When it comes to carbon disclosure and reporting, few challenges are harder to
crack than quantifying the extent of an organization’s scope 3
emissions
— estimated by the World Economic Forum (WEF) to represent over 80
percent of emissions across most business
sectors.
While no one is pretending that addressing scope 1 and
2
is easy, they are at least under the control of a single entity to manage. On
the other hand, scope 3 is created indirectly by a company’s entire value chain
and consumers. This means liaising with potentially thousands of customers and
suppliers to access their data and understand the carbon footprint of every item
the producing firm uses. This could run into billions or even trillions of data
points for the largest companies.
When accounting for scope 3
emissions,
companies share a common challenge: a lack of sufficiently granular, accurate
and verifiable primary product-level data. Complexity in emissions accounting
and data sharing, as well as a diverse ecosystem of stakeholders, adds to the
challenge. However, there are signs that industries are aligning to cooperate
and tackle it together.
The emergence of PACT
I recently represented Avery
Dennison at Climate Week NYC
2023 within the Scope 3 Summit organized by the World Business Council
for Sustainable Development. There, I shared a
stage with the Partnership for Carbon Transparency, better known as
PACT. Via its Pathfinder
Network, PACT has set the very bold
ambition to create the “internet for emissions data.” This would set a common
framework for all organizations to seamlessly connect, exchange and derive
insights from emissions data. So-called ‘data exchanges’ — where companies share
carbon footprint data — do exist already; but they tend to be industry specific,
and data formats are inconsistent. Large organizations would typically have to
access many of these data exchanges to build a holistic picture of scope 3
emissions and may encounter data consistency and interoperability challenges.
This is why PACT is so exciting, since it is attempting to bring this all
together in one place.
Metrics matter; and PACT ensures every company has access to standardized
information from its suppliers. This enables companies to take targeted action
on their value-chain emissions and to create accountability for reduction
progress. In lending its support to PACT, the WEF notes that “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.”
Data conformance with PACT
I’m pleased to say that Avery Dennison’s atma.io
connected product cloud is among one of the first PACT-conformant solution
providers within the
Pathfinder Framework version 2.0. atma.io enables scope 3 tracking across the
value chain at item
level,
to build trust and transparency among all stakeholders. Over the last two years,
the platform has helped organizations manage over 30 billion items throughout
various supply chains. Being PACT conformant means that atma.io can be leveraged
across complex supply chains to enable data sharing in a consistent and
interoperable way that’s needed to grapple with the challenge of scope 3.
Scope 3 and Digital Product Passports go hand in hand
While the challenge of quantifying scope
3
can seem daunting today, the emergence of PACT and data exchanges will make it
much less so in the future. One huge catalyst for these initiatives is likely to
be the introduction of Digital Product
Passports
(DPP) in the European Union.
The European Commission’s Circular Economy Action
Plan
is laying the groundwork for the phased introduction of a DPP in key markets by
2027. Initially, this will affect textiles, industrial and electric-vehicle
batteries,
and consumer electronics. It means that all companies selling these products to
end users will need to develop a deeper understanding with their suppliers to
understand exactly what is in each item and its origins — including
carbon-footprint
data
— and ensure information is easily accessible by the consumer.
The good news is that scope 3 and DPP compliance go hand in hand. This will spur
action across all sectors to collaborate further and make the path to scope 3
much easier than it appears today.
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As Vice President, Digital Solutions, Max leads Avery Dennison’s digital solutions strategic innovation platform, which brings together all of Avery Dennison’s digital solutions initiatives including the atma.io connected product cloud. Max joined Avery Dennison in 2017 to launch Avery Dennison's corporate venture capital (CVC) program and currently serves on the boards of directors of three of Avery Dennison’s CVC portfolio companies.
Before joining Avery Dennison, Max was co-founder and CEO of NuLabel Technologies (acquired by Altana), a new materials startup developing activatable materials and sustainable solutions for brands and the packaging industry.
Max has served on the Venture for America Entrepreneur Board and has also been named to the 30 Under 30 lists for Forbes (2015) and Inc.com (2016). Immediately before founding NuLabel, Max graduated with a degree in Political Science from Brown University.
Published Oct 12, 2023 8am EDT / 5am PDT / 1pm BST / 2pm CEST