Background: Trends for more sustainable and environmental friendly business practices have transformed many industries, especially Volvo CE as an OEM within heavy vehicle industry, where company needs to continuously innovate and develop environmental sustainability technologies. Volvo CE is trying to balance the cost and profit with environmental impact through engaging in sustainable operations and do it through the optimization of Environmental Performance Management (EPM). There is a need for Volvo CE to improve their whole supply chain throughout the entire tier of suppliers since the suppliers create a major value within company business and Volvo CE need to find the way on how to diffuse the EPM to supplier networks. Also, to control and evaluate the process, Volvo CE is looking for systematic control mechanism to measure and control the practice of EPM. Research questions: 1. How does the environmental regulation in heavy vehicle industry impact the EPM of Volvo CE? 2. How should the EPM be efficiently diffused to the supplier network of Volvo CE? 3. Which are the effective control mechanisms of the EPM on the supplier network of Volvo CE? Purpose: The purpose of this paper is two-fold. Firstly, it aims to identify the impact of environmental regulations has in Volvo CE. Secondly, it is set to analyse the possible ways to efficiently diffused the EPM on the supplier network of Volvo CE and identify control mechanisms for the EPM implementation on the supplier network, from the perspective of Volvo CE. Method: By using Volvo CE as the research object, this study adopts case study method with qualitative approach. The study is conducted in ii Volvo CE perspective where it has an abductive approach with the intention to examine the impact of environmental regulation in EPM of Volvo CE, understand how Volvo CE implement the diffusion back to the supplier network and control the process through EPM. Conclusion: The findings emphasize that the environmental sustainability regulations impact the EPM in Volvo CE are distributed in manufacturing/production, managerial, strategic, technical and compliance area. Volvo CE needs to work a lot with energy efficiencies, material efficiencies and waste reduction management and find the products, which need less energy to produce and environmental friendly. To achieve the efficient of EPM adoption, EPM should perceive to have relative advantage, compatibility, complexity, trialability and observability characteristic. The control mechanism can be built through formal and informal control techniques. Specifically, Volvo CE needs to identify more joint KPI:s with suppliers and include important suppliers in the process. A long-term relationship with an important supplier will alleviate the control of 2:nd and 3:rd tier supplier since the important supplier will have the trust and authority to control, monitor and oversee how they are implementing the environmental aspect in their daily work.