Product Carbon Footprint (PCF)

Overview

With the manufacturing sector accounting for about 20% of global carbon emissions and consuming 54% of the world’s energy sources (1), there is an urgent need for manufacturers to take steps to understand and reduce their product carbon footprint (PCF), in other words, the total greenhouse gas emissions generated by a product. Growing consumer awareness of environmentally friendly products, as well as demand from consumers, investors, and governments for accurate PCF labeling on all products highlight the need to establish a carbon baseline.

As companies take up the challenge of calculating their PCF, they soon realize what a complex endeavor this can become. This is because they first need to understand their entire value chains, which poses a multitude of challenges, the greatest one being: obtaining reliable and verifiable data on materials, components, and processes that can be used to quantify CO2 emissions for their products.

EXA’s Product Carbon Footprint solution (EXA PCF) enables customers to do exactly that, from cradle to gate: in other words, assess the environmental impact from raw material extraction through to product manufacture up to the factory gate. The underlying bill of materials data is retrieved from source ERP systems and contains highly detailed information that enables them to map carbon emissions values to each material and each process step and, in doing so, helps answer the following questions:

 

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Which raw materials are consumed in a product and in what quantities?

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From which suppliers and from which group companies do I source them?

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What is the carbon footprint of those raw materials?

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What percentage of the carbon footprint of those materials is caused by transportation within my company’s boundaries?

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What production activities are undertaken in which group companies to manufacture the product? How can carbon emissions within the company be correctly allocated to various production activities?

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How can I roll up carbon footprints from each production step and accurately calculate PCF, starting from sourcing of external materials, production activities and transportation, to final end product?

EXA PCF, an SAP add-on, covers carbon emissions from cradle to gate.

This can be split as follows:

 

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Cradle to inbound gate

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Inbound gate to outbound gate

(1) Sharing Data to Archieve Decarbonization of Value Chains: Briefing Paper, World Economic Forum and Boston Consultant, March 2022

Tight integration with source ERPs

EXA PCF automatically retrieves data from all connected SAP ERP systems while ensuring that no context information is lost, even in complex processes, such as cross-company sales, drop shipments, tolling, stock in transit, and so on. It also ensures that the value chains for carbon footprints calculated in EXA PCF can be reconciled with the information in the local ERP systems at any time. Thanks to the intelligent integration in EXA PCF, master data breaks between the ERP systems can be easily identified and corrected.

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One system providing detailed insight on all your value chains

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Standard connectors to read relevant finance and logistics information from source systems – from SAP R/3 to SAP S/4HANA

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Data harmonization even when facing master data challenges, such as material number breaks, UoM breaks, or business partner breaks in intercompany transactions

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Value chains fully in sync with pieces of information in underlying ERP systems

Cradle to inbound gate

This covers information on all sourced materials in the enterprise – from the cradle to the enterprise gate. These may be raw materials, semi-finished or finished goods as required by the enterprise for further processing. EXA PCF provides highly detailed information on every single material sourced from external suppliers and keeps track of where, when, and how much was procured. This information is then used to map its carbon emissions. Carbon emissions values are preferably received from the vendors directly. However, in absence of that, they can also be retrieved from LCA databases.

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Obtain accurate data on sourcing of materials from external suppliers including quantities or unit of measure

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Provide details on procured quantities for mapping carbon emissions to each material

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Provide supplier collaboration platform to communicate with suppliers to obtain accurate carbon emissions data on materials sourced from them

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Allow easy integration with LCA databases if suppliers cannot provide carbon emissions information

Inbound to outbound gate

This covers all the value additions undertaken within the enterprise. This largely relates to R&D and production within the company’s boundaries. Value addition can occur in many research and production sites involving interplant and intercompany transportation.

EXA PCF tracks all such activities as maintained in the ERP systems directly associated with production systems. Actual emissions in the enterprise (as part of Scope 1 emissions) can be mathematically allocated to sold products based on the activities undertaken in the manufacture of the products. This provides an accurate method to distribute the Scope 1 emissions to individual products. If the enterprise has already completed this exercise of mapping value-added activities to carbon emissions, EXA PCF takes that as the basis for calculating the carbon emissions along the value chain.

The emissions produced by transporting materials are also mapped to each product, thereby providing a holistic picture of the carbon footprint of every single product.

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Obtain accurate information on various production/value-added activities within the company

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Retrieve all information on the transportation along the value chain that is required to produce the end product

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Disclose this information to allow allocation of carbon emissions in the plant/offices to value-added activities

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Provide simple models for calculating carbon emissions generated by transportation

Analytics

This section provides easy-to-use analytics for senior management to get a bird’s eye view on the materials, value-added activities, and transports that are the cause of major carbon emissions and should therefore be treated with higher priority. If an end product needs more attention, you can drill down along the entire value chain and find out exactly which sourced materials of value-added activities are the source of concern.

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Which procured materials cause a larger carbon footprint?

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Which value-added activities cause a larger carbon footprint?

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Which end products consume these high carbon footprint materials and/or value-added activities?

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Carbon emissions of an end product together with drill down along the value chain

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A global value chain with carbon footprints rolled up

Uncompromised security

This section provides easy-to-use analytics for senior management to get a bird’s eye view on the materials, value-added activities, and transports that are the cause of major carbon emissions and should therefore be treated with higher priority. If an end product needs more attention, you can drill down along the entire value chain and find out exactly which sourced materials of value-added activities are the source of concern.

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EXA PCF enjoys the same data security as that of underlying SAP systems

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Single sign-on with existing SAP users

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SAP roles and authorizations in line with your GRC strategy

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