This article is brought to you thanks to The European Sting’s collaboration with the World Economic Forum.
Author: Sebastian Steinhauser, Chief Strategy Officer, SAP
- The transparent collection and reporting of sustainable business data is key to achieving ESG metrics and climate targets.
- Organizations from different industries cannot achieve these results in isolation.
- Carbon data networks allow emissions data to be shared along with other sustainability data with suppliers and industry partners.
Sustainability transformations depend on data transparency. The availability and maintenance of accurate, auditable data is essential to achieving corporate ESG metrics and shared global goals. Not only must companies use tools to collect, report and leverage sustainable business data across their operations, but also share it across their networks of suppliers and partners to unlock the potential for large-scale industry decarbonization.
Scope 3 emissions (emissions outside of our own operations) account for more than 80% of emissions in most areas of the company. What is needed is end-to-end value chain transparency and the sharing of actual and verified emissions data, not estimates or averages down to the individual product and supplier level.
Switching from average values to actual values has enormous advantages. It enables companies to embed sustainable business decisions in their business processes from sourcing to product development, invest in high-yield decarbonization activities in their supply chains, comply with increasing regulatory requirements and deliver more accurate corporate reporting.
Many consider overcoming this challenge to be the “holy grail” of sustainable business. Solving the lack of data visibility across industries and value chains in enterprise networks has the potential to yield massive positive results. So what’s holding us back?
Companies across industries are realizing that they cannot scale sustainable results on their own. They need to collaborate and share data, but that remains a challenge for a number of reasons. First, a consistent approach to calculating and attributing emissions down to the product level is required. Companies do not create the necessary primary data around their emissions activities and inputs. And technical standards or protocols for sharing and managing emissions data via “carbon data networks” are only now beginning to be formalized.
Development of data networks on CO2 emissions
In the past year, great strides have been made in developing the complex technical standards and data management protocols required to enable companies to share emissions and other sustainability data with suppliers and industry partners.
The Partnership for Carbon Transparency (PACT) is a program led by the World Business Council for Sustainable Development (WBCSD) that has brought together companies and organizations across industries to address the Scope 3 emissions data challenge.
What is the World Economic Forum doing about climate change?
Climate change is an urgent threat that requires decisive action. Communities around the world are already experiencing increasing climate impacts, from droughts to floods to rising sea levels. The World Economic Forum’s Global Risks Report continues to rank these environmental threats high on the list.
In order to limit global temperature rise to well below 2°C and as close as possible to 1.5°C above pre-industrial levels, it is imperative that businesses, policymakers and civil society advance comprehensive short- and long-term climate action in line with the goals of the Paris climate protection agreement.
The World Economic Forum’s Climate Initiative supports the scale-up and acceleration of global climate action through public-private sector collaboration. The initiative works across multiple workspaces to design and implement inclusive and ambitious solutions.
These include the Alliance of CEO Climate Leaders, a global network of business leaders across industries developing cost-effective solutions for the transition to a low-carbon, climate-resilient economy. CEOs are using their position and influence with policymakers and corporate partners to accelerate the transition and realize the economic benefits of creating a safer climate.
Contact us to get involved.
PACT aims to make it easier for individual companies to share granular, primary and verified product emissions. Of course, this data exchange must be secure and confidential while working across different types of data management systems.
PACT created the Pathfinder Network to make this possible. It is an open, decentralized network infrastructure that enables various technology solutions to connect and support peer-to-peer data exchange across value chains and industries. Earlier this year, the first standardized data exchange took place on the network, using several different technology applications from CircularTree, IBM and Siemens. SAP also helps standardize the network’s data exchange through an API specification that is part of the SAP Product Footprint Management solution.
By the end of 2022, PACT, with the support of other companies, will further develop the Pathfinder network and set up new technology components to support the exchange of emissions data across supply chains – an essential step for the growing industry-specific data exchange.
Catena-X for the automotive industry
A rapidly evolving example of an industrial data network is the Catena-X Automotive Network. Founding members include BMW, Mercedes-Benz, Volkswagen, Ford Europe, Deutsche Telekom, SAP, Bosch, BASF, Siemens, ZF Friedrichshafen, Schaeffler and the German Aerospace Center (DLR).
Catena-X is a scalable, secure and interoperable data ecosystem in which automotive manufacturers and suppliers, dealer associations, equipment providers and recyclers alike can participate. Catena-X’s sustainability goals include enabling effective carbon footprint management and promoting the circular economy.
Catena-X works closely with WBCSD to define standardized methodologies and data models that help all network participants maintain data sovereignty while calculating and sharing emissions data in a consistent, comparable and auditable way. Since 70% of the automotive value chain are small and medium-sized enterprises, it is crucial that they can contribute to the emissions data chain.
This type of transparency of emissions data is not only increasingly becoming part of the dynamics of the B2B industry, but also the way brands interact with their end customers who want to buy more sustainable products and services.
A blueprint for industry-wide action
Catena-X currently consists mainly of European automotive and related companies. But companies from other regions, including the USA and Asia, are also joining the network.
As a leading example, it provides guidance for the development of similar networks for industries such as high tech, life sciences and energy.