In today's eco-conscious world, businesses are increasingly held accountable for their environmental impact, prompting a growing focus on accurate and transparent emissions reporting on product level. This applies in particular to the chemical industry, which is one of the main sources of global greenhouse gas emissions and has a major impact on practically all downstream industries. While Scope 1 and 2 emissions, those directly caused by a company’s operations, are relatively easy to track, the complex challenge lies in accurately collecting upstream Scope 3.1 emissions data, supplier-specific raw material emissions encompassing a significant percentage of the industry's and a product’s total emissions.
The Scope 3.1 Challenge in the Chemical Industry
The chemical industry's complex and multi-stage production processes require the use of a wide range of different raw materials. For companies with a global reach, this inventory can easily expand to thousands of distinct materials. Additionally, the widespread practice of multi-sourcing further compounds the complexity, leading to a vast number of suppliers that collectively contribute to the bulk of Scope 3.1 emissions. This intricate web of suppliers and materials poses a significant challenge in accurately capturing and managing these emissions, making the collection process both laborious and time-consuming.
Daniel Bochnitschek, Managing Director of AllocNow, notes, "While primary data collection from suppliers is the ideal approach, the reality within the chemical industry is that the share of primary data is often below 5%."
To circumvent this challenge, businesses often rely on secondary data sources, which provide industry-average emission factors. These databases compile information on emissions associated with the extraction, production and transportation of materials from cradle to the purchasing company’s gate. Leveraging these databases allows companies to estimate their Scope 3.1 emissions without the need to gather data directly from every supplier. This approach can be valuable for businesses to gain an initial understanding of their overall environmental impact.
Product Sustainability Platform: Streamlined Data Collection and Effective Secondary Data Matching
AllocNow, with its unique Product Sustainability Platform (PSP), has not only developed a software solution that automates and scales Lifecycle Assessments but also assists companies in navigating both paths to collect Scope 3.1 emissions factors – streamlined data collection and effective secondary data matching.
PATH 1: EFFECTIVE SUPPLIER ENGAGEMENT
Prioritizing the Material and Supplier Portfolio
Given the complex landscape of numerous materials and suppliers, it is impractical to deal with all elements at once, forcing companies to strategically prioritize their efforts. While the commonly used approach handles the task by prioritizing based on purchased quantity of a material, its limitation lies in fixating on high-running commodities, potentially overlooking factors that genuinely impact the product footprint. Therefore, judicious prioritization is essential, emphasizing the influence on sales products or the product portfolio rather than being confined to purchase volume.
AllocNow's software takes a transformative leap, enabling users to filter not only for the purchased quantity but also for the entire network impact of a specific raw material. This represents a paradigm shift and empowers companies to gain a holistic, end-to-end view on their value chains.
This comprehensive approach enables businesses to concentrate efforts on materials and suppliers significantly contributing to the environmental footprint of sales products. Beyond the superficial focus on individual material quantities, AllocNow's PSP guides companies in making decisions aligned with their sustainability objectives, fostering a more profound and impactful approach to environmental management.
Picture 1: The comprehensive model of a company’s production network allows to identify and prioritize high-impact raw materials and suppliers.
Streamlining the Data Collection Process
Once priorities are set, the platform streamlines the data collection process, eliminating the need for manual file management, tedious coordination, and status updates. A standard questionnaire aligned to the TfS PCF guideline ensures a comprehensive dataset is requested from suppliers including all meta data to assess the quality of the provided information. Furthermore, integrated workflows allow for quality control before a supplier value is considered for product footprint calculation. This results in substantial time and resource savings for both purchasing and sustainability departments.
Picture 2: Integrated workflows provide a mechanism for conducting quality control checks before a supplier value is included in the product footprint calculation.
PATH 2: EFFECTIVE SECONDARY DATA MATCHING
The predominant method in the chemical industry for determining Scope 3.1 emissions involves utilizing secondary databases. However, this method presents a significant hurdle in efficiently aligning existing datasets with the raw materials in use. Without the aid of advanced tools and techniques, this process can become complex and time-consuming.
AllocNow's PSP addresses this challenge by employing sophisticated matching algorithms to semi-automate the identification of suitable emission factors sourced from high-quality secondary databases. These algorithms meticulously navigate through extensive databases, including Ecoinvent and Carbon Minds, proposing fitting candidates for all raw materials within a company's portfolio. Users are then presented with these recommendations, enabling them to evaluate each option and, if necessary, choose a more suitable alternative. This approach significantly expedites the mapping process, ensuring that a substantial percentage of a company's purchase quantities accurately corresponds to fitting emission factors.
Nico Lauter, Head of Product at AllocNow, emphasizes the success of the PSP, stating, "Our initial prototypes have shown remarkable results, with a coverage of up to 80% of purchase quantity filled with suitable emissions factors."
Unlocking Sustainable Success: AllocNow's PSP Paves the Way for Precise Emissions Management
In response to growing global sustainability commitments and intensifying regulatory pressures, chemical companies are increasingly recognizing the paramount importance of accurate emissions data encompassing their entire value chain. Effectively and efficiently managing Scope 3.1 emissions has emerged as a critical issue.
Enter AllocNow's PSP—an unparalleled solution that empowers businesses with tools to streamline data collection and execute effective secondary data matching. By significantly reducing data acquisition time and enhancing accuracy, the platform seamlessly ensures compliance with reporting requirements, keeping companies at the forefront of their sustainability efforts.
Beyond these foundational functionalities, AllocNow's PSP empowers businesses with valuable insights that inform strategic decision-making. Supply chain optimization becomes a tangible reality, enabling companies to make choices that not only contribute to environmental sustainability but also enhance overall operational efficiency. As a direct outcome, emissions are effectively reduced, signaling a transformative leap toward a greener and more sustainable future.
To delve deeper and experience a live demonstration of the PSP, feel free to reach out to us.
Please also find a related LinkedIn post here.