If you’re a European company sourcing in Asia, 2026 will be the year Scope 3 shifts from a sustainability topic to a supply chain one.
Last year was pivotal for RESET. We completed our integration into LRQA, and the business is growing rapidly beyond our apparel roots into hard-goods, tech, and private equity.
We’re also expanding our presence in Europe to address the rapidly-evolving challenges for European companies with Asian supply chains. Between new carbon-linked cost exposure, increasing scrutiny on supplier performance, and a narrowing runway to 2030 targets, many companies are realising their Scope 3 plan needs to look more like a supply chain strategy than a reporting process.
On a personal note, that has meant relocating to the UK after nearly eight years in Asia. After spending the last quarter of 2025 deepening my understanding of the market, I’ve compiled some reflections, from a business perspective, on the key factors shaping 2026 for European companies sourcing in Asia.
A sharper, more focused regulatory environment will emerge
In many ways, 2025 felt chaotic when it came to EU regulation, largely because of the market commentary on the Omnibus package. Through 2025, it could have seemed to a casual observer that the entire sustainability movement was coming to a grinding halt: Many in the space were complaining that any adjustment in regulations represented a massive step backward, and that the EU was turning its back on its sustainability goals by simplifying the Corporate Sustainability Reporting Directive (CSRD).
Having observed this firsthand while working with responsible sourcing teams in Asia, it was clear that resources going into compliance and reporting could be far better spent on actually reducing emissions. This was particularly challenging under the previous coverage of CSRD and especially the EU Deforestation Regulation (EUDR). Simplification will hopefully allow more breathing room for sustainability teams to focus on their carbon reduction goals rather than just chasing the ever-moving target of regulatory compliance.
That said, removing the enforcement of reduction roadmaps from the Corporate Sustainability Due Diligence Directive is a missed opportunity, and does make the carbon component rather toothless[1].
Many companies are sleeping on CBAM – 2026 will be the wake-up call
Arguably the most consequential piece of legislation for how companies think about carbon is still flying under the radar in many sectors: The Carbon Border Adjustment Mechanism (CBAM).
CBAM is the world’s first legislation to monetize Scope 3 emissions, making companies financially accountable for their supply chain footprint. The EU issued updated CBAM guidance towards the end of December, and now that we have more clarity on the practical impact, the scale is undeniable[2]. Some downstream products, particularly those including metals, are sure to see material cost increases, and industries such as fertilizers are looking at vastly reduced and even negative margins.
Amid all the (still somewhat muted) panic around costs, what remains missing from the debate is the only true way to minimize exposure: reducing carbon emissions at source. Hopefully 2026 sees European companies looking seriously at how sourcing decisions in areas such as primary metals can be made differently to promote low-carbon products. Otherwise many will get a large bill in 2027, without much clarity on how to reduce it.
Lastly, regulatory updates will continue: the UK CBAM will become much clearer through 2026, which will bring a much larger group of non-EU companies into scope[3], reinforcing border taxes on carbon as a market trend that’s much harder to ignore.
Supply chain carbon management will gather pace across sectors
RESET has long been active in the apparel and textile sector, and within the space we see a maturity on the topic of supply chain carbon management that other sectors have yet to reach. The industry has managed to establish best practices on how to engage large groups of suppliers, manage carbon targets over time, and support deeply on implementation.
With the pressures of CBAM – and not long left until 2030 voluntary targets – I expect to see other industries putting similar practices in place. We’re seeing really interesting movement in sectors such as the Pharmaceutical industry, with initiatives such as the Pharmaceutical Supply Chain Initiative (PSCI), and companies such as Secaro (formerly Manufacture 2030) assembling vast databases of supplier data reduction plans in industries such as Automotive and DIY. This forms a really interesting foundation on which to start meaningful emissions reduction in 2026.
Renewable energy procurement will get more critical and more complex
As we approach 2030, Scope 2 targets are also coming into sharper focus. In the past, many companies have treated Scope 2 as something of an easy fix, expecting to be able to buy large amounts of renewable energy in 2029 and 2030 in order to hit their target all at once. Many European companies have failed to invest time in understanding their Asian supply chain and the complexities of buying in markets as heterogeneous as China, India, and Southeast Asia, not to mention the time required to develop meaningful, high-trust relationships with renewable energy dealers locally.
Updates from both regulatory and accounting bodies are about to bring this into sharper focus. GHG Protocol’s update recommending hourly matching for Scope 2 emissions is likely to make reliable renewable energy procurement far more difficult, with very few Asian providers able to provide the level of granularity required at the outset. This will squeeze supply, particularly of Energy Attribute Certificates (EACs), and increase the prices more advanced developers can charge[4].
From a regulatory point of view, although we have seen great liberalization in some markets in Asia, we are likely to see some constriction in China, where the government is restricting the amount of new development licences it’s issuing to try to cool the overheated renewable energy market and allow time for the grid to catch up. This is likely to increase volatility in the short term and make it all the more important to develop meaningful relationships on the ground.
SBTi will face a moment of truth: Are targets tick-box exercises or tangible commitments?
SBTi commitment has been growing steadily over the past two years, but much of the new growth is coming from Asian suppliers, that have been asked to set targets by their European customers. Although this is laudable, some questions need to be asked about the quality of these targets. Many suppliers are starting to see SBTi commitment as a tick-box exercise required to keep customers happy, rather than a meaningful commitment to reduce emissions.
SBTi have now also proposed introducing supplier SBTi commitments as a valid pathway to set a Scope 3 target in their upcoming revisions to the Net Zero Standard[5]. In our view, companies that focus too much on supplier commitment to set their Scope 3 targets risk slower-than-expected emissions reductions, unless very clear, targeted monitoring processes are implemented.
At RESET, we have learned over time that to make supplier target setting truly effective, well-defined, costed and mutually agreed reduction roadmaps are essential, along with monitoring approaches that combine accountability with meaningful technical support. If companies push suppliers to set targets without proper monitoring, we’re likely to see many very low-quality targets in the coming years which are not fit for purpose – and will fail to meet the moment in terms of the climate transition.
Conclusion
For European companies sourcing in Asia, the common thread is that Scope 3 is becoming a commercial reality. The regulatory direction in Europe is evolving, but the pressure on supply chains is still increasing: Cost exposure is getting clearer, investor scrutiny is sharpening, and the runway to 2030 is getting shorter.
If you’re sitting in Europe trying to define what “good” looks like across an Asian supply chain in 2026, now is the time to get specific. Understand where your carbon and cost exposures lie, know what is feasible with your supplier base, and build a plan that moves beyond commitments into tangible delivery.
At RESET, now part of LRQA, that’s our focus: turning Scope 3 ambition into practical supplier engagement programs, credible reduction roadmaps, and measurable outcomes on the ground across Asia. If you’d like to compare notes or get an additional perspective on your 2026 priorities, feel free to reach out.
[1] Corporate sustainability due diligence – European Commission
[2] CBAM Legislation and Guidance – Taxation and Customs Union
[3] Carbon border adjustment mechanism (CBAM): Policy update – GOV.UK
[4] The Current Status of GHG Protocol Scope 2 Revisions as of December 2025 – GSI Environmental Inc.
[5] SBTi launches draft Corporate Net-Zero Standard V2 for consultation – Science Based Targets Initiative