How to Set Up a Useful Product Carbon Footprint
So you thought you’d set up for success with a carbon baseline? Think again. Companies with diverse product ranges and ambitious net zero programs are leveraging Product Carbon Footprints (PCFs) to effect change. In this guide, we will run through how to set up and implement useful PCFs.
So what is a PCF?
A Product Carbon Footprint (PCF) is the total amount of CO2 associated with a product throughout its lifecycle. PCFs provide a granular view of environmental impact, enabling targeted action and transparent communication.
The situation today - why we need PCFs:
Corporate GHG inventories don't cut it anymore. Reporting on high-level company-wide carbon data creates a few problems:
Fails to resonate with customers. Carbon baselines are too abstract for customers (retailers and consumers) to understand and make informed decisions from. Let’s face it, Scope 1-3 jargon doesn’t create a splash
Obscures supply chain opportunities. Aggregating your emissions across Scopes 1-3 makes it difficult to identify targeted emissions reduction opportunities within your supply chain.
Limits operational action. Corporate-wide baselines don't provide enough detail to drive meaningful change. A procurement professional won’t find “Scope 3” applicable to their business activities and responsibilities.
Why is a PCF useful?
PCFs offer a more effective approach to addressing corporate sustainability challenges by:
- Targeting decarbonisation efforts. Pinpoint emission hotspots in the supply chain to allow for product development and improvement e.g., swapping out high-emitting ingredients for more sustainable ingredients in food products.
- Meaningful communication:
- B2B: Share product/ingredient carbon data with your customers to make yourself more competitive during procurement processes. We’re starting to see this happen already.
- B2C: Differentiating products through transparent communication of carbon footprints to consumers.
Example: Oatly
Oatly thrives from confrontation. They’ve positioned themselves as the 'good guys' fighting the enemy (aka the dairy industry). Referential data, like the 58% lower CO2e impact of Oatly Barista sold in the UK compared to British cow's milk is a powerful narrative that resonates with consumers.
PCFs are gaining momentum
Sustainability teams are experiencing more pressure from commercial teams to have PCF information available. We’ve seen an uplift of PCF use by ~3x on our platform alone.
But PCFs have their challenges:
They are inconsistent. Diverse methodologies (GHGP, ISO, PEF) create comparability issues.
They are higher effort. Creating 100,000 PCFs for a diverse product portfolio is undoubtedly more intense than calculating your baseline once a year. Dynamic and up-to-date data is also expected from both consumers and R&D teams:
- Consumers: (B2B & Retail): Consumers expect product-level carbon data to be current, not historical.
- R&D team: R&D teams rely on up-to-date PCFs to inform material selection, process optimisation, and product design decisions.
They are specific. PCFs demand a level of specificity far greater than GHG inventories, which often obscure data under broad Scope 1-3 categories. This granular detail can feel like disclosing proprietary information, making companies more vulnerable to scrutiny.
A Checklist for Building a Useful PCF
1: Collect primary data
A PCF should be based on primary data, particularly for your most material hotspots. This requires supply chain engagement (sigh…).
A recap on supply chain engagement prioritisation:
You won’t be able to engage all your suppliers. Segment them into cohorts taking into consideration the following:
- Quantitive categories e.g., emissions materiality, supplier category, spend, revenue
- Qualitative categories e.g., strategic importance, sustainable performance and willingness to engage.
Top tip: Shift focus from gathering supplier baselines to product footprints
Rather than collecting general supplier carbon baselines, concentrate on the specific carbon footprint of the products you purchase from them.
Gathering this level of data granularity will allow you to make more informed decisions about sourcing, design and reduction strategies.
2: Calculate, standardise and exchange
Key factors to consider when calculating PCFs:
- Standardised calculation: Adopt consistent calculation methods (like those outlined by PACT) to ensure data comparability and accuracy.
A recap on supply chain engagement prioritisation:
The Partnership for Carbon Transparency (PACT): backed by the WBSCD is standardising the methodology for calculating and exchanging PCFs. They are helping to improve accuracy and enable decarbonisation across value chains. PACT’s network is already affecting 100,000 companies. Members sharing PCFs through PACT include 30+ of the world's CPGs such as P&G Nestlé, Unilever, ABinBev etc. Altruistiq's support and alignment with PACT standards enable interoperable data exchange with any other PACT conformant systems that suppliers are using, increasing response rate and data standardisation.
