For many global organisations, the race to net zero has moved beyond their own four walls. While companies have made significant strides in addressing Scope 1 and 2 emissions, the real challenge, and the greatest opportunity, lies in Scope 3: the supply chain.
As corporations set ambitious climate goals aligned with RE100 and the Science Based Targets initiative (SBTi), they frequently encounter a bottleneck. How do you ensure thousands of distinct suppliers, often located in complex regulatory environments across the Asia Pacific (APAC), transition to renewable energy?
The path to a green supply chain is rarely straightforward. Suppliers often face practical barriers that prevent them from switching to renewables independently. These include a lack of technical knowledge, limited procurement volume (making them unattractive to large energy developers), and the sheer complexity of local energy markets.
In the APAC region specifically, the challenges are magnified by:
Consequently, companies face a "geographic mismatch" where their suppliers are located in regions with high premiums, limited transmission capabilities, or fragmented regulatory landscapes.
Failing to address these barriers does not just endanger your climate targets; it means missing out on significant commercial advantages.
Despite the complexities, the economic case for renewable energy in APAC is strengthening. Our market analysis and practical implementations highlight substantial savings potential:
The implication is clear: companies that proactively manage their supply chain’s energy transition can secure long-term price stability and gain a competitive edge, while those who wait may face rising costs and compliance risks.
The foundation of success is setting clear, enforceable renewable energy targets for suppliers. These should be aligned with international standards like RE100 and SBTi. However, a mandate is only as good as its enforcement; it must be supported by robust tracking and compliance mechanisms to ensure suppliers are actually making the switch. To ensure action is prioritized, SBTi’s latest draft for its updated Net Zero guidance provides energy-specific targets for high energy consumption activities.
You cannot expect suppliers to navigate complex energy markets alone. Effective programmes involve conducting targeted, local-language workshops and personalised follow-ups. This "Knowledge Building" phase is critical to bridging the gap between a supplier's willingness to change and their ability to execute.
This is the most transformative solution. By aggregating demand across multiple suppliers, companies can overcome the issue of limited volume, unlocking "economies of scale" that individual factories could never achieve alone.
We are seeing success with Direct Power Purchase Agreements (DPPAs). By identifying and bundling key suppliers, companies can improve negotiation leverage to secure competitive pricing. We are also actively advising clients in Vietnam to engage partners across their supply chains to jointly pursue DPPA opportunities.
We help clients navigate the Green Power Trading (GPT) landscape to avoid the premiums of unbundled RECs. For Nike, South Pole managed diverse supplier "Buyer Groups," handling the Request for Proposal (RFP) process to secure a long-term framework agreement across multiple provinces. Similarly, we facilitated a 5-year agreement for Philips to source 48,000 MWh/year from a solar-PV system in Jiangsu, transitioning their Suzhou facility to 100% renewable electricity.
We are actively advising clients on recently developed physical PPA frameworks to capitalise on emerging market opportunities.
The landscape of renewable sourcing in the Asia Pacific is maturing rapidly. We foresee robust growth in aggregated PPAs as the primary vehicle for tackling Scope 3 emissions.
While markets like China will see narrowing regional price disparities and regulatory evolution, emerging markets like Vietnam and India will see accelerated adoption of corporate PPAs due to the financial stability they offer against volatile energy costs.
Success will no longer be about simple procurement; it will depend on strategic supplier aggregation, deep regulatory alignment, and rigorous project selection. By acting now to embed these strategies into your procurement policy, your organisation can mitigate risk and lead the transition to a sustainable future.
South Pole offers end-to-end support—market assessments, RFP management, and Buyer Groups—to turn Scope 3 challenges into opportunities.
