New Technology World

This article is sponsored by Makersite.

Since 2010, the U.S. Securities and Exchange Commission (SEC) has encouraged companies to disclose climate-related risks. However, the disclosure of this data is voluntary, making it easier for companies to avoid or mitigate the data. We have an ambitious net-zero target. With the newly proposed regulation, the SEC has taken a big step towards greater accountability and transparency in the market.

Why is the SEC taking this action now?

Sustainability experts have argued for the past two decades that regulation was inevitable and imminent, but regulation has always been “just on the horizon.” Now that this horizon has finally arrived, it is clear that regulation will soon be introduced where it has not yet been established. Presumably they will be based on sustainability regulations currently being submitted by Europe and America. This is against the backdrop of most countries signing the Paris Climate Agreement and a growing number of countries setting net-zero targets between now and 2050.

What does this development mean for you?

Many companies will have to comply with the new regulations, but it will be the most difficult for international companies. Fortunately, many leading companies have decades of commitments to sustainability. Others have already adapted their businesses or are in the process of adapting them to a net-zero future.

The past has shown that harnessing climate change as a force for innovation presents an unprecedented opportunity. Companies that drive innovation attract a lot of attention from customers and investors. In short, regulation and public perception can bring business value to a company. But whether you see the business value: Upcoming regulations will require companies to report and mitigate environmental damage.

what should you do now

What you should do depends a lot on where you are as an organization.

If you’re an early adopter, chances are you already have an established program and are probably in the limelight now. enjoy it! You are beyond the initial stages of estimating, hot spot analysis and average data that drive company reporting and management.

What you should look for is to do two things.

1. Find flaws in your current processes so you can scale up what you’re doing.
2. Take what you’ve learned and integrate it into the core engines of your business: procurement and engineering to drive meaningful change within your company. You’ll also be looking at the technology changes that will enable this next step, with a focus on features that make it easier for engineers and procurement to make sustainable decisions. In this way, it expands from a purely sustainable perspective to a real-world, multi-criteria perspective on which decisions are based.

If you are just starting your sustainability program, you are in the average majority. We have a lot of work to do, but fortunately we’re not trying to reinvent the wheel. As a manufacturer, the most important factor for determining your approach is the data available within your business on the products and his chain of supply. Does this data depend on procurement or product engineering?The more mature his BOM information is in the company, the more he leans towards a lifecycle based approach. This is recommended as opposed to spending-based approaches based on procurement data (read more about the benefits of these approaches here). Procurement and product teams are key stakeholders in data and reduction initiatives. Determine what they need and how they would like to receive that information. Talking to your sales reps about your priorities can help you create a roadmap for initial success and get budget commitments.

How will you overcome challenges?

For most manufacturing companies, up to 90% of their environmental impact is hidden in their deep supply chains. In the worst case, emissions from 21 layers of the supply chain would need to be investigated to cover his 90% of emissions. why? It’s an empirical calculation. If all suppliers only capture about 10% of their emissions (Scope 1 + 2) and 90% of all company/supplier emissions come from their supply must dig deep into the 21 layers of the supply chain. Worst case your emissions. Even the most optimistic scenario requires digging through at least four supply chain tiers. It may not seem like much at first, but with over 65% unaware of what’s going on in their Tier 2 supply chain, it’s a daunting task even for leading-edge supply chain teams.

Providing the ability to quantify environmental impacts and bring about meaningful change through existing processes and teams within an organization is therefore not possible without assistance. Tools are invaluable for saving time, increasing credibility for auditors, and most importantly, essential for enabling change within an organization.

Solution providers fall into three groups. Consultants report manually using internal tools, primarily using a lifecycle-based approach, while software solutions report automatically. Most of the software on the market takes a cost-based approach to calculations. In other words, we estimate emissions by collecting data on the economic value of purchased goods and services and multiplying it by industry average emission factors. Makersite is currently the only solution that allows a hybrid approach. This is a fully automated solution that uses a life cycle approach when bill of materials data is available and a cost based approach when not. The more granular the data, the more actionable the insights. In this way, Makersite automatically reports on all 15 scope 3 categories, while simultaneously identifying reduction measures, predicting target attainment, and readying business stakeholders such as procurement for action. .

why is this important? Emissions reporting is the easy part. Only with actionable insight into your product data and supply chain can you make meaningful changes. Allowing real change means more than demonstrating the potential to be more sustainable. It also means that we need to be able to assess these possibilities at other levels such as cost and risk.