Consistent carbon accounting standards needed to realise greenshoring opportunity

We need to develop a universal methodology for measuring and reporting embodied emissions.

The two most common carbon accounting standards and methodologies are life-cycle assessments (LCA) and carbon accounting (CA) tools. Both of these typically are based on the greenhouse gas protocol, the global standard framework for measuring and managing greenhouse gas emissions.

The challenge is that the current standard is open-ended so the same data can be interpreted in any number of ways. There’s no consistency or transparency for embodied carbon, or upstream Scope 3 emissions, and claims around actions and outcomes can be questioned.

This is especially challenging for industrial businesses given the energy intensive nature of manufacturing. The lack of common data makes tracking overall emissions reductions almost impossible and vital information can be obscured or lost. This risks completely undermining our collective drive to net zero.

The High Value Manufacturing Catapult is working with Innovate UK, partners and relevant government departments to jointly develop universal, consistent standards, as well as signpost where companies can find practical guidance and robust assessment methods in the meantime. Our new report, Embodied Emissions and Net Zero: An Overview of Carbon Accounting, recommends nine actions be taken with support from partners from industry, government, standards bodies and academia.

It’s right that the starting focus should be Scope 1 (direct) and 2 (indirect) emissions. Those are more clearly defined in terms of the standards and are much easier to account for and measure.

Tracking Scope 3 (indirect value chain) emissions is much more complex because of the sheer number of partners and distance involved. The supply chain of a highly engineered product, for example, can encompass thousands of suppliers and span the globe many times over. Complexity, however, should not be an excuse to bury heads in the sand because for most manufacturers Scope 3 represents between 60% and 95% of embodied carbon emissions.

Equally, additional and tailored assistance is also needed to support SMEs, which account for 99.9% of the business population, to demystify carbon accounting and help them begin or progress their decarbonisation journey.

The skills piece is clearly a challenge. One thing we’re exploring at the HVM Catapult is foresighting: identifying what our skills requirements are now and in the future. Short term, the focus should be on leadership to help businesses measure and understand their carbon footprint and see how and where they can start to reduce it.

We’re also looking at what a low-carbon competitive manufacturing supply looks like and its components. How might a business improve resource energy efficiency? What is the role of data management in effective carbon accounting? Could intelligent sourcing help identify and separate those suppliers with a high-carbon footprint from those with low-carbon emissions?

Design is a key focus area. Much of a product’s lifetime emissions are determined at the design stage. How can goods be designed for low-carbon manufacture, for the circular economy? These are all key attributes needed for businesses to be successful in a low-carbon manufacturing world.

Answering these and other questions will build a clear picture of what our future skills requirements and job profiles look like. Medium term, the focus is working with providers, academia and government to ensure the skills provision is available to meet those requirements.

So what advice would I give businesses right now?

Firstly, don’t wait until a customer or legislation demands you reduce your carbon footprint. Be more proactive and recognise that there is likely to be a cost involved but don’t see it as an additional tax or green levy, view it as a short-term investment for long-term growth and success.

This is also why standards and transparency are so important. Currently, there isn’t an obvious market incentive and reward for decarbonising. That will come at some point, so don’t have carbon pricing imposed upon you, be ready to respond and win those early market opportunities.

Seek help. There is a great deal of support out there, which the HVM Catapult or others can provide or signpost, to help you measure and reduce your Scope 1 and 2 emissions. Put Scope 3 higher up your business agenda and find the time to understand where you sit and start drawing up an action plan. 

If you can show that you’re decarbonising ahead of the market and competition, that’s going to be a huge competitive advantage to your business. The opportunity may be medium term but those who win will be those who take early action.

This brings us to greenshoring – putting sustainability at the core of location choice for manufacturing and thus ensuring that manufacturers see the UK as a sustainable base for operation.

The UK has a strong opportunity, though not uniquely so, to gain a first-mover advantage around greenshoring and sustainable manufacturing. But to successfully exploit this advantage we need to address the lack of common carbon auditing and monitoring standards.

With them in place, the UK could lead the development and worldwide adoption of the standards – as well as the decarbonisation infrastructure and technologies – to become a global greenshoring destination.