Integrating energy management into supplier performance assessment: challenges and opportunities in buyer–supplier relationships

Upstream supply chain emissions represent a substantial share of industry’s indirect greenhouse gas emissions. Still, energy management is seldom included in supplier assessments to ensure effective upstream emissions reduction, which can support achieving the net-zero goals at the supply chain level. Interviews were conducted with large global manufacturers and their first-tier Swedish small and medium-sized enterprises (SME) suppliers to examine: (i) the main challenges they face in evaluating and reporting suppliers’ energy management practices, and (ii) what strategies both parties need to adopt to overcome them. Drawing on agency theory, the analysis reveals that unclear energy-related expectations, a lack of clear reporting criteria, and SMEs’ limited capabilities to effectively report energy management practices that create information asymmetries and misaligned incentives. These challenges hinder the effective integration of energy management into broader decarbonization strategies. The study identifies key practices – establishing energy-related key performance indicators for reporting, developing energy-shared data protocols, and strengthening capability-building among SMEs − that can improve transparency, align incentives in the buyer–supplier relationship, and foster collaborative progress towards reducing upstream emissions. The study contributes by revealing key challenges that buyers and suppliers face in advancing energy management within upstream sustainable supply chains and provides actionable measures for integrating energy management into supplier performance assessment as part of strategic supply chain sustainability and decarbonization efforts. This study advances the sustainable supply chain management literature by improving the understanding of how energy management can be systematically embedded within supplier performance assessments in sustainable supply chains, promoting more effective decarbonization strategies