Sustainability Salad of Acronyms: Business and Planet Value Decoded

By Felipe Daguila

In this digital transformation age, the lexicon of sustainability is becoming as crucial as any programming language. Businesses and consumers alike are becoming progressively attuned to the importance of green practices.

In my two decades in the tech industry, I became intimately familiar with its language, full of acronyms that often baffled the uninitiated. Now, with the understanding of a better optimized customer engagement, I’ve discovered a similar fascination for acronyms in the world of sustainability. This isn’t just a quirk of these industries; it signifies the continuous evolution of new concepts, trends, and technologies, something that both the IT and sustainability industries have in common.

In this digital transformation age, the lexicon of sustainability is becoming as crucial as any programming language. Businesses and consumers alike are becoming progressively attuned to the importance of green practices.

According to the Harvard Business Review, 72% of companies see climate change as a significant risk to their business operations, revenue, and costs, while a study in the Stanford Social Innovation Review reveals that over 90% of CEOs consider sustainability crucial for their company’s success. As for the customers’ opinion, according to a study by Accenture, 83% of consumers think it’s crucial for companies to design products for reuse or recycling, while a survey from Simon-Kucher indicates that 78% of people consider environmental sustainability important and express a desire to lead more sustainable lives.

With the merger of technology, corporate responsibility, and sustainability, we’re faced with an extensive list of acronyms. But what do these terms signify for your business and our planet?

Join me, as I aim to elucidate these acronyms, offering business leaders a clear roadmap to navigate their sustainability responsibilities. Let’s dive in.

Corporate Carbon Footprint (CCF)

One of the pivotal concepts in corporate sustainability is CCF, which stands for Carbon Corporate Footprint. CCF represents the total greenhouse gas emissions a company or organization induces, encompassing both direct and indirect emissions. Understanding CCF is instrumental for any business aiming to make genuine strides in sustainability.

A heightened global climate consciousness has seen an exponential demand from stakeholders for businesses to review their CCF especially with the awareness around Scope 3 emissions. Scope 3 carbon emissions represent the majority of the carbon footprint for most companies, in some cases as high as 85% to 95%, says CNBC.

Consequently, we’re observing a surging market for carbon accounting, tailored management tools, and bespoke consulting services.

Challenges remain in making this data collection and reporting a reality. Collating precise emissions data especially for Scope 3 spanning an entire enterprise is a challenging feat. The CDP reported that only 41% of businesses have disclosed information on at least one Scope 3 emissions category. Different standards throughout different landscapes also complicates the emission reporting process.

Embracing the CCF metric within your operations isn’t just about adhering to sustainability norms; it’s about harnessing an invaluable tool that can redefine your business trajectory. A transparent and meticulous assessment of your CCF not only builds trust among stakeholders and consumers but positions your company as a forward-thinking entity, truly committed to meaningful sustainability.

Moreover, by aligning with regulatory standards, you not only protect your company from potential liabilities but also place it in a favorable position to benefit from various incentives.

• Trust & reputation boost: Accurate CCF tracking and reporting can enhance your corporate image, making your business more attractive to eco-conscious consumers and partners.
• Regulatory compliance & incentives: By effectively managing your CCF, you’re not just meeting the minimum requirements but positioning your business to tap into potential incentives, from tax breaks to grants.
• Operational efficiency & cost savings: Addressing cost and operational qualms will not only reduce your carbon footprint but can also translate into significant cost savings, offering a dual benefit of environmental responsibility and economic efficiency.

The intersection of technology, AI, and CCF has already brought various developments to the industry, with numerous companies  facilitating more effective sustainability measures.

• Maersk: Recognizing the considerable CCF from shipping, Maersk has pledged to achieve carbon neutrality by 2050. To do this, they’ve been exploring biofuels and investing in innovative carbon-neutral shipping solutions.
• Nestlé: As part of their efforts to combat climate change, Nestlé has worked to map its full supply chain to understand its Scope 3 emissions better. They are taking active steps to reduce CCF by aiming for zero net emissions by 2050, which includes making their over 800 sites around the world carbon neutral.
• L’Oréal: L’Oréal has committed to a “L’Oréal for the Future” program, aiming for all of its sites to achieve carbon neutrality by improving energy efficiency and using renewable energy. They’ve particularly focused on understanding their CCF across all scopes to drive these initiatives.

Such companies and their tangible initiatives showcase the potential of tech-driven approaches to tackle and manage CCF effectively.

Product Carbon Footprint (PCF)

PCF decodes the carbon emissions generated during the entire lifecycle of a specific product, from raw material to its end. PCF reporting is gaining popularity among businesses as an evolving eco-aware consumer base demands transparency in the carbon credentials of their purchases, pushing businesses to accommodate this eco-requirement.

