The largely unregulated environmental impact and carbon management landscape are shifting like an iceberg in a post-industrial world – quickly. Regulators and stakeholders are no longer putting stock into self-substantiated claims and good intentions alone. Companies increasingly face the task of integrating ESG and carbon management strategies into their existing business models, supply chains, and reporting frameworks to keep their portfolios risk-averse and squeaky clean and maintain regulatory compliance. And as different global regulatory frameworks are coming into play, like the newly approved draft proposal by the European Parliament to ban greenwashing, this is more important than ever.
“Parliament’s approved negotiating mandate foresees banning the use of general environmental claims like “environmentally-friendly”, “natural”, “biodegradable”, “climate neutral” or “eco” if these do not come with detailed evidence. It also aims to ban environmental claims that are based solely on carbon offsetting schemes. Other misleading practices such as making claims about the whole product if the claim is true only for one part of it.”
That last part is significant for businesses looking to understand and report on the emissions related to their products. For example, suppose a brand promotes a product on its website as “made with organic and recycled material," but the product only contains 30% organic cotton or 10% recycled polyester. In that case, this will get them in a bit of trouble. This factual discrepancy will also negatively impact the carbon metrics that a brand showcases to its customers. So how do we fix this and ensure businesses stay compliant regarding regulations such as these? With an easy-to-use and straightforward carbon management strategy that looks at every step, material, button, bow, and process along a product's supply chain.
And fortunately for businesses and the icebergs, advancements in technology and data analytics are making it easier to collect, analyze, and build an effective carbon management strategy.
But what exactly is carbon management?
The goal of carbon management is to reduce the carbon footprint of a business or industry. It refers to the systematic approach of reducing and managing greenhouse gas (GHG) emissions to mitigate climate change and promote sustainability. It encompasses a range of activities and practices.
- Policy and Regulatory Compliance: Environmental regulations, policies, and standards are often the catalysts that drive carbon management initiatives. Now, more than ever, businesses need to ensure compliance with laws and regulations related to carbon emissions.
- Stakeholder Engagement and Communication: Effective carbon management involves engaging and communicating with stakeholders, including employees, customers, investors, and the wider community. This engagement can raise awareness, gather input, and build support for carbon reduction initiatives.
- Carbon Accounting and Reporting: Good carbon management relies on accurate measurement for businesses to publicly report on their carbon footprint or to regulatory bodies to show their commitment to sustainability and transparency. And carbon accounting is the step used to measure the impact – more on this below.
And a great place to start is with an easy-to-use tool to calculate carbon footprint across supply chains. This is where Arbor comes in – specializing in the lifecycle analysis component of carbon management and helping businesses calculate reports and gain actionable insights into the data on carbon footprint produced directly and indirectly throughout their operations.
Carbon management includes various strategies, including renewable energy solutions, carbon capture, and life cycle analysis. When it comes to decarbonization technologies, it’s the wild west, with dubious solutions like offsetting having dominated the scene. But the good news is, as more and more innovative technologies emerge and regulators start to implement strategies to standardize how emissions are measured and reported, implementing a carbon management system is more attainable than ever before.
Life Cycle Analysis, also known as Life Cycle Assessment (LCA), is one of the primary tools used to support decision-making for carbon reduction strategies. It is a method for assessing all direct and indirect environmental impacts across the entire lifecycle of a product. An example of this is the “cradle-to-grave” accounting process. This framework looks at the impact at each stage of a product's life cycle, from resource extraction to all the steps along a product's manufacturing journey, from transportation, material formation, and product use, until the final disposal or grave.
How is carbon management different from carbon accounting?
Carbon management aims to minimize the carbon footprint of an organization, industry, or society.
It relies on accurate measurement and emissions reporting. And carbon accounting is one of the steps a company takes in a carbon management strategy. Carbon accounting, or greenhouse gas accounting, sets out to quantify the amount of emissions produced directly and indirectly from various activities and sources within a set of boundaries. Cradle to grave is an excellent example of two boundaries that are looked at, from the first boundary being raw material extraction, the “cradle,” to the final boundary, the disposal, or “gate”.
For example, if an electronics company wants to understand the carbon footprint of its top-selling speakers, it would conduct a carbon accounting process to identify and measure emissions associated with the product's supply chain. This would include emissions from energy consumption, such as electricity usage, heating, and transportation.
Carbon accounting involves collecting data on energy usage, fuel consumption, production volumes, etc., and then converting the data into CO2e emissions using specific calculations – head to our methodology page to learn more about how we turn data into emissions calculations. Once the emissions are quantified, the company can analyze the data, identify areas of high emissions, and explore strategies to reduce the product’s footprint. Carbon accounting helps organizations understand their carbon impact, set reduction targets, implement carbon strategies, report their progress transparently to stakeholders, and report their emissions to the general public or regulatory bodies to demonstrate their commitment to circularity and transparency. But a company needs a carbon management system to do all of this.
