Product carbon footprint data through supplier information can address scope 3 emissions. Image: Unsplash/Alin Anderson
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- Decarbonizing scope 3 emissions, those from upstream and downstream partners in a company’s supply chain, is a big challenge for reducing the carbon footprint of a business.
- Product-level information based on suppliers' primary data can help identify hotspots where materials, processes and products can be addressed regarding their emissions impact.
- There is a critical need for consistently calculating product carbon footprint at the most granular level and to exchange data in a verifiable, secure and interoperable manner.
Reducing Scope 3 emissions is a major challenge in the race towards net zero. Companies worldwide, spurred by the Science Based Targets Initiative (SBTi), have made notable strides in mitigating their direct emissions (Scope 1) and those from purchased electricity (Scope 2).
However, decarbonizing Scope 3 emissions — those embedded both upstream and downstream throughout a company’s supply chain and generally account for more than 70% of the industry’s greenhouse gas emissions on average — is complex.
Schneider Electric and the World Economic Forum’s Industry Net Zero Accelerator initiative have been exploring how exchanging “product carbon footprint” (PCF) data is a key step towards emissions reduction and holistic product life cycle assessment.
Why product carbon footprint data exchange is necessary
Addressing the complexity of Scope 3 emissions requires a granular understanding of product-level environmental impacts. While valuable, corporate emissions data fall short of providing the detailed insights required for scalable and quantifiable Scope 3 decarbonization.
The breakthrough lies in capturing product-level information based on suppliers' primary data.
This knowledge holds the key to highlighting hotspots to redesign materials, processes and products to optimize their emissions impact – particularly in the critical use phase (Scope 3 Category 11) and the purchased goods and services (Scope 3 Category 1), which generally represent over 70% combined Scope 3 emissions, according to a survey by the Science Based Targets Initiative.
The key challenges to overcome
In recent years, companies and coalitions have acknowledged how critical product-specific data is needed for Scope 3 decarbonization, but challenges have hindered progress.
Three specific barriers have been identified through the Forum’s Industry Net Zero Accelerator initiative’s research:
- There needs to be a standard methodology and detailed guidelines to calculate PCF at the most granular level consistently.
- There is a growing need for a secure and interoperable protocol to exchange PCF data in a verifiable manner while safeguarding confidential supply chain information.
- Equipping suppliers with the tools, training and incentives needed to implement PCF data exchange capability is difficult.
Breaking barriers and making progress through collaboration
Fortunately, substantial progress is underway, fostered by industry coalitions. Some have already established data exchange rules within their specific sectors: Catena X for the automotive industry and Together for Sustainability for the chemical industry, for example. Others have taken a cross-industry approach to accelerate accounting and exchange of product-level emissions across all value chains and promote system interoperability across one connected network. Value chain transparency will indeed not succeed if organizations must choose between standards and networks.
For instance, the Partnership for Carbon Transparency (PACT) initiative from the World Business Council for Sustainable Development (WBCSD) has developed the Pathfinder Framework, a cornerstone for driving standardized PCF calculation norms, building on existing standards such as ISO and GHG Protocol.
Another cross-industry coalition, the ESTAINIUM association, has developed an open and independent infrastructure that allows supply chain partners, third-party solutions and certifiers to communicate cradle-to-grave PCF data in a trustworthy and confidential manner via the shared ESTAINIUM TSX (trusted supply chain exchange) technology.
Both the WBCSD PACT framework and the Estainium TSX technology have moved into real-life testing and Schneider Electric is participating in both pilots.
In parallel, the Forum’s Centre for Advanced Manufacturing and Supply Chain is facilitating the learning and reapplication of key strategies that can help industries navigate the complex path of supplier engagement in Scope 3 decarbonization. The latest insights and use cases are being compiled on the digital repository of its Industry Net Zero Accelerator initiative.
Thanks to this industry-wide collaboration, companies can start driving the practical exchange of PCF data with their suppliers, uncovering new insights and making more educated decisions to accelerate their Scope 3 decarbonization journey.
The move towards holistic assessment
While PCF exchange is a significant milestone, the ultimate goal is to embrace complete product life cycle assessments. Life cycle assessments provide a holistic view of environmental impacts – not just carbon emissions but resource depletion, water use and other factors.
This comprehensive approach to assessing the impact of products is critical to minimizing environmental damage. Once a company can complete a PCF calculation, it’s most of the way towards calculating a life cycle assessment since many inputs are the same.
To drive this vision, Schneider Electric is fostering an ecosystem of support for suppliers, nurturing their sustainability maturity wherever they are on their journey. Through the Zero Carbon Project, the company is helping its top 1,000 suppliers to halve their operational carbon emissions by 2025.
By focusing on the suppliers that provide materials with the highest footprint, Schneider Electric is building its suppliers’ decarbonization capacity faster and transitioning from reporting corporate emissions to decarbonization actions. Through this work, they are paving the way towards product emissions calculation and sharing.
Call to action: Calculating product-level emissions
The trajectory of Scope 3 decarbonization rests on the choices we make today. We must make rapid progress on corporate emissions estimations, data-based PCF calculations, and a globally standardized data exchange of product life cycle assessments. All are critical to accelerating Scope 3 decarbonization and ultimately achieving net-zero goals.
Thanks to industry coalitions, the path to net zero no longer looks convoluted or hindered by barriers, so there is now no excuse for not acting on Scope 3 emissions. In fact, Schneider Electric’s early learning in PCF data exchange shows that the steps are clear and with it comes an opportunity to strengthen collaboration across value chain players.
We urge more companies to seize this moment, embrace PCF exchange, and join and leverage the work accomplished through industry coalitions. The ripple effects of these actions will span industries, accelerating the collective journey to net zero.
The following team members of the Industry Net Zero Accelerator initiative have contributed to the knowledge development: Maria Basso, Tobias Ebi, Eric Enselme, Edouard Henrio, David Leal-Ayala, Isabella Kaplan, Na Na, Victoria Nerad, Scheille Preston, Amira Tantaoui El Araki and Xiaoming Zhong. The initiative team thanks Matt Seiler for his contribution to the initiative's knowledge-deep dive into tackling scope 3 emissions.
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The views expressed in this article are those of the author alone and not the World Economic Forum.
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