Most companies now know where the bulk of their emissions come from. Not the office. Not the company cars. Not even their own factories. The emissions are upstream: inside the supplier sites making their ingredients, components, and packaging.
Scope 3 emissions are, on average, eleven times higher than a company's own direct emissions according to PwC research. For many large manufacturers and retailers, a huge chunk of those come from one thing: heat. The boilers and furnaces suppliers use to cook, dry, sterilize, and process goods run almost entirely on fossil fuels.
The technology to fix this already exists. Heat pumps, electric boilers, biomethane: the solutions are there. So is the motivation. What keeps projects from happening is a question no one has cleanly answered yet: who pays?
Four groups, four problems
The funding problem is really an alignment problem. Four groups each hold a piece of what's needed, but they rarely connect.
Large companies hold the responsibility. Companies like Unilever, Kingfisher, or AstraZeneca have targets to cut their supply chain emissions. But they can't fund every factory they buy from; there are simply too many.
Suppliers hold the assets. The boilers that need replacing sit in their buildings, on their books. But replacing a gas boiler is a big capital project, and it's hard to justify. A CFO typically wants the money back in six months. A heat decarbonization project can't promise that.
Governments hold grant funding that could help cover project costs. The money exists but accessing it is slow and complicated. For a smaller supplier without a dedicated sustainability team, applying for grants can feel like more trouble than it's worth, so the funding goes unclaimed.
Banks hold the money. Lenders are willing to fund this kind of infrastructure, but they want security: long-term contracts, steady income, a solid business case. Most suppliers can't show that without help from their buyers.
Only 22% of companies have mature programs in place to manage emissions from their suppliers. That's a measurement problem, yes. But it's also a financing problem.
Why good projects go nowhere
Suppliers aren't refusing to act. Projects stall because the path from "good idea" to "funded project" is long and unfamiliar.
To get a decarbonization project off the ground, you need leadership support, a business case, and access to money. For many suppliers, especially smaller ones who've only ever used their own internal budgets, that process feels daunting. Suggest external financing and the reaction is often: is it risky? What does that mean for us? It's new, and new feels scary.
On top of that, some lenders have historically only worked with large suppliers, setting thresholds based on energy bills or company size that ruled out smaller sites. The will was there; the path wasn't.
How it can work
No single funding source will solve this. The answer is combining several, as well as getting the right people in the room together
Government grants are often the best place to start, because they don't need to be paid back. Significant funding exists across the UK and EU; the EU heat decarbonization fund alone is over a billion euros, with regional layers on top. The problem is that most suppliers don't know what they're eligible for, or how to apply. A simple tool that matches a supplier to relevant grants, based on their location and energy profile, can change that.
Bank financing becomes more accessible when buyers get involved. A supplier with a five-year contract from a major buyer looks much less risky to a bank than one without. It's the same logic as a mortgage: a lender wants to know the income is stable. Buyers who are willing to share that contract information with lenders, not money, just information, could help their suppliers get significantly better interest rates. A small ask with a big impact.
Energy-as-a-Service is a model where a third party installs and owns the equipment, and the supplier pays for the energy it uses over time rather than buying the equipment upfront. No large upfront cost. No balance sheet headache.
Shared buyer funds are the newest idea and potentially the most powerful. Several buyers pool a small amount of money, suppliers borrow from it to cover things like energy audits or early project costs, and pay it back from the savings they make. The pot then refills and helps the next supplier.
Confidence matters as much as cash
Even when money is available, some suppliers won't use it if they've never done anything like it before. External financing feels unfamiliar.
That's why it matters so much for suppliers to learn from each other. When a supplier of similar size hears from another how they funded a heat pump project and came out ahead, it changes the calculation. Real examples from real businesses do what a bank brochure can't: they make the whole thing feel possible.
This is what the Clean Heat Program is built for.
Developed by Secaro and ERM with sponsorship from AstraZeneca, the program is designed to bridge exactly this gap. It doesn't try to solve the financing problem with a single mechanism. Instead, it tackles all of them together.
Finding public money
A simple matching tool, built with ERM, shows suppliers which government grants they're eligible for based on their location, site criteria, and energy profile.
Accessing private financing
Suppliers are connected to a growing network of financing partners, from major banks to specialist energy lenders. Where buyers are willing to share contract information, that stability can help suppliers unlock better rates.
Removing the upfront cost entirely
For suppliers who aren't ready to take on debt, Energy-as-a-Service options mean a third party installs and owns the equipment, and the supplier simply pays for the energy they use over time. No large upfront cost. No balance sheet headache.
Building the internal case
The program supports suppliers in putting together a business case strong enough to get sign-off from the top. For example, a mix of workshops and drop-in sessions are available for AstraZeneca’s suppliers and can help them secure leadership buy-in.
Pooling resources across buyers
One of the program's goals is to bring more Scope 3 companies in, so that a shared fund becomes possible: buyers contribute capital, suppliers borrow from it for audits and early project costs, and then pay it back from their energy savings. The pot refills and helps the next supplier. The more buyers who join, the more viable it becomes.
Learning from others who've done it
As part of AstraZeneca's program, the industry leader has brought in some of its larger suppliers to share how their teams financed heat projects, helping smaller suppliers in the network understand what's possible.
The aim is to make sure that lack of financing or capability is never the reason a decarbonization project that could work doesn't happen.
What this means for buyers
There isn't one answer to who pays, but there is a clear structure. Grants reduce costs. Bank financing provides the capital, and improves when buyers share their supplier relationships. Shared funds support projects that wouldn't happen otherwise. And the right program pulls all of it together.
The buyers who move early, who connect suppliers to funding, who share contract information with lenders, who build peer networks across their supply base: they'll cut their Scope 3 emissions faster than those who wait.
Pressure from regulators, investors, and customers is only growing. The technology is ready. The financing models are taking shape. The Clean Heat Program exists to make sure the funding gap isn't what stands in the way.
