- Transparent recording and reporting of sustainable business data are key to achieving ESG metrics and climate goals.
- Companies across different industries cannot achieve these outcomes in isolation.
- Carbon data networks enable sharing of emissions data along with other sustainability data with suppliers and industry partners.
Sustainability transformations hinge on data transparency. The availability and management of accurate, verifiable data are essential to achieving corporate ESG metrics and shared global goals. Companies must not only use tools to record, report, and act on sustainable business data within their operations but also share it across their networks of suppliers and partners to unlock the potential for industry decarbonization at scale.
Scope 3 emissions (emissions outside companies’ own operations) represent over 80% of emissions across most business sectors. What’s needed is end-to-end value chain transparency and sharing of actual and verified emissions data, not estimates or averages, that are accounted for down to the individual product and supplier level.
Moving from averages to actuals has enormous benefits. It allows companies to embed sustainable business decisions into their business processes from sourcing to product development, invest in high-yield decarbonization activities in their supply chains, adhere to increasing regulatory requirements, and deliver more accurate corporate reporting.
Many consider overcoming this challenge as the “holy grail” of sustainable business. Solving the lack of data transparency across industries and value chains in business networks has the potential to generate massive positive outcomes. So, what’s holding us back?
Companies across different industries see that they cannot scale sustainable outcomes on their own. They need to collaborate and share data, but it remains challenging for several reasons. To start, a consistent approach to calculating and allocating emissions down to the product level is needed. Companies aren’t creating the necessary primary data around their emissions activities and inputs. And technical standards or protocols for emissions data sharing and management across “carbon data networks” are only now beginning to formalize.
Establishing carbon emissions data networks
Over the past year, a great deal of progress has been made in developing the complex technical standards and data management protocols required for companies to share emissions and other sustainability data with suppliers and industry partners.
The Partnership for Carbon Transparency (PACT) is a programme led by The World Business Council for Sustainable Development (WBCSD), which has brought together companies and organizations across different industries to tackle the Scope 3 emissions data challenge.
What’s the World Economic Forum doing about climate change?
Climate change poses an urgent threat demanding decisive action. Communities around the world are already experiencing increased climate impacts, from droughts to floods to rising seas. The World Economic Forum’s Global Risks Report continues to rank these environmental threats at the top of the list.
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 essential that businesses, policy-makers, and civil society advance comprehensive near- and long-term climate actions in line with the goals of the Paris Agreement on climate change.
The World Economic Forum’s Climate Initiative supports the scaling and acceleration of global climate action through public and private-sector collaboration. The Initiative works across several workstreams to develop and implement inclusive and ambitious solutions.
This includes the Alliance of CEO Climate Leaders, a global network of business leaders from various industries developing cost-effective solutions to transitioning to a low-carbon, climate-resilient economy. CEOs use their position and influence with policy-makers and corporate partners to accelerate the transition and realize the economic benefits of delivering a safer climate.
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PACT aims to make it easy for individual companies to share granular, primary, and verified product emissions data. This data exchange, of course, must be secure and confidential while working across different types of data management systems.
PACT created the Pathfinder Network to make this happen. It’s an open, decentralized network infrastructure allowing different technology solutions to connect and support peer-to-peer data sharing 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 contributes to the network’s data sharing standardization through an API specification that’s part of the SAP Product Footprint Management solution.
By the end of 2022, with the support of other companies, PACT will further develop the Pathfinder Network and put in place new technology components to help exchange emissions data across supply chains – an essential step in growing industry-specific data exchanges.
Catena-X for the automotive industry
A rapidly developing example of an industry 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 where automotive manufacturers and suppliers, dealer associations, equipment vendors, and recycling firms can all take part equally. 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, which helps all the network participants maintain data sovereignty while calculating and sharing emissions data in a consistent, comparable, and verifiable way. Since 70% of the automotive value chain are small and medium-sized enterprises, enabling them to contribute to the emissions data chain is essential.
This kind of emissions data transparency will increasingly become part not only of B2B industry dynamics but also of how brands engage with their end customers who are looking to buy more sustainable products and services.
A blueprint for industry-wide action
Catena-X is currently made up mostly of European automotive and related companies. But companies from other regions, including the US and Asia, are 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.