Where in comes to PCF, there are different types of assessments to consider:

• Cradle to Gate: This covers the carbon footprint from the raw material stage up to the point the product leaves the manufacturing facility.
• Cradle to Grave: This is a comprehensive assessment that includes all stages from raw material extraction through to disposal.
• Cradle to Cradle: This approach goes beyond Cradle to Grave by also considering how materials can be recycled or reused, aiming for a closed-loop system where waste is minimised. This concept ties into the idea of “circularity,” which aims for products and materials to be kept in use for as long as possible through recycling, refurbishment, and eventually remanufacturing.

There are various hurdles an enterprise has to solve before committing to this. Among them are the complexity of PCF determination from origin to disposal and the absence of a universal standard for PCF calculation complicates matters.

But due to the awareness of consumers on sustainable products across generations, opportunities are rife for businesses who take up to PCF reporting. A recent report by First Insight and the Baker Retailing Center at the Wharton School of the University of Pennsylvania found that Gen X consumers have seen a nearly 25% increase in their preference for sustainable brands and a 42% rise in willingness to pay more for sustainable products. Across all generations, the willingness to pay a premium for sustainable options has grown significantly, with nearly 90% of Gen X consumers now willing to spend an extra 10% or more, compared to just 34% two years ago.

Due to this, businesses also get to stand out among their competitors by offering eco-advantageous products. A study by Visual GPS and YouGov reveals that the pandemic has influenced consumer expectations, with 81% of those surveyed now expecting companies to demonstrate environmental consciousness in their advertising and communications.

Technology and AI offer several avenues to assist with PCF calculations and reporting. Life cycle assessment (LCA) software can automate the data collection process from raw materials to disposal, streamlining the complexity of PCF determination.

AI-powered analytics can scrutinize supply chain data to identify carbon-intensive stages, thereby helping to optimize for lower emissions. Additionally, blockchain technology can establish a transparent and verifiable traceability system for each product’s carbon footprint.

Further looking to the future, there are plans to ensure a broader implementation of PCF, especially in the EU (European Union).

The European Commission’s Digital Product Passport (DPP) is an initiative under the European Green Deal. Slated for implementation in 2026 for the apparel, batteries, and consumer electronics sectors, the passport will require businesses to provide detailed information on both finished products and their individual components.

The DPP enables consumers to make informed, eco-friendly purchases via QR code scans, while providing businesses with detailed data to improve environmental performance and make more accurate sustainability claims.

Its global implementation of DPP is an ambitious plan; one that will depend on the success of the EU’s execution of the initiative.

There are many companies that are moving on the right track in tracking their PCF and implementing it in their sustainability efforts. Examples are:

• Levi Strauss & Co.: The iconic denim brand has taken notable steps towards understanding its PCF. Recognizing that producing one pair of Levi’s 501 jeans results in significant emissions, they’ve worked on initiatives to reduce the water and energy used in production. By understanding and reducing their PCF, they aim to produce more sustainable products for their eco-conscious consumers.
• Unilever: Known for a diverse range of products, Unilever has been proactive in calculating the PCF of its products. They’ve initiated “carbon rainbow” efforts, looking at ways to replace carbon derived from fossil fuels in their product ingredients with renewable or recycled carbon.
• IKEA: The furniture retailer has been focusing on reducing the carbon footprint of its products. From sourcing sustainable wood to promoting products that help consumers reduce waste and save energy, IKEA’s PCF initiatives are central to its broader sustainability and climate positive mission.

Life Cycle Assessment (LCA)

LCA is a systematic approach used to evaluate the environmental impacts of a product, service, or process throughout its entire life cycle, from raw material extraction to production, use, and disposal.

LCA provides a comprehensive view of environmental effects and can inform strategies to reduce a product’s overall carbon footprint. However, challenges include the complexity of data collection, varying methodologies, and the absence of universal standards.

Examples include:

• Ford Motor Company: In an effort to understand the environmental impact of their vehicles, Ford has implemented LCA studies. This includes understanding the carbon footprint from material extraction, vehicle production, usage, and eventual recycling or disposal.
• H&M: As a part of its sustainability initiative, this fashion retailer has integrated LCA into its production process to better understand and reduce the environmental impact of its clothing items from raw material to final product.
• Procter & Gamble (P&G): P&G uses LCA as a tool to understand the environmental footprint of its vast array of consumer products. This knowledge has driven more sustainable choices in package design and sourcing.

Environmental Product Declarations (EPD)

Last but not least, Environmental Product Declarations (EPD) are standardized reports that provide quantifiable environmental data about a product, based on its LCA. EPDs offer a transparent way for businesses to communicate the environmental impact of their products to consumers, regulators, and stakeholders.

Despite their importance, challenges in EPD creation include the time and resources needed for comprehensive LCA, and the lack of global standardization which can lead to inconsistent reporting.

Blockchain technology can be employed to provide transparent and immutable records for EPDs, while AI-driven platforms can analyze existing EPDs to suggest potential areas for improvement in environmental performance. Both of these technologies can streamline the creation and utilization of EPDs, making them more accessible and reliable.

