5 reasons why producing companies should measure their PCF

The "product carbon footprint" (PCF) is one of the most effective methods to determine the climate impact of products. It takes into account the greenhouse gas emissions generated throughout a product's life cycle (from raw material extraction to the end of the finished product's life) and is expressed in "CO2 equivalents" ("CO2e") (you can find more information on what this term means in our FAQ). A PCF not only helps customers understand their own footprint, but also provides much-needed transparency and full traceability so that companies can begin to truly optimize their products by including the entire value chain. We explained 5 reasons why a PCF is essential for manufacturing companies:‍

1. It improves traceability and the quality of supplier partnerships within the supply chain.

In order for all stakeholders at the corporate level to properly report and truly know if the company is on track to meet the 1.5 degree target, the entire value chain, including upstream and downstream activities, must be traceable. Specifically, the supply chain must have accurate product information, developed with the same understanding of the assessment boundaries and on the same data basis. As such, the PCF helps to initiate product traceability (and thus transparency) and provides a clear assessment standard.

Several organizations have already understood that PCF-induced transparency is an efficient pathway to move towards "Net Zero" (more information on what is Net Zero can be found in our FAQ).

Working on CO2 product-transparency allows manufacturers to find out if suppliers are indeed a fit in terms of environmental impact and thus, helps them carefully choose suppliers with similar sustainability principles. Moreover, a PCF and its implications often leads manufacturers to work closely with their suppliers on improvement projects such as product packaging, label, small parts etc. This strengthens the bonds between manufacturers and their suppliers which can lead to significant synergy effects.

2. It kicks off companies' contribution to SDG 13 ("Take urgent action to address climate change and its impacts").

The PCF indicator allows companies to begin decarbonizing their operations and supply chains by knowing where and how to reduce emissions from their products, services and processes (UN, 2022). This paves the way for potentially setting ambitious emission reduction targets in line with climate science, as well as scaling up investments in the development of innovative low-carbon products and services. PCF calculation is therefore agreeing with UN Sustainable Development Goal 13, which defines the premises of a company's journey towards Net Zero.

For more information on SDG 13: https://sdgcompass.org/wp-content/uploads/2016/04/Goal_13.pdf

3. It differentiates the product from others on the marketplace.

In light of climate change, consumers and selling companies are increasingly aware of product-related GHG emissions. As a result, general behavior is gradually shifting toward more climate-friendly products and business choices. Consumers start demanding "low-carbon products" and the information to make informed choices. When choosing to purchase a product, an available PCF can indeed be a key driver of choice for potential customers if communicated in a clear and simple manner, as highlighted in a review study on carbon footprint labels on food by Rondoni & Grasso (2021). It therefore also brings a significant competitive advantage, as a PCF helps place the provider ahead of its competitors.

4. It reduces emission-related costs.

For all companies, CO2e is a major cost driver and will continue to be so in the future. Exploring levers for decarbonization can have a significant positive impact on a company's costs. This does not only mean direct cost reductions through energy efficiency or waste reduction, but also related to the costly consequences of the climate crisis, social pressure and regulatory requirements (reputation, impact of climate change on production conditions, CO2 tax, etc.). Focussing on the product rather than on a larger vision actually brings together several advantages: The EU's plan for a digital product passport, which is currently being consolidated (European Parliament, 2022), makes it clear that PCFs will soon be due one way or another. Further, new sustainable business models and innovations are appearing exponentially. To this extent, other companies must not fail to address the issue of the circular economy promptly.

5. It improves company image

As explained in reason #1, the PCF significantly improves a company's transparency as it openly shows the climate impact of its product(s). In this logic, it allows businesses to start fulfilling the transparency requirements of "corporate social responsibility" (CSR) principles. Additionally, it builds trust between a company and its stakeholders. This proves that the company cares about the climate challenge and customer concerns, which ends up improving the businesses' image and can increase sales.

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To sum it up: Calculating Product Carbon Footprints is a rapidly growing area and is seen by many as a critical step in initiating a company's climate transformation. It offers opportunities for companies that act quickly to capture a significant competitive advantage. However, some would say that a Corporate Carbon Footprint (CCF) can help just as much as a PCF, so why prefer PCFs? The regulations on the product level are getting stricter, those who now only focus on CCFs and are thus in the carbon tunnel are most likely missing out on what can actually be improved in the value chain. This is because it is only through PCF and not CCF that product designers can come up with relevant sustainability-related innovations. Hence, a rigorous methodology, accurate industry information and sufficient up-to-date data are essential to be able to make the best decisions in this area.

Sustamize enables companies to optimize and manage automated product carbon footprints with the largest CO2 database and a unique science- and industry-based calculation approach.

For more information, feel free to contact us here.

Sources

European Parliament (2022, 30 March). On making sustainable products the norm. Communication from the commission to the european parliament, the council, the european economic and social committee and the committee of the regions. Access: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52022DC0140&qid=1649112555090

European Parliament (2014, 22 October). Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups Text with EEA relevance. Access: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32014L0095

Rondoni, A., & Grasso, S. (2021). Consumers behaviour towards carbon footprint labels on food: A review of the literature and discussion of industry implications. Journal of Cleaner Production, 301, 127031. Access: https://doi.org/10.1016/j.jclepro.2021.127031

United Nations (2021). SDG Report. Goal 13. Access: https://unstats.un.org/sdgs/report/2021/goal-13/

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