To meet the European net-zero emissions target by 2050 or earlier, all companies need to contribute by measuring and neutralizing CO₂ emissions. By making carbon emissions visible on an operational level (e.g., product), companies can begin to manage and reduce them. However, net zero is still a long journey! Strategic, value chain-embedded, and digital solutions are the key drivers towards net zero. New digital concepts can provide the required infrastructure and analytical power to mitigate CO₂ emissions and to generate a real strategic advantage from CO₂ data.

While first industry efforts resulted in carbon transparency and reduction in the domains of Scope 1 and 2 of the Greenhouse Gas protocol, managing Scope 3 emissions across the value chain seems more troublesome. As Scope 3 has the tendency to represent ~70 to 90% of overall emissions, politics are expanding regulations on inter-organizational liabilities.

High Scope 3 emissions are predominantly caused by highly complex, specialized, and outsourced global value chains e.g., due to a large number of suppliers, integration of various parts, multi-stage production, as well as online and offline interaction. To engage in inter-company CO₂ tracking, three different conceptual approaches for enabling cross-company carbon footprints are possible:

• Project-based lifecycle assessment
• Point-to-point data exchange
• Ecosystem approach

A project-based assessment is a one-time approach, for example, applied for a specific existing product, or a yearly corporate review. It requires creating operational ad-hoc transparency on CO₂ data, relying on supplier information, or coming up with a pragmatic approach to assessing the CO₂ values of supplied products or services. The upsides are reduced efforts of corporate footprints thanks to one-time assessments and reduced scopes narrowed down to specific products.

However, in the worst case, companies do not have available data, make no effort to collect them, calculate data inaccurately, and even hand out requested data in an unhandy format. All of this make lifecycle assessments (LCAs) costly, not scalable to the full portfolio, and a static one-time exercise.

A point-to-point data exchange connects two corporates bilaterally with each other to enable a permanent exchange of available carbon data, e.g., master data, orders, and shipments via cross-supply chain data exchange. The latter augments the received data with its own information and transfers it to the next supply chain participant. This approach is very complex as a lot of transactions complicate CO₂ allocation to specific companies and products. It is very time-consuming and costly to set up individual, supplier-by-supplier interfaces with thousands of suppliers. In other words, this would require setting up many individual point-to-point interfaces to receive CO₂ data and gain permanent transparency.

Challenges similar to the project-based assessment apply to point-to-point exchanges. More collaboration between all involved companies could lead to better data quality and quicker results though.

The ecosystem approach involves a participative community or network of companies and institutions willing to exchange carbon data. Multiple parties share a common infrastructure to conduct a product’s lifecycle assessment efficiently and effectively. Ecosystems can either be decentralized or centralized. While the centralized ecosystem might be beneficial for the central party, other parties often only join for fear of being cut out of business. This can be observed in manufacturing execution networks where brands have huge leverage over the participation of their OEMs. Suppliers subsequently are faced with multiplied needs to feed disparate systems at each of their customers.

The decentral ecosystem allows data to be shared only once with every network participant having access. While still operated by a central entity, the International Air Transport Association (IATA) has established such a system to exchange electronic ticket information or standards for bar-coded boarding passes. Using a decentral network reduces the number of interfaces and transactions, and therefore complexity and integration needs between participants. However, it requires a completely different collaborative approach based on a trustworthy platform.

Both ecosystem concepts face challenges of collecting data as well as allocating data to specific units (product, business units, etc.). Furthermore, the consistency of shared data needs to be ensured to be reliable and trustworthy.