Calculating Product Carbon Footprints at Materials Services

Understanding the carbon impact of our products and decarbonizing the supply chain

Measuring the climate impact of our products require data and a robust calculation model. We have developed a way to accurately calculate greenhouse gas (GHG) emissions for every product in our portfolio and provide exact Product Carbon Footprint (PCF) data to our customer – at order and supply item level. In this way, we are bringing carbon transparency in the metalworking industry.

A high share of industrial GHG emissions comes from the metal production and processing industry. Therefore, there is an urgent need for the manufacturing and production sectors to account for product carbon footprints due to the growing concern about the impact of climate change and the role of greenhouse gas emissions in driving it. Measuring the carbon footprint of the material helps to provide visibility into the emissions associated with the production. Data transparency and accuracy on the product-level is a key element to understand emission reduction opportunities along the value chain and meet climate goals.

By sharing PCF information with our customers, we enable them to track and reduce their scope 3 GHG emissions. With the PCF data from the calculations, our customers have the exact baseline data for their own PCF calculations.

Methodology overview – in accordance with the GHG Protocol Standard

General principles

The Greenhouse Gas Protocol (or GHG Protocol for short) divides GHG emissions into three scopes. It is currently the most commonly used series of accounting standards for GHG emissions. The standard advises businesses on identifying their GHG emissions across the entire company and its related activities, such as transport of materials. We correspondingly divide our emissions into these three scopes:

Scope 1 includes all direct emissions we cause ourselves through the energy combustion at our facilities, such as fuel combustion of our company fleet, fork lifters or heating systems at our warehouses.
Scope 2 comprises all indirect emissions from the generation of acquired and consumed electricity and district heating.
Scope 3 includes all upstream and downstream indirect emissions that are generated in our value chain. Upstream emissions, for example, arise from purchased goods and services (material production). Downstream emissions include the materials delivery to the customer.

All accounted GHG emissions are expressed as CO₂ equivalent (CO₂e).

From production to the customer’s gate

Following the GHG Protocol Product Standard, the calculation of the PCFs considers scopes 1 to 3 emissions. Our adopted boundary is a “cradle-to-gate”-approach, which comprises all processes from raw material extraction, manufacturing, eventual processing, storage and delivery to the customer’s gate. The use or processing of the delivered material as well as the end-of-life stages are excluded from our calculation methodology.

For a total PCF, four steps are used for calculation, which are then aggregated to one value:

Upstream material: Production and manufacturing of raw materials
This calculation step covers the emissions associated with the production of the material. This calculation step is very important, as the manufacturing of the product (raw material extraction, production) represents the most significant contribution to the overall PCF. We therefore work closely with our suppliers and consider validated supplier product-level GHG inventory data into our calculations. Where supplier-specific data is not available, we calculate with default emission factors using verified LCA data from external data providers as well as from industry associations to fill the gaps.
Delivery/ subcontracting: Transportation
We measure emissions from upstream transportation of products purchased from our tier 1 suppliers (including multi-modal shipping). Transportation is mostly carried out by external transport service providers, which therefore are not part of the emissions of our own operations. Emissions from transportation of purchased products of our tier 1 suppliers are already included in the cradle-to-gate inventory data from our suppliers. We source the emission factor per type of transportation from reliable and well -known secondary databases.
Material processing: Internal warehousing and processing
In this step, we measure the emissions of storage and processing of the products at our sites. We collect site-level data on energy use, waste generation and packaging material consumption, and calculate using the emission factors obtained from external databases. We consider the evidence of renewable energy sources in the purchased energy, if such certificates are available in corresponding contracts.
Customer dispatch: Transportation and service
This calculation step covers the emissions from downstream transportation to the customer. The calculation method is similar to the calculation performed in upstream transportation step.

Third-party verification and assurance

We developed a third-party verified calculation approach by working together with recognized Life cycle assessment (LCA) experts. To calculate product related carbon footprint intensity data we combine most recent activity data from our operations with most up-to-date emission factors.

We follow the principles of relevance, accuracy, completeness, consistency, and transparency, as established in the Greenhouse Gas Protocol for Product Accounting and Reporting Standard (GHG Protocol Product Standard).

In order to ensure our alignment with the GHG Protocol Standards, we commissioned the well-known, world leading independent assurance provider DNV to provide verification over the calculation methodology and input data.