A recent industry report from The Expert Group Transformation of the Automotive Industry (ETA) and published by Federal Ministry of Economic Affairs and Climate Action (BMWK) in Germany focused on the need for harmonization of product carbon footprint (PCF) methodologies. This is especially important during the rapid transition to lower emissions vehicles and within the regulatory framework of CSRD and CSDDD to minimize uncertainty and inefficiency for reporting. The report provides a strong analysis of the challenges and opportunities for improvements and how to engage with industry stakeholders.

 

Selected observations from the independent advisory group ETA, include:

• The importance of data quality for inputs to PCF calculations.
• Variability in the usefulness of data from primary and secondary sources.
• Significant effort is required to gather and analyse supply chain carbon impact.
• Raw material costs will be impacted by the Carbon Border Adjustment Mechanism.
• Lack of standardization in the approach and methodology for PCF calculations

 

The findings are widely applicable because these issues apply to most manufacturing supply chains globally, not just the automotive sector. The impact to consumers and regulators is a pervasive lack of confidence in the comparative carbon footprint data at the corporate and product level. This uncertainty is not due to intentional actions but rather from gaps in the availability of GHG activity drivers and inconsistent methodology. With thousands of companies becoming subject to CSRD every year, manufacturers are exposed to regulatory and market risks that need to be addressed.

 

Based on this report and challenges currently being experienced by manufacturers across Europe, what are some “no remorse” decisions that companies can make when working alone or as an industry?

 

• Collect primary data as inputs whenever possible.
• Perform robust benchmarking and quality assurance on supplier data.
• Collaboration with value chain partners and industry advocates.
• Find and focus on areas of greatest impact – for both carbon and costs.
• Reinforce importance of data visibility and consistency over time.

 

Manufacturers have an emerging imperative that aligns business needs with environmental goals, as stated in the report “low-emission production and primary products are becoming a location and competitive factor.” Accurate and transparent carbon footprint assessments provide a way to drive meaningful GHG reductions, reduce risks, and create value.

 

 

Report link: https://expertenkreis-automobilwirtschaft.de/media/pages/home/0ce543a65f-1713349456/expertgroup-transformautomotiveindustry_report_carbon-accounting_final_20240417.pdf

 

Additional reading: https://expertenkreis-automobilwirtschaft.de/

 

About the author: Fosterra is an independent sustainability consultancy that works with global supply chains to find opportunities to reduce their carbon footprint and achieve sustainability goals. Our work provides deep insight into the risks, trends, and opportunities for improving environmental performance that we are pleased to share. www.fosterra.com