate Leaders Coalition, demonstrate how AI can tackle Scope 3 at its most complex.

The EY-Liberty Global Smarter networks, greener planet report, published in January 2025, shares other compelling case studies. Consider the AI-enhanced ‘call before you dig’ program that reduced unnecessary field dispatches by 30-35%. Or the AI-optimised data centre software that achieved 15% average savings in energy and equivalent to nearly AU$2 million a year.

These success stories also reveal a key insight: AI doesn’t just help with emissions tracking. Applied strategically and responsibly, AI can help organisations align their financial and environmental goals, control costs and enhance efficiency, spark innovation, and foster a new era of collaboration with supply chain partners.

From hidden footprint to open book

Scope 3 emissions are the hidden climate cost of business – embedded in product lifecycles, transport networks, waste disposal, and even how employees commute. Unlike Scope 1 and 2, which companies can directly control, Scope 3 emissions are inherited from every supplier, contractor and service provider along the value chain. The simplest way to think about it? Your Scope 3 emissions are someone else’s Scope 1 or 2.

Measuring emissions is the first step to managing them – but with Scope 3 that’s the hardest part. The Carbon Disclosure Project (CDP) estimates that supply chain emissions are, on average, 11.4 times larger than a company’s direct operational footprint. Yet, most businesses still struggle to track them.

That changed in 2025. From 1 January, Australia’s largest companies must start to disclose their Scope 3 emissions. Smaller businesses aren’t directly covered – yet. But by 2027, thousands of organisations, including not-for-profits, will be subject to the same rules. And even those outside the mandate won’t escape scrutiny. When large supply chain partners must report their Scope 3 emissions, they’ll be asking their suppliers to do the same.

It’s a daunting shift, but also a defining moment.

However, AI and Scope 3: Precision on the path to net-zero emissions, prepared by EY teams together with select members of the Climate Leaders Coalition, reveals a compelling opportunity.

AI and data-driven insights not only tackle Scope 3 emissions but also align with the most pressing business priorities, helping companies achieve both environmental and operational goals simultaneously.

Precision on the path to net-zero emissions finds companies that leverage AI-driven analytics can:

• Automate emissions tracking – AI can process vast amounts of data, mapping emissions across supply chains in real time to aid fast, informed decisions.
• Improve data accuracy – Machine learning algorithms can fill gaps in third-party data, saving time and reducing reliance on rough estimates.
• Optimise supply chain decisions – AI can model different scenarios, helping businesses choose lower-emission suppliers and improve logistics efficiency.
• Engage suppliers at scale – AI-powered tools can help companies work with thousands of suppliers simultaneously, driving emissions reductions across the value chain.