How does Arbor fit in?
Arbor simplifies carbon management for companies, enabling them to calculate emissions with industry-leading accuracy, make data-backed environmental decisions and comply with climate legislation. We work with a multitude of sectors, including apparel, construction, electronics, and beyond. Our mission is to streamline carbon management, enabling businesses to calculate their carbon impact accurately, covering every facet of Scope 3 supply chain operations, from energy consumption to transportation and even the tiny details like buttons and bows. Our platform's reporting and insight tools highlight areas for carbon reduction and pave the way for data-backed environmental decisions, promoting compliance with climate legislation.
We have built our tool to meet global environmental regulations, ensuring that businesses are compliant – whether it’s the proposed EU Green Claims Directive or other international regulations already in place, like the German Supply Chain Act or the French Anti-Waste and Circularity Law, for misrepresenting environmental or social impact claims throughout their supply chains. Arbor helps to avoid potentially costly fines or penalties associated with these regulations. In the wake of the tenth anniversary of the deadly Rana Plaza factory collapse, Ikea, Amazon, and Tom Taylor became the first to have complaint cases filed against them under the German Supply Chain Act.
Our carbon management solution provides a comprehensive solution that enables businesses to accurately calculate their carbon footprint, identify areas for improvement, and make informed decisions that reduce carbon impact. It also helps map one of the most essential parts: By looking at the environmental impact, companies can see how potentially harmful environmental practices impact those working and living in those regions.
“It is about looking for the conflict within sustainability. You can look at the sustainable development data that a company posts on their sustainability page for a particular region, and it doesn’t add up. The city that I'm from, Lahore, is one of the most polluted cities in the world, right? All these major manufacturing hubs are in the most polluted cities of the world. Take one look at the communities and tell me how they are doing something sustainable?”
- Arbor co-founder and Chief Impact Officer Abdullah Choudhry in our post, We Need to Talk About Cotton.
Maintaining compliance with regulations, lowering emissions, and protecting the lives of garment workers all seem like priorities, so what is taking businesses so long to make changes? Because companies tend to have a pretty bleak understanding of what their supply chains look like, it’s pretty easy to use the excuse that it’s too difficult to gather, trace, and wrangle the data needed for accurate assessments.
Scope 3 emissions, the indirect emissions produced from assets not owned or controlled by the company, such as supply chain partners, are where most of a company's emissions are released. Effective tools and AI-based solutions can collect vast amounts of data across supply chain activities, calculate the impact from varying processes, and give companies an easy-to-understand impact score to manage their carbon impact effectively.
We spoke to Rejean Provost, an ESG expert with Tradebeyond, a data-sharing solution that streamlines sourcing and product development while incorporating sustainability into all supply chain operations.
"Digital solutions are essential for measuring and improving ESG performance in the supply chain,” said Rejean, “To achieve sustainability, you must first know where you stand and then use tools to measure your progress. By having access to data on product type, location, and energy usage, you can make informed decisions that reduce your carbon footprint and benefit the planet."
How do our carbon calculations work?
For a quick rundown on why calculating carbon is the go-to for evaluating environmental impact, we recommend heading to our blog post, Waste Not, Water Not: Why Arbor Doesn’t Calculate Waste & Water Metrics, for more detail. Here’s a taste:
“The formula for calculating carbon is relatively standardized, but that doesn't mean it's simple. Carbon emissions are released in various forms, and many factors, such as transportation, electricity, and all the byproducts, come into play. To ensure that our CO2 measurements are accurate, our comprehensive methodology considers multiple byproduct variables, including wastewater and waste disposal.”
It all starts with data.
It depends on the data looked at, and at Arbor, we use a mix of primary and secondary data. The company collects primary data for the specific purpose of a calculation, and secondary data is pre-existing data from publicly available databases, research institutions, and governmental sources. Secondary data is vital for calculating carbon emissions when it is used to support primary data or as a benchmark for comparing the emissions of a product to the industry average. For example, if a company wants to understand how its most sustainable t-shirt compares to its competitors, it will need secondary data for a full assessment. The downside to only relying on primary data is that they can be expensive and time-consuming to collect, putting the burden on the businesses, who are already in a time crunch, to verify their impact for regulations and stakeholders. Having a mix of data that includes secondary data relieves this burden.
We talk a lot about our calculations in the fashion industry, so for this post, we trade our Arbor-branded ball caps for hard hats and share some of our work in the construction industry.
