Growing regulatory, partner and consumer interest in sustainability is forcing chemical companies to better understand and share information about product carbon footprints (PCF). While measuring emissions across a product’s life cycle has always been difficult, new resources promise to make it easier.
Lavanya Pawar, CEO and founder of PCF and Scope 3 data firm Carboledger, sat down with SmartBrief. Pawar explained why measuring emissions accurately is vital to a wide range of sustainability efforts and how chemical companies can ensure they’re using the best data.
Why is it important for chemical companies to accurately calculate product carbon footprints?
The need for chemical companies to calculate product carbon footprints (PCF) is compelling. In today’s landscape, there is a global shift towards sustainable solutions and this opens up unique opportunities for companies to co-innovate. It’s no longer solely about regulatory compliance; it’s about gaining a competitive edge. Even the big consulting companies are talking about this.
For example, Bain is saying that those who embrace this shift early not only streamline costs, thanks to regulatory frameworks like the Carbon Border Adjustment Mechanism (CBAM) but also strategically position themselves to leverage subsidies. According to Accenture, this is over a $200 billion rapidly evolving market. In this dynamic environment, it’s those who act proactively that stand to reap the greatest benefits, while those who hesitate risk falling behind in the race for sustainability-driven prosperity. To succeed in co-innovation it is important to know where to innovate and you can only do this if you understand the product-level data.
There’s also a growing demand for PCF data driven by downstream customers, reflecting the increasing consumer preference for sustainable products. This transition has elevated PCF data from discretionary to indispensable. Consequently, more chemical companies are diligently calculating their PCFs. As they undertake this process, they recognize the need for precise PCF data from their upstream suppliers, thus perpetuating the requirement for accuracy throughout the supply chain.
Scope 3 emissions are notorious for being difficult to measure. What’s changing to make them less so?
Scope 3 emissions might be the most important to measure. CDP reports that nearly 90% of the chemical industry regards Category 1 of Scope 3 as paramount. Remarkably, 75% of total emissions fall within Scope 3. With Category 1 representing the highest emissions within Scope 3 achieving precise measurement is the most important job to be done.
The crucial inquiry now becomes: How do we procure accurate data for calculating Category 1 emissions? With today’s data technology and AI, getting the accurate data is not that hard! The era of unreliable spend-based methods is already a thing of the past. With a shift towards calculating PCFs and sharing this data downstream in the supply chain, determining accurate Category 1 emissions is feasible through supplier-specific data utilization. This growing transparency in data exchange marks a notable stride towards removing old challenges associated with Scope 3 emissions measurement.
How can chemical company leaders improve emissions data transparency with suppliers and customers?
Using today’s technology and tools, improving emissions data transparency is no longer a headache. Chemical company leaders, suppliers and customers must value pragmatism over pursuit of perfection. Suppliers are often piled up with various data requests from customers, leading to a cumbersome process of managing different formats, be it Excel sheets or survey platforms. Conversely, customers may find themselves waiting eagerly for data responses, only to receive information that’s either unusable or requires extensive effort to interpret.
The heart of the issue largely has revolved around the substantial volume of data requested by customers. Fortunately, a significant portion of this challenge can be tackled through PCFs. Instead of requesting extensive data, customers can simply ask for PCFs and associated metadata. With the increasing trend towards calculating PCFs, we are already seeing that most strategic suppliers within our clients already possess this information.
The problem is the process. The primary obstacle in the past was data quality. Clear communication of methodologies, scopes and assumptions is pivotal. Fortunately, standardization efforts, such as the TfS PCF Guideline and WBCSD PACT, are advancing swiftly, alleviating this issue.
If PCFs have been calculated, suppliers are indeed qualified to share them. Even if data isn’t fully compliant, transparency can create a culture of striving together for decarbonization. By openly sharing what’s available and what’s lacking, all players along the value chain can work together to fill in the gaps. The data will improve over time but we have to first start with transparency. With simple AI tools, customers can simplify data sharing by allowing suppliers to use their preferred templates or formats, rather than mandating conversion to a specific format.
Why is digitization of PCF data sharing key for decarbonization?
In the pursuit of decarbonization, PCF data sharing lays the groundwork by providing essential insights. This data serves as the cornerstone for informing carbon reduction strategies, targeting areas where emissions are most pronounced. Consequently, there’s a dual focus: data and strategy. While technology efficiently manages data-related tasks, humans are better deployed in devising strategic approaches. It’s about synergizing human expertise with cutting-edge technology like AI to empower individuals to focus on higher-value tasks.
This principle also holds true for PCF data sharing. It’s about harnessing technology to enhance efficiency while preserving the invaluable contributions of human expertise. Emerging technology is a crucial facilitator, simplifying data conversion processes and reducing manual efforts for both suppliers and customers. Additionally, technology serves as a quality control mechanism, safeguarding the integrity of data transmitted across the supply chain.
Carboledger is a platform for the chemical industry to securely share and access supplier-specific, primary and high-quality product carbon footprint data.