What Business Goals can be Achieved with Lifecycle Product Footprints?

An important early step of every carbon footprinting engagement is to answer the question:

"What business goals do I hope to achieve through quantifying my product's carbon footprint?".

Investing effort into defining clear business goals early in a project leads to a return of more value than a simple carbon footprint figure. This reflecting upon "why" it is important to understand your product & business impacts will inform the footprinting process and will tailor outcomes towards results that you care about.

Some examples the CarbonGraph team have observed are:

• Selection of the appropriate GHG accounting methodology,
• A focused data collection process that prioritizes high-impact areas of a supply chain,
• Accurately-defined supply chain boundary limits
• An understanding of important inclusions / exclusions to consider in the model,
• Insight discovery and risk during the modelling process,
• A carbon footprint result and project takeaways that serves your objectives.

The detailed justification for "why" it is important to understand a product's lifecycle impact varies by business and industry. Some are under scrutiny from the public and investors to reduce their impact, others may be anticipating a need to adapt to upcoming regulatory changes, others may simply consider sustainability as a core part of their guiding principles.

In any case, the most common business goals fall into one of four categories:

• Climate Change Management
• Performance Tracking
• Stakeholder Stewardship
• Product Differentiation

Climate Change Management

The lifecycle product carbon footprinting approach involves quantifying the greenhouse gas (GHG) intensity of each step in your product's supply chain.

There are obvious reasons for completing such a study, mainly that it is increasingly required for compliance with local GHG reporting regulations. However, there is more that a proactive business can learn when exploring their supply chain at such a granular level. For example:

• Understanding Energy Intensity - GHG emissions are often used as a proxy for energy intensity. The amount of energy required in a supply chain remains relatively constant, despite frequent price-volatility in the unit costs of energy.
• Understanding Regulatory Risk - How would your business be impacted by a carbon tax? What if the tax is 25, 50, 100 $/tonne?
• Understanding Supply Chain Risks - Where are your suppliers located? Are there more local suppliers of the same products?
• Identifying New Market Opportunities - Can you switch to a more local supplier? What if you switched to electrical from fossil-based production steps?
• Identifying New Cost-Reduction Opportunities - Where are the inefficiencies in the supply chain?

Both investors and the public use awareness of GHG impacts in a product lifecycle as an indicator of businesses with a more informed and holistic operating strategy.

Performance Tracking

After a baseline lifecycle product carbon footprint has been produced, the logical next question is "How will/can my footprint change over time?". Acting upon identified market opportunities and reduction strategies should help to reduce your footprint over time.

Some businesses may choose to set performance targets or goals (e.g. to accomplish stated climate change objectives) others may want to conduct a "what-if?" style analysis on how different improvement projects will affect the footprint.

In any case, the trends of lifecycle product carbon footprints over time are normally shared within externally published sustainability reports.

Some examples of the business goals served by tracking performance over time are:

• Measure and Report Emissions Performance - Tracking and communicating the emissions reduction progress to internal and external stakeholders.
• Emissions Reduction Roadmaps - Developing a list of improvement opportunities to reduce energy/emissions intensity in your supply chain. How will/does each step impact the product carbon footprint?
• Target Setting & Tracking Over Time - The baseline product carbon footprint can informs what feasible reduction in the long-term emission is possible. Target setting enables alignment with stated corporate and country climate goals.

Stakeholder Stewardship

Investigating every step of a product's lifecycle creates an opportunity to re-engage with upstream suppliers and downstream customers.

The boundaries of lifecycle product carbon footprints models span across any individual stakeholder. Therefore emissions reduction at any supply chain step will be reflected in the overall footprint. In other words, positive individual actions reflect well on each stakeholder in the supply chain.

Stakeholder collaboration should be encouraged to move towards this common goal of identifying and reducing carbon footprint of supply chains. Emissions reduction and economic improvement are not mutually exclusive!

Open sharing of product carbon footprint information can lead to benefits to all stakeholders, including:

• Supply Chain Efficiency - Identifying emissions intensive, or redundant, production steps that can be modified to low-emissions or low-cost alternatives. For example, perhaps a business-to-business product has an intermediate packaging step that can be eliminated.
• Stronger Stakeholder Relationships - Good-faith sharing of product carbon footprint information can lead to joint partnerships and marketing opportunities that can grow the market, not just market share.

Product Differentiation

Consumer and investor preferences are favoring products and organizations that understand and manage their GHG impacts and risks.

Businesses that are proactively identifying these risks are realizing advantages over businesses that are waiting for government and regulatory mandates.

• Competitive Advantages - Some consumers indicate that lower emissions products justify a higher price point. Irrespective of ones personal views on this, the act of carbon footprinting leads to identifying supply chain optimizations and synergies that can create a competitive moat.
• Corporate & Brand Strength - An organization does not need to have the "best-in-class" carbon footprint for it to reflect positively on their brand. Even the act of carbon footprinting indicates that your organization considers ESG risks and is a step in the right direction.
• Employee Stewardship - Efforts to consider the lifecycle impacts of your products is an direct signal to employees of your corporate values and can help with staff retention and recruitment.