Examples of companies include:

• Skanska: This global construction company has been pioneering the use of EPDs for their construction products and services. They use EPDs to highlight the sustainable nature of their construction methodologies and to communicate the environmental impact of their buildings to clients and partners.
• Volvo Cars: In its commitment to transparency and sustainability, Volvo Cars has used EPDs to communicate the environmental footprint of its vehicles, considering all stages from material sourcing, manufacturing, to eventual vehicle end-of-life. It also launched a website specifically for its EPD.
• Electrolux: This home appliance manufacturer has adopted EPDs to communicate the environmental performance of their products, ranging from refrigerators to washing machines. The declarations serve to both inform consumers and drive internal improvements.

Telling Your Acronyms Apart

To simplify, here is how to distinguish CCF, PCF, Life Cycle Analysis (LCA) and Environmental Product Declaration (EPD):

• PCF: Highlights carbon emissions tethered to an individual product’s lifecycle.
• CCF: Encompasses the totality of a company’s operational emissions.
• LCA: A holistic evaluation of a product’s environmental toll, not restricted to carbon.
• EPD: An industry-standard report providing a snapshot of a product’s environmental footprint, frequently anchored in LCA findings.

In today’s world, there are many companies leading the charge in these areas by adapting and implementing innovative strategies in decarbonization. Among them are:

Unilever:

Unilever, a multinational consumer goods company, has long been committed to sustainability. The company has been actively reducing its CCF by implementing sustainable sourcing of raw materials and streamlining its manufacturing processes for increased efficiency. They are also committed to sourcing 100% renewable electricity for their operations.

Patagonia:

Patagonia, an outdoor clothing and gear brand, is renowned for its commitment to environmental responsibility. 87% of Patagonia apparel contains recycled material. Patagonia uses LCA to ensure its products are designed and produced with minimal environmental harm. The brand is also known for its dedication to transparency, revealing its supply chain practices to the public.

Tesla:

Tesla, primarily known for its electric cars, is at the forefront of the green revolution in the automotive industry. Unlike traditional automakers that rely on fossil fuels, Tesla’s approach to manufacturing prioritizes reducing its carbon footprint.

Although not explicitly stated, the company’s approach to revealing details about its battery recycling program and push towards 100% renewable energy aligns with the principles of EPD. Transparency in how products are made and their environmental impact is crucial in today’s eco-conscious market.

Adidas:

Adidas, the global sportswear giant, has been making strides in sustainable product innovation. The company has been keen on measuring and reducing the PCF of its products. By using materials like recycled polyester, Adidas aims to decrease the carbon footprint associated with each pair of shoes or clothing item they produce. In recent years, Adidas launched eco-friendly product lines, such as shoes made from ocean plastic.

In Conclusion

Through such efforts, these companies not only reduce their environmental impact but also set a benchmark for other businesses in their respective sectors.

Apart from this, advancements in AI and tech are revolutionizing sustainability. From AI-powered data analysis for emission reduction insights to predictive analytics that foretell emissions from specific strategies, the potential is vast.

A PwC study revealed that leveraging artificial intelligence could cut global greenhouse gas emissions by 4%. Additionally, the environmental applications of AI have the potential to add as much as $5.2 trillion USD to the global economy by 2030.

An apt example of how AI is used in climate action would be the Google Forecasting System, which covers regions inhabited by over 370 million people, sent out 115 million notifications to 23 million individuals in 2021.

Automation promises accuracy in data collection, while AI-driven simulations provide a crystal ball into sustainable strategic alternatives. Further, with IoT-integrated real-time monitoring, businesses have an unprecedented, instantaneous window into their emissions data.

In this transformative era, carbon management platforms are not just tools but torchbearers, guiding enterprises towards a greener, sustainable tomorrow.

Key Takeaways:

• CCF and PCF are becoming increasingly important metrics for businesses, with stakeholders demanding greater transparency especially around Scope 3 emissions
• There lies a missed opportunity for companies for not looking at CCF and PCF together in their decarbonization strategy and sustainability transformation strategy
• Businesses face challenges in data collection and reporting due to the complexity of calculating emissions and a lack of standardized metrics.
• Consumer attitudes are shifting towards sustainability across generations, leading to increased demand for eco-friendly products.
• Companies like Unilever, Patagonia, Tesla, and Adidas are leading the way in sustainable practices, ranging from minimizing their CCF to implementing LCA and EPD for greater transparency and reduced environmental impact.
• Technological advancements, particularly in AI, offer opportunities for better emissions tracking and predictive analytics.

Ed.  Photo from the article submitted by Felipe Daguila.

About Felipe Daguila: Felipe Daguila is the Chief Commercial Officer of the SaaS sustainability startup Terrascope. His mission is to help companies decarbonize by measuring their Scope 3 emissions.