Over the past few years, forward looking Consumer packaged goods (CPG) companies have been feeling the pressure to reduce the environmental footprint of their products and the GHG emissions within their complex supply chains. This has primarily been driven by the growing need to meet customer demand for sustainable products, the desire to differentiate in what is a very competitive market, and increasing attention from investors and regulators.
With an ever growing list of stringent environmental requirements on the horizon, (such as the new SEC’s Climate-Related Disclosures Rule, the EU’s Ecodesign for Sustainable Products Regulation (ESPR), or the UK’s Green Claims Code for example) it is now more important than ever that leading CPG brands and manufacturers obtain a clear understanding of their product-level emissions, and focus efforts on the GHG reduction opportunities that will enable meaningful environmental transformation within their supply chains.
Assessing Environmental Impact at the Product-level is Critical
Traditional top-down approaches to determining of GHG inventories, while sufficient to develop an overall accounting of emissions for an organizational entity and meet the needs of regulatory reporting, do not provide the level of detail necessary to identify specific sources of emissions within the supply chain.
In order to to understand the full life cycle emissions of a product, Brands need to shift to a metrics-driven approach of measuring, assessing, and benchmarking their sustainability impact at a product-level. This bottoms-up approach can provide significant insight into the specific sources of emissions within the full life cycle, from raw materials extraction, processing, manufacturing, transportation, through disposal of a product, and importantly help identify what specific actions can be taken to reduce them.
Producing product-level environmental footprints however, is a complex process that typically requires careful consideration of various factors, including the materials used, transportation methods, and the energy use within various manufacturing processes. This can be both daunting & challenging, as identifying sources of information, data collection, and obtaining the right supplier data can be a resource-intensive and costly process, particularly given the typical complex supply networks within retail that involve hundreds of suppliers and thousands of products sold through a variety of channels.
Emerging Data-Driven Solutions Provide A Viable Path
In recent years, there has been an emergence in the development of innovative new technologies that harness the power of data science and machine learning to revolutionize product life cycle assessments (LCAs). These emerging tools are addressing the need for scalable and cost-effective approaches to assess the environmental impact of products throughout their entire life cycle, from raw material extraction to disposal.
By leveraging advanced algorithms and vast amounts of data, these tools are capable of analyzing complex supply chains, energy consumption patterns, waste management strategies, and other crucial factors that contribute to a product’s environmental footprint.
The data-driven approach enabled through these powerful tools not only provides more accurate and comprehensive assessments, but also enables companies with larger retail product portfolios to identify specific hotspots within products or product categories, compare where they fall within industry benchmarks, develop consumer environmental labeling, and most importantly, identify what specific improvements they need to focus on in order to reduce their product level emissions & achieve their sustainability goals.
Key Takeaways: Sustainable Supply Chains Are Critical Differentiators
With Governments around the world introducing new regulations to reduce product-level carbon emissions and promote sustainable practices within supply chains, Brands must now step up to ensure that they are in compliance or risk reputational damage, substantial fines, or both. Ultimately, the need to prioritize sustainability and move faster is critical for CPG companies. With increased regulatory pressure and growing consumer demand for eco-friendly products, brands that do not act quickly risk falling behind their competitors.
To succeed in this new landscape, brands must take a proactive approach to reducing their environmental impact and prioritize sustainability across their entire supply chain. This includes investing in new data-driven technologies that identify emissions within specific areas of the product life cycle, working with suppliers to reduce their environmental impact, and engaging with consumers to understand their needs and preferences.
By taking a holistic approach and committing to sustainability, CPG brands can not only reduce their environmental footprint but also position themselves as leaders in the market.
About CarbonBright: CarbonBright brings accurate and comprehensive product-level sustainability data to suppliers, retailers & brands in the Consumer Packaged Goods Industry, enabling transformation across supply chains to meet global demand for more sustainable products, while improving agility, resilience, and brand differentiation.
