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
Up- and downstream emissions dominate product footprints and explain sector trends in Carbon intensity (CI)
The graph depicts the average upstream, manufacturing and downstream emissions of those 308 products for which granular LCA data was available. Sectors are ordered by increasing product CI. Impacts of transport (up- & downstream) and end-of-life tend to be low, however these averages mask large variations between products within the same sector.
Many products show impressive annual improvements, and granular LCA data appears key
The continuation and growth of the CDP Supply Chain Program benefits all corporations who participate and even those who merely monitor others’ disclosure to understand in which stages their CI 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 and guidelines for tracing value chains. With the right data, we know that conducting fast LCAs across entire portfolios is now possible, ensuring measurable emission and cost reductions (Science 344-6188, 2014).
Main CoClear value add versus raw CDP data
By applying our data science expertise, CoClear’s analysis revealed insights by:
- Where not reported directly, mining data to obtain product weights and thus calculate CIs
- Parsing life cycle meta data (where available) to break down each footprint into its bottom up contributions upstream, manufacturing (i.e., reporting company-owned facilities), and downstream, as well as transport and end-of-life
- Using GICS and other meta data to map each product into one of 8 broad sectors
- With integrity screening, filtering out products that likely had errors such as wrong units