Most sustainability managers know their physical supply chain inside out. They can tell you where every raw material comes from, how far it travels, what carbon sits behind each pallet, and which factory floors have been audited twice over. But put the same question to them about the software that runs the business, and they’ll most likely need to call someone else in to answer those questions.
Digital suppliers don’t arrive on lorries, nobody weighs them, and so, nobody questions them either. That’s left a real gap in procurement policies because the energy behind hosted platforms and SaaS subscriptions grows faster than nearly any other supply chain category. Procurement teams can close that gap without much extra work, but they’ll need to start treating software renewals with the same scrutiny they’d give any packaging or logistics contract.
Where the Footprint Actually Appears
Here’s where the numbers get uncomfortable. A report from CDP found that upstream Scope 3 emissions are, on average, 26 times higher than a company’s direct operational output, yet only 15% of corporates have set a supply chain emissions target. Physical goods are at least beginning to get proper oversight, but for digital services, the conversation hasn’t even started.
The IEA’s Energy and AI report spells it out clearly. Data centres consumed around 415 TWh of electricity in 2024, roughly 1.5% of global consumption, and by 2030 the agency projects that figure will more than double to about 945 TWh, exceeding Japan’s entire current electricity demand. Every cloud-hosted CRM, ERP, collaboration tool and analytics platform feeds into that total, yet software vendors almost never appear in supplier sustainability questionnaires.
What to Ask at Every Software Renewal
You don’t need to become a data centre specialist to bring software vendors into the same framework that already covers physical suppliers, and you won’t need to overhaul your procurement process to do it either. A few questions will do.
Energy Sourcing
Start by asking whether the vendor has committed to 100% renewable energy, and whether that commitment is backed by power purchase agreements or just offset certificates. Offsets don’t actually reduce the carbon intensity of the grid where the servers run, so the distinction between real procurement of renewables and a paper certificate is one that procurement teams should pin down during negotiations.
Data Retention and Exit Rights
The less data a platform stores without good reason, the fewer servers it will need and the lower the energy draw, so ask what gets kept and for how long. Contract exit rights deserve the same focus, because vendor lock-in is the digital version of being stuck with one physical supplier and no alternative route out.
Sales decks won’t be straight with you about either, which is why you should always check independent reviews. Which CRMs, for example, ranks platforms on true cost once seats and add-ons are factored in, alongside setup time and admin overhead, which is exactly where lock-in tends to hide. Build exit terms into every renewal, the same way you would with any other supplier agreement.
Server Location
A data centre in a coal-dependent region will carry a very different footprint to one powered by Scandinavian hydro, and vendor marketing will almost never mention that difference. Ask for hosting regions in writing during the negotiation, then check them against the grid they actually run on.
Your Next Renewal Is the Easiest Place to Start
By now, the argument for auditing software suppliers has moved past theory. Waiting for regulation to make it compulsory will mean missing years of low-cost improvements that take almost no effort to capture. Procurement teams already do this work. They evaluate supplier risk, negotiate contract terms, chase compliance documentation and hold vendors to agreed standards every day, so adding a handful of energy and data questions won’t need a new department or a bigger budget. It just takes a willingness to treat digital infrastructure with the seriousness that physical supply chains have had for years.
Companies that act early will carry a smaller Scope 3 footprint into whatever reporting framework comes next, whether that’s the CSRD, updated CDP questionnaires, investor-led disclosure pressure or something entirely new. They’ll build real know-how too. That means better contracts, fewer surprises at renewal, clearer exit options and a procurement function that reflects where the company’s emissions will grow fastest. Software is infrastructure now, and infrastructure belongs in the procurement policy.