Do you have imperfect data?
Our advice is to just get going.
While standardised primary data from supply chains remains the ultimate goal, you're not going to get universal primary data overnight.
At Altruistiq, we have developed a data quality score to assess data accuracy to indicate how confident you should be in your data. It is on a scale of 1 (Estimate) - 5 (Very High).
A data quality score can help prioritise decision-making. PCFs with high scores can inform critical business choices, while those with lower scores may require additional data refinement before significant decisions are made
A note on standardisation:
There’s no need to stifle efforts that are being made to improve primary data coverage if you are only now aligning to a standard like PACT.
Use tools like Data Quality Scoring and Primary Data Share % to evaluate the reliability of the current data provided. This enables you to accept data while incorporating additional metrics to evaluate its accuracy.
- PCF data exchange: PCF data exchange, between businesses, is crucial to improving Scope 3 accuracy. However, to date this has been inefficient and expensive. Most businesses have been gathering supplier specific emissions data via:
- Peer to Peer. E.g., Business A calls Business B and asks them to manually share data. They do. This is peer-to-peer, but high effort and not scaleable.
- Centralised/ Suppliers all report to a central database (e.g., CDP). Customers can pay for CDP data to get supplier emissions factors for their Scope 3 calculations
- Going forward, look for interoperable sustainability data management solutions that facilitate smooth PCF data sharing between supply chain partners.
- PACT has developed the Pathfinder Network, an open and global network of interoperable platforms/ solutions for peer-to-peer exchange of accurate, granular and verified primary data across the supply chain.
- Cost-effective PCF generation is a reality. Advancements in data platforms have significantly reduced the cost of calculating PCFs compared to traditional LCA methods. A single PCF traditionally could take months and cost several thousands of $ to develop, whereas, at Altruistiq, we’ve automated the calculation process to work across tens of thousands of products and SKUs.
3: Verify and Audit
PCF verification and auditing - is it really necessary?
While auditing is ideal for ensuring PCF accuracy, it's currently impractical for widespread implementation due to high costs. The necessity of verification and auditing largely depends on what you intend to do with the PCF:
Low priority
- Internal use: PCFs are used for directional guidance on product R&D and ingredient procurement - verification and auditing is not always necessary.
Moderate priority
- B2B: Short-term reliance on self-declared PCFs, ideally aligned with the PACT data structure, is enough. However, industry-wide auditing should be a long-term goal.
High priority
- Consumer-facing label: To withstand public scrutiny and avoid greenwashing accusations, verification and auditing is advised.
This phased approach helps balance the need for data sharing with practical considerations. For especially critical PCFs audits can always be conducted selectively on a case by case basis
4: Communicate Wisely
Tactical PCF communication is a delicate balance between risk and reward. Our take is:
For B2C:
An emissions number on a consumer product is more or less useless. Consumers typically make a purchasing decision in seconds (9 to be exact), and in 9 seconds the average consumer won’t do the math problem.
There are some situations where referential data is useful e.g., my product is 30% lower than the alternative. This works for challenger brands (e.g., Oatly vs Milk, Flora vs Butter) but not incumbents. As an incumbent, you could be fractionally better than your competitor, but that is a much harder sell.
Caveat: multi-brand companies often have challenger brands within their portfolio e.g., Sainsbury’s Taste the Difference Beef or Nestlé’s Nespresso, act as challenger brands and might want to share their PCFs on pack.
And for B2B:
PCFs can be used to make your business/products more competitive during procurement processes. Upskill the marketing and sales teams with the knowledge to speak confidently on your product carbon footprint with customers. This will help them leverage the PCF data for commercial opportunities:
- Price premiums: By quantifying the environmental benefits of a lower PCF, B2B companies can justify premium pricing for their products.
- Co-investment: Leveraging PCF data, businesses can propose collaborative R&D initiatives to develop lower-carbon product variations. By focusing on counterfactuals and showcasing potential improvements, companies can position themselves as innovation partners.
It’s time to reassess your approach to supply chain data collection and re-focus on PCF data collection.
