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Achieving Higher Value Chain Efficiency Through Product Life Cycle Analytics

“What data analytics did for baseball it could do for the environment by shrinking the carbon footprint of thousands of consumer products.

By Christoph J. | Published 8 years ago | About a 3 minute read

“What data analytics did for baseball it could do for the environment by shrinking the carbon footprint of thousands of consumer products. With data from each step in a product’s life cycle, companies are starting to pinpoint where carbon emissions are greatest to redesign their products and reconfigure operations to cut carbon and save money.” — Kim Martineau

In a first of its kind initiative*,* CDP has collected the largest publicly available dataset of supply chain carbon emissions across the world through its Supply Chain Program. Focusing on the reported product-level emissions in that dataset, CoClear ran detailed analytics of the life cycle assessments (LCAs) of 546 products (170 in 2013, 185 in 2014, and 191 in 2015). This unique analysis spans 108 companies across 26 countries and 29 GICS Industry Groups.

A study of this breadth conclusively answers the recurrent business question: What level of emissions and corresponding cost can really be saved by understanding one’s entire value chain?

Key Findings

Upwards of two-thirds of life cycle emissions and thus efficiency improvement potential tend to be outside a company’s own operations
Sectors with low average carbon intensity (CI) typically have most of their product value chain emissions upstream, whereas larger CIs are driven by downstream emissions
Within sectors, CIs and value chain hotspots vary widely from product to product, and only individual LCAs reveal each product’s individual opportunities
Product improvements led to an average annual intensity reduction of 7%, thus ensuring absolute reduction is possible despite growth
Carrying out LCAs, the more granular the better, pays off: On average, companies with life cycle breakdowns of their products achieved about twice the product efficiency improvements as those with only product-level footprints (~9 percent v ~4 percent)
However, most companies still do not know or report their products’ emission changes

Many Products Show Impressive Annual Improvements; Granular LCA Data Appears Key

Individual reasons for year-on-year reductions in product emissions are as varied as the range of products themselves. However, a crucial trend in the data points to the superior product emissions management of those companies that reported detailed LCAs along their value chains. Products that included a detailed breakdown of carbon emissions saw an average 9 percent decline in total emissions while products that only reported final carbon output saw a lower, 4 percent decline. The 7 percent average product improvement (with a wide range from negative to positive for different products) means that profound reductions in product carbon intensity are possible such that a company’s absolute reduction goals can still be met despite growth.

Bloomberg was among the companies reporting steep carbon reductions, thanks in part to a redesign of the keyboard on its terminals in 2011, which led to a 57 percent drop in carbon emissions by using fewer materials and improving energy efficiency on the consumer end.

Benefits of LCA Data

The continuation and growth of the CDP Supply Chain Program benefit all corporations who participate and even those who merely monitor others’ disclosure to understand in which value chain stages their carbon intensity is likely to be highest. While there is still room for improvement in how companies respond to the questionnaire, CDP’s process provides crucial opportunities for tracing value chains, whether to inform companies’ own efficiency improvements or to increase emissions transparency for large commercial or institutional customers including the US government. With the right data, we know that conducting fast LCAs across entire portfolios is now possible, ensuring measurable emission and cost reductions.

For more information or to download the full report visit http://www.coclear.co/.