Executive Summary: Achieving Higher Value Chain Efficiency Through Product Life Cycle Analytics
In a first of its kind initiative, the Supply Chain Program, CDP has collected the largest publicly available dataset of supply chain carbon emissions across the world (CDP 2015). 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). Our unique analysis spans 108 companies across 26 countries and 29 GICS Industry Groups.
A study of this breadth conclusively answers the re-current business question:
What level of emissions and corresponding cost can really be saved by understanding one’s entire value chain?
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% v ~4%)
However, most companies still do not know or report their products’ emission changes