Stakeholder Capitalism

How digital tracing can reduce industrial carbon emissions

Steam rises at sunset from the cooling towers of the Electricite de France (EDF) nuclear power station at Nogent-Sur-Seine, France, November 13, 2015. The nuclear industry argues world leaders at the COP21 conference in Paris next week should not have to choose between nuclear and renewables but between low-carbon energy, including nuclear, and fossil fuels. Paris will host the World Climate Change Conference 2015 (COP21) from November 30 to December 11. Picture taken November 13, 2015.   REUTERS/Charles Platiau TPX IMAGES OF THE DAY

Traceability can help shrink industry's carbon footprint across sourcing, production, logistics and operations Image: REUTERS/Charles Platiau

Barbara Frei
Executive Vice-President and Chief Executive Officer, Industrial Automation, Schneider Electric
Francisco Betti
Head, Global Industries Team; Member of the Executive Committee, World Economic Forum Geneva
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SDG 09: Industry, Innovation and Infrastructure

  • Decarbonizing indirect greenhouse gas emissions from industry is a big challenge.
  • Digital tracking and tracing of materials and goods effectively, reliably and responsibly could help reduce emissions.
  • Carbon emissions information must be detailed and easy to disclose if companies are benefit from the competitive advantage that better end-to-end traceability can offer.

Despite the multiple calls for action from climate scientists and civil society, evidence reported daily suggests current pledges are not enough to stop the climate crisis. The industrial sector is failing and companies must act now if we want to limit the temperature rise to 1.5° C and meet the most recent goals set at COP26.

Switching to clean energy and being more efficient with resources can help lower direct greenhouse gas emissions, but decarbonizing indirect emissions from industry remains a big challenge.

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For companies producing electrically powered devices or equipment, indirect emissions may refer to emissions from the transportation and distribution of incoming raw materials and components and of finished products to customers. Tracking and tracing materials and goods effectively, reliably and responsibly could help improve processes, inventories, deliveries and reduce carbon emissions faster.

Imagine if companies and consumers could simply swipe a QR code or RFID tag to access encrypted data that contains a product’s unique digital ID. This data could authenticate the product’s (and its parts’) place of origin, environmental and carbon footprint data or biodiversity impact. It could also record how it transitted via intermediaries – with details of subcomponent suppliers and shipment dates and times – and even include the details of who was on shift when it was manufactured.

Companies around the globe, in every sector, are making traceability a priority of their operational capabilities. Bain’s recent Global State of Traceability survey, a consultation with more than 150 senior supply chain leaders, suggests 68% of executives view traceability as “very or extremely important”.

In other words, we’re quickly moving to a world in which secure end-to-end connectivity and digital avatars are replacing manually-controlled tracking systems, providing far more than just visibility and transparency on where things are.

Trusted sustainability starts with traceability

To help shrink the industrial carbon footprint, traceability can address three challenges across sourcing, production, logistics, operations and a product’s life cycle, while enforcing greater transparency and accountability. However, cross-company discussion and alignment on the following three areas are required:

1. Carbon emissions information must be detailed and easy to disclose. Industrial companies across all sectors, from steel to plastics, are committing to net-zero targets but they are yet to standardize how they monitor progress. Measuring the life-cycle emissions of products is the most meaningful way to illustrate how raw materials’ production, manufacturing processes and use affect an overall carbon footprint.

As binding mechanisms are put in place to make companies ethically and sustainably accountable, this kind of life-cycle traceability will be vital to quantifying their environmental impact. It’s about revealing where raw materials are extracted; how and where they are assembled, transported and distributed; how products are decommissioned, recycled or destroyed; and whether child or forced labour was involved at any stage.


Similarly, circularity initiatives, recently proposed carbon border taxes and green procurement mandates can make sustainable metals and plastics the norm, with digital tagging and green information schemes helping to support and incentivize the disclosure of sustainability performance. Technologies to secure and share immutable data and product certification can help combat premature obsolescence, reduce the wasteful destruction of unsold goods and the use of single-use items, and encourage repurposing, remanufacturing and recycling instead.

2. End-to-end traceability technologies also promise to improve industrial resilience by digitally enforcing trust across manufacturing and production systems. They can help uncover the root causes of production errors and establish ways to safely source, produce and dispatch high-quality goods. Industrial companies still maintain data confidentiality and oversight on disclosing supplier information or intellectual property.

How digital traceability can work
How digital traceability can work Image: Schneider Electric/Global Supply Chain Vision

3. End-to-end traceability offers new competitive advantages. Benchmarking carbon footprint information across industrial sectors will yield a faster reduction in emissions and control sustainable manufacturing and material costs.

Accessing data on an “only-when-needed basis” allows decision-makers to share information, collaborate transparently and cement trust with consumers. For example, product recalls or quality, counterfeit or conformity issues will trigger access to specific information and comply with safe, sustainable and environmentally transparent operations. Being able to simplify the accessibility of this information is vital for ESG compliance and will also help build consumer loyalty for brands with sustainability appeal.

We live in an era of hyper-connectivity and abundant data. Companies that harvest and analyse this selectively and securely and fully embrace digital traceability across industrial processes and value chains have much to gain. It’s unquestionably about improved productivity, performance and flexibility – but it will also advance industrial decarbonization at a faster pace.

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The views expressed in this article are those of the author alone and not the World Economic Forum.

Related topics:
Stakeholder CapitalismClimate ActionEmerging Technologies
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