Carbon Competitiveness®
“One person’s upstream carbon is always another person’s downstream carbon”
This statement highlights the importance of the “carbon footprint of purchases”: in fact, it accounts for between 40 and 80 percent of the carbon footprint of businesses and organizations.
Carbon Competitiveness® is the ability to demonstrate, while maintaining the same quality of service or product, lower GHG emissions than one’s competitors.
This recent concept is a direct result of customers’ new demand for decarbonization in their purchases.
Everyone has indeed become concerned with reducing their own carbon footprint, given the new tax, regulatory, and commercial constraints ; this “Carbon Competitiveness®” is also becoming a requirement for them, particularly in calls for bids.
Conversely, ignoring it means running the risk of seeing competitors stand out in this area, which has become an additional criterion for market selection.
So here is a new component in its own right of every company's strategy.
It is up to each company to strike a balance between reducing its greenhouse gas emissions—a competitive advantage—and the economic imperatives of traditional competitiveness, including, in particular, the selling price.
The new requirement, therefore, is for companiesto disclose emission factors for their products and services that are lower than those of their competitors, all calculated fairly, rigorously, and in compliance with regulations.
OnlyISO 14 067 precisely defines the methods for calculating and verifying results that are enforceable against third parties for the calculation of these factors, known as PCF (Product Carbon Footprint).
This significant portion of purchases in its carbon footprint presents a great opportunity to engage in a new type of collaborationwith its own suppliers and customers: the virtuous cycle of low-carbon practices.
A company’s Carbon Competitiveness® depends on that of its suppliers, determines that of its customers, and generates benefits for everyone:
- A virtuous cycle that fosters a lasting relationship of progress and shared benefits among the parties.
- The promise of accelerating a robust low-carbon trajectory— one that brings together all stakeholders, benefits everyone, and is essential to our shared fight against climate change.
Carbon Competitiveness®, Climate, and Carbon Footprint®
Carbon Competitiveness® has become a major challenge for the long-term viability of businesses and a powerful tool for achieving the drastic reduction in greenhouse gas emissions that our planet urgently needs.
Every company must be able to display its PCFs to its customers, and will use this as a sales pitch. Many buyers are increasingly interested in this.
To successfully transition to a low-emission economy, the first step is to conduct a compliant and comprehensive BilanCarbone® assessment.
Implementing this approach—which involves a quantitative and qualitative analysis of the company’s incoming and outgoing “carbon” flows—enables the following:
To identify and implement solutions to reduce its emissions based on its own organizational and process choices.
To implement a “positive carbon discrimination®” policy for its various suppliers—a policy that ensures their quality, sustainability, and “Carbon Competitiveness®.”
Define and Implement a Decarbonization Strategy to Maintain Carbon Competitiveness®
To remain competitive, a company must regularly calculate its Bilan Carbone® in full compliance with regulations and as accurately as possible, thereby identifying, implementing, and managing solutions to reduce its emissions.
Have a solid methodological foundation
For these carbon footprint calculations, emission factors are used—multipliers that convert activity or process data into a total carbon footprint.
These factors therefore constitute the “carbon footprint” of a product or service.
There are 4 types of emission factors
Monetary EFs
Monetary Emission Factors: These factors are provided by ADEME and other international reference databases and are applicable to Scope 3 emissions.
They greatly simplify the process of compiling the GHG inventory, but they have many drawbacks. In fact, by using these factors, the company must disclose accounting information in order to compile its GHG inventory.
These factors are also of little significance because the emissions calculated in this way depend on the prices at which the company negotiated its energy, goods, and services.
ADEME estimates an 80% uncertainty for these factors and recommends using them only as a last resort.
FE by type of products and services
Emissions factors by type of product and service: These factors are also provided by ADEME and other international reference databases.
These are average factors. For example, a T-shirt—which has only one emissions factor listed in the database—may be produced in Asia or Europe using different processes, materials, and energy sources, which can cause the associated amount of GHG emissions to vary considerably.
Furthermore, not all goods and services are covered by these factors (there are only 7,000 factors in ADEME’s Base Carbone®, compared to hundreds of millions of products and services on the market…).
They can be used to prepare an initial GHG emissions inventory, but should be replaced as soon as possible—and to the greatest extent possible—with the more realistic emission factors described below.
FE composites®.
Composite Emission Factors® (Product Carbon Footprint, PCF, calculated in accordance with ISO 14 067): These factors are derived from the detailed composition of a product or service and allow for the consideration of GHG emissions associated with each stage of its life cycle ( extraction and transport of raw materials, manufacturing processes, distribution from the factory, product use, and end-of-life).
EF per unit of work
Emissions Factors per Unit of Work (EFUW): These factors are calculated based on the overall carbon footprint of an organization or a portion of its operations by allocating its GHG emissions to its production units. They allow for the precise consideration of the various stages of the life cycle.
The PCFs and emission factors per unit of work are therefore essential tools for companies seeking to improve their Carbon Competitiveness®, and will lead them to choose suppliers with the best “carbon” performance.
Measuring and Improving Carbon Competitiveness®
Suppliers with the highest Carbon Competitiveness®— known as Positive Carbon Discrimination®—can be highlighted through internal or external “marketplaces” that integrate product catalogs along with their “carbon weights” (PCF), calculated in accordance with ISO 14 067.
It is therefore necessary for buyers to be able to verify the value reported by the supplier—which has become a key factor in purchasing decisions—by analyzing it accordingly with all due impartiality: application of ISO 14 067, direct access—or access through a trusted third party—to the PCF qualification form detailing all items and the quality/compliance of the emission factors taken into account, and the consistency of the assigned quantitative data.
The Global Climate Initiatives (GCI) platform ensures the production and availability/confidentiality of these forms; it may conduct an audit of them upon request, or refer such a request to a trusted third party selected by the parties, which will certify compliance with ISO 14 067 and the quality of the primary data used.
This first step in the process of decarbonizing procurement is therefore simply to evaluate the bids received based on the carbon footprint per unit of product or service.
Beyond that, it will be beneficial to collaborate with suppliers to obtain increasingly detailed information and work together to identify avenues for improvement—an essential condition for continuously improving one’s own Carbon Competitiveness® relative to competitors.
Regulations: Ensuring Fairness
Various regulations and standards must be followed in order to credibly demonstrate a reduction in one’s carbon footprint and publish a Bilan Carbone® or GHG emissions report that is legally binding on third parties.
The Bilan Carbone® Method in France.
Reporting in accordance with ISO 14064 or the GHG Protocol at the international level.
Reference databases: ADEME’s Empreinte® database, Inies®, Ecoinvent®, BEIS-Defra®, IATA, GLEC, …
Similarly, it is essential to ensure fairness when applying positive carbon discrimination® to suppliers based on the emissions factors of the products and services they offer.
It is essential to verify that ISO 14 067 is being applied correctly when performing these composite emission factor® calculations, as well as the ability to audit these calculations directly or indirectly.