Data is a driving force when it comes to reducing carbon emissions. Catena-X is building a data ecosystem that creates transparency of emissions information from business partners across the entire automotive value chain.
The packages from SAP Industry Network for Automotive help companies gain insights into their carbon footprint data and identify further potential for reducing greenhouse gas (GHG) emissions.
Scope 3 emissions: The biggest challenge to reach net zero
Despite the massive disruptions companies are currently facing, climate change remains the biggest challenge that industry needs to collectively address. To meet the Paris Agreement goal of limiting global warming to 1.5°C – which would reduce the possibility of triggering the most dangerous and irreversible climate change catastrophes – net-zero global CO2 emissions must be achieved by mid-century emissions are secured. The European Union (EU) has set itself an even more ambitious goal of achieving carbon neutrality by 2050.
In the short term, this means that greenhouse gas emissions must be reduced by more than 50% by 2030 to embark on a responsible path towards net zero.
Although the largest companies have explicitly stated sustainability or carbon neutrality as a strategic goal, few have outlined a clear and comprehensive action plan for the transition. Regulations such as the Corporate Sustainability Reporting Directive (CSRD) or new regulations proposed by the United States Securities and Exchange Commission (US SEC) on the disclosure of corporate CO2 data leave companies no time for empty green statements. The time to act is now!
Why is it so difficult to report on CO2 emissions? While the reporting of Scope 1 emissions (direct emissions from owned or controlled sources) and Scope 2 emissions (indirect emissions from the generation of purchased energy) is well established in many companies around the world, the visibility of the Greenhouse gases emitted by the supply chain (Scope 3), which account for a significant proportion of the total emissions, is often insufficient.
In the automotive industry, for example, 98% of all GHG emissions are Scope 3 emissions. This makes it all the more important to identify opportunities to reduce carbon footprints along the supply chain. Lack of trust, lack of access to high-quality data, inconsistent methodology or standards of data collection and lack of interoperable technology solutions in the highly complex automotive supply chain are the major obstacles to overcome.
Unleash network performance for decarbonization
In order to meet sustainability and regulatory requirements, companies must work with partners, suppliers and customers and establish transparent processes and common data standards – from material procurement to manufacturing and distribution.
As the first open and collaborative data ecosystem, Catena-X Automotive Network aims for a more sustainable industry value chain by engaging all stakeholders and enabling data transparency. Tracking the carbon footprint of products is one of the first use cases that Catena-X is now addressing. This is the starting point for a better understanding of Scope 3 GHG emissions, which form the basis for enforceable decarbonization opportunities.
On the one hand, a common accounting and reporting methodology for product carbon footprint data is required to support the consistency, comparability and auditability of the data coming from the network partners. Through the partnership with the World Business Council for Sustainable Development (WBCSD), Catena-X adopts the framework of CO2 Calculation scheme and data model.
Earlier this year, SAP became the first company in the world to achieve a standardized carbon footprint value in a WBCSD proof of concept. Importantly, the standardized approach also encourages network partners to move away from unspecific industry average measurements and use accurate primary emissions data.
On the other hand, technology is key to operationalizing emissions accounting and sharing. With its many years of industry process know-how and best practices for solutions, SAP acts as a key factor in tracking carbon footprint data of products within the automotive network.
Industry network solutions strengthen the automotive value chain in the pursuit of zero
With GreenToken by SAP, companies can share their product carbon footprint with their business partners in a simple, efficient and secure way.
[Link]GreenToken is a web-based SaaS subscription solution that aims to create accountability and transparency throughout the material supply chain. Adherence to the standardized data model defined with WBCSD helps ensure data consistency across the network.
Product carbon footprint data can be managed and easily transferred at material level between direct business partners.
It uses an energy-efficient form of blockchain to notarize and tokenize carbon emissions from one supply chain member’s wallet to the next without exposing any private or sensitive data. As these tokens move down the supply chain downstream, the information gathered is shared, creating a reliable, immutable and auditable chain of custody. In addition, not only CO2 Data, but also other information such as the provenance of parts and certifications, can be shared through this trusted and auditable approach.
The solution provides a secured open API that can be accessed by other carbon emission calculation tools or transaction back-end solutions. There is direct integration with SAP ERP Central Component 6.0 and SAP S/4HANA software.
Transactions can also be controlled by importing CSV files or manually, meaning that small and medium-sized businesses (SMEs) without back-end enterprise resource planning (ERP) solutions can also use GreenToken to exchange CO2 data can use within the network.
“GreenToken’s novel approach has the potential to create an accountable and auditable scope 3 reporting network that is lacking today,” said James Veale, co-founder of GreenToken by SAP. “In addition, we have already piloted GreenToken in other supply chains at scale and the solution is now ready for Catena-X.”
Hagen Heubach is Global Vice President and head of the Industry Business Unit Automotive at SAP and board member of the Catena-X Automotive Network.
Heiko Flohr is Senior Vice President and Head of Product Management for SAP for Discrete Industries and a member of the Guidance Board for Catena-X Automotive Network.
Leyi Liu is part of the solution management for SAP Industry Network for Automotive and Catena-X Automotive Network.