Comparative analysis in the construction sector
Our analysis aimed to compare the CO2 performance of two concrete suppliers for a global construction company. We looked at the individual raw material used in the production of concrete by the two different suppliers to help the construction company make the necessary data-based decisions on which suppliers produced concrete with the lowest environmental impact. We identified the most carbon-intensive raw materials used in the concrete slabs, allowing for targeted efforts to reduce emissions. And the difference was pretty drastic.
We identified that one of the supplier's concrete products emits 21.6% less carbon emissions per ton of concrete compared to the second supplier, thereby reducing 558.2 tonnes of Scope 3 emissions. Here, the supplier with lower emissions would save approximately USD $91,600.00 per 530k sqft. Our automated software to conduct this analysis allowed our client to save 200 hours of work. – curious how? Ask us here.
Why is effective carbon management critical?
Carbon management goes beyond addressing annual carbon emissions added to the atmosphere. It also focuses on developing technologies and strategies to tackle a company’s legacy emissions – emissions that originate from past industrial activities, such as manufacturing processes, energy production, or transportation– and hard-to-abate industrial emissions where finding alternatives to fossil fuels or carbon-intensive processes is particularly tricky. Carbon management is set up to support innovative technologies and approaches to tackle these challenging emissions and find new solutions for decarbonization.
Not only does effective carbon management reduce emissions and help maintain regulatory compliance, but as our construction example shows, it can save time and money.
Maintaining competitiveness doesn’t always lead to adverse environmental impacts. By pinpointing areas along a supply chain where there are areas for improvement and switching to energy-efficient or low-fuel options, businesses can maintain their bottom lines and normalize the cost-benefit of sustainability.
“Some of the benefits we see our clients talking about –besides meeting legislation requirements, & verifiable marketing claims– is that by having more visibility & transparency in their supply chain they can make savings by consolidation,” continues Rejean “and at the same time reducing their impact on the planet.
Our clients have provided two excellent examples of the benefits of supplier visibility. Firstly, when they can view all their Tier 2 and Tier 3 [suppliers that provide goods or services to the Tier 1 suppliers] and Tier 4 suppliers [suppliers that provide very specialized or niche products or services], they often discover that many of their Tier 1 vendors [those who directly provide critical and high-value components or services] also source materials such as fabric, yarn, and dye from the same Tier 2-3 suppliers. As a result, our clients can consolidate their purchasing of fabric and dye, which can help avoid the need to clean the water twice, reduce freight costs, and streamline the overall buying process. Secondly, by better understanding their packaging and trim suppliers, clients can group their purchases and shipments more efficiently.”
Connecting those dots between supply chain producers is essential to achieving sustainability goals and reducing the environmental impact of a company's operations. Consolidating the purchasing of fabric and dye and grouping purchases and shipments more efficiently can also help reduce carbon emissions. By reducing the number of shipments and consolidating purchasing, there is a reduction in transportation-related emissions, such as fuel consumption and overall energy consumption. Additionally, by streamlining the overall buying process, companies can reduce waste and water and minimize lead times to improve the overall sustainability of their supply chain.
What makes Arbor’s data verifiable?
Our methodology involves gathering and analyzing a wide range of data from various sources, including information about energy and resource use, transportation, waste disposal and a healthy mix of both primary and secondary data. The accuracy and reliability of this data are crucial for determining the carbon impact of a product and identifying ways to reduce that impact.
To ensure the accuracy of the data, Arbor has developed a Data Quality Rating (DQR) system that assesses each data point based on various factors. These factors include the geographical and technological representation of the data, the year it was collected, and the completeness of the data. The DQR system evaluates each data point's accuracy, precision, and overall usefulness, then calculates the product's overall environmental impact.
Arbor's data is verifiable because they use a rigorous system to ensure the accuracy of the data they collect and analyze. The DQR system objectively and transparently assesses data quality, providing businesses with reliable and actionable information about their Scope 3 upstream activities.
Accuracy plays a critical role in reporting the environmental impact of a business. Inaccurate data can lead to flawed analyses, incorrect conclusions, and ineffective strategies for reducing environmental impact. Arbor can provide reliable and actionable information about its Scope 3 upstream activities, which can help businesses make informed decisions about reducing their carbon impact and meeting climate goals.
What’s Next?
Based on this post's length, effective carbon management isn’t simple. And neither is navigating the changing market landscape, saving icecaps, and living up to a commitment to sustainability. But tools like Arbor simplify the process, and we can help enable accurate carbon footprint calculations, identify improvement areas, and make informed decision-making.
Arbor works towards a future where understanding a carbon footprint isn't just a possibility but a reality – all while making the process accessible and approachable. Our key differentiator lies in our unique capabilities, like material-level calculations, GRI-certified reporting, region-specific data, and product prototyping, setting us apart as an invaluable partner in a company's journey toward carbon reduction.
We do one thing, and we do it well, and that is at least simple. Let us show you how.
