The 70% that nobody is reducing
For the median Indian industrial supply chain, Scope 3 emissions represent between 65% and 85% of total footprint. Yet corporate climate strategy — even at the most ambitious buyers — remains focused on the 15–35% that lives inside Scope 1 and 2. This is not because Scope 3 is difficult. It is because the incentives to act on it are misaligned. The buyer sees a KPI, the supplier sees a compliance cost, the lender sees a risk it cannot underwrite.
"You cannot decarbonise a value chain by asking the largest company in it to try harder. You have to make the smallest ones capable."
MSMEs will drive the majority of abatement
This is the counter-intuitive finding. The abatement cost curve for a large listed company is steep — solar PPAs and efficiency retrofits are quickly exhausted, leaving only expensive and speculative options. For an MSME, in contrast, the curve is shallow: fuel-switching, thermal recovery, load management, and modest process changes can deliver 20–40% reductions at negative or marginal cost. What is missing is not the abatement. It is the capital and the mandate.
Three instruments, one path
- — Operational efficiency ranked by marginal abatement cost. Not a spreadsheet. A ranked, funded, tracked plan.
- — Renewable procurement structured around the MSME's cash-flow calendar, not the buyer's ESG report deadline.
- — Vetted removals and compliance offsets to neutralise the residual — used sparingly, and only after abatement is exhausted.
Reducing Scope 3 is not a communications strategy. It is a capital allocation problem, an information problem, and — for the MSMEs that anchor Indian exports — a survival problem. The businesses that solve it in this decade will hold the pricing power in the next.