Recent changes in product carbon footprint necessity are facilitating the requirement for further exchange of product carbon footprint data in order to understand cradle to grave supply chain emissions to accurately quantify the embodied emissions present in products and services.
Carbon emissions are conceptualised into 3 scopes under the GHG Protocol, scope 1 direct emissions, scope 2 indirect emissions and scope 3 value chain emissions. With the breakdown of the emissions being 80% represented by scope 3, these emissions lie in an organisations 3rd party supply chain, due to the nature of globalised supply chains.
The 80% of emissions value represented by Scope 3 can effectively be named “the scope 3 problem” due to the impermissibility of data access and the known-unknown nature of these emissions, how they come about, where they reside in the supply chain and how to effectively lower them given the lack of control of 3rd party manufacturing processes.
Product Carbon Footprints are the solution to the scope 3 problem, enabling the granular collection, analysis and detailed hotspot identification of emissions activity within a product, they cross organisational boundaries and include the emissions generated by a product (and with hope, services, soon) across its entire value/supply chain.
The calculation and exchange of data presented through product carbon footprints is etching the outlines of an Internet of Emissions Data, a global information network capable of facilitating the exchange and use of various supply chain participants product carbon footprints to create Primary Data driven workflows, as opposed to secondary emissions factors, which are well documented in their wide ranging and often incorrect insights generated, due to them not representing the realities of product specific data collection.
Carbon Transparency has evolved to meet the needs required and represent a conceptual framework for understanding and working within the complex boundaries and needs of this problem, with academic literature starting to consolidate around a common parlance and framework for how to consider carbon transparency.
The Partnership for Carbon Transparency or PACT has evolved to combat these unique challenges, organising a range of stakeholders to define a standardised methodology for the calculation and exchange of Product Carbon Footprints, with a goal of unifying PCF efforts across industry verticals used the integrated learnings from a variety of supply chain participants.
In this blog, we will be discussing PACT and providing an in-depth overview of the organisation, processes that PACT facilitates and the benefits provided by the PACT ecosystem.
What is PACT?
PACT or the Partnership for Carbon Transparency is a membership-based group of organisations belonging to the WBCSD that came together in 2020 to find a solution to develop the global standard for calculating and exchanging consistent, comparable and credible Scope 3 emissions data across value chains, allowing organizations to take carbon-informed decisions. It consists of 30+ direct PACT members, 150+ ecosystem partners and 2500 companies involved in supply chains communicating with either PACT members or ecosystem partners.
What organisations are members of PACT?
Members of PACT cross industries and verticals, with an image illustrating this taken from the PACT Methodology Version 2.0 document.
Some of the most active of the 30+ member organisations include:
- Unilever
- CircularTree
- BASF
- SAP
- Smart Freight Centre (SFC)
The creation of PACT and the definition of the PACT Methodology and original Network specification was driven by around 50 organisations including PACT members, standard setters, regulatory bodies and industry initiatives.
What organisations are partners of PACT?
PACT partners may or may not be members of PACT itself, as such this list of organisations includes an even wider range of organisations covering more industries, verticals, products and services. You can consider partners of PACT as any organisation that enables the PACT ecosystem to function as it was intended:
Some of these functions are:
Environmental consultancy: Organisations that wish to use the PACT Methodology to create Product Carbon Footprints using manual means.
Technology providers: Organisations that are in need of an automated solution to Product Carbon Footprint storage, usage, analysis and exchange. with solution and technology partners forming part of this through their support of the PACT Network, which will be discussed in more depth in some of the following sections.
Partners of PACT cross industries and sectors, and represent organisations covering a wide range of supply chain partners. With around 150+ partners.
- Initiatives such as the WEF and SME Climate Hub.
- Standards and Guidance like the GHG Protocol and EPD
- Targets and Disclosure Programs like Ecovadis, CDP
- Industry Initiatives: TfS, SFC, Catena-X, Digital Catapult
- Auditors: Deloitte, KPMG
- Data Providers: Ecoinvent, PRe Sustainability
- Solution Providers such as ZeroTwentyFifty
- Various Industries and Sectors:
- Health: Bayer, Novartis
- Automotive: Continental AG, Michelin
- Food and Tobacco: Nestle SA
- Energy: Chevron, Shell
- Chemicals: BASF, Dow
- Industrial: ABB, Schneider Electric
- Personal Goods: Unilever, Colgate-Palmolive Company, The Proctor & Gamble Company
- Basic Resources: ArcelorMittal
- Real Estate: Swire Properties
- Technology: Fujitsu, IBM, Microsoft, SAP, Siemens
- Utilities: Veolia
- Consultancies: Quantis
Who runs PACT?
PACT is run by the World Business Council for Sustainable Development (WBCSD), who, along with the World Resources Institute (WRI), are the co-convenors of the Greenhouse Gas Protocol (GHG Protocol), a leading Carbon Accounting standard that was created in 1998 and has served as a de-facto standard ever since. With this experience and knowledge, PACT is acting as the convenor of a wide and engaged community working in collaboration to establish a robust, applicable and scalable approach to PCF calculation & exchange.
Who is the WBCSD?
We’ve mentioned the WBCSD in a few places here, so it makes sense to talk about them briefly.
The WBCSD is the co-convenor of the GHG Protocol and why this matters for the feasibility of PACT.
“Greenhouse Gas Protocol (GHG Protocol) was jointly convened in 1998 by World Business Council for Sustainable Development (WBCSD) and World Resources Institute (WRI).” - https://ghgprotocol.org/about-wri-wbcsd
Why does PACT exist?
PACT exists in order to chaperone and manage the intensive process of engaging with a wide range of industry partners and initiatives, guiding the progress of the Methodology Working Group and Technology Working Group in order to drive the exchange, alignment and integration of product-level carbon emissions and shape a global standard for Product Carbon Footprints. If you’d like to understand more about how this process works, check out PACT’s Governance page.
“Powered by WBCSD, PACT is acting as the convenor of a wide and engaged community working in collaboration to establish a robust, applicable and scalable approach to PCF calculation & exchange.”
What is the PACT Ecosystem?
Earlier in this piece we discussed the differences between PACT Members and PACT Partners, but there is a wider definition of participation with PACT that can be referred to as the PACT Ecosystem.
We have included an image from PACT which describes the range of organisations involved in the PACT ecosystem, if you have a quick look at the list of organisations, you’ll see that there are a variety of organisations that have goals very different to that of a traditional profit-generating enterprise, such as industry focused initiatives such as those produced by RMI, as well as technology players and academia organisations. This is because whilst much of the work involved in defining the technical specification can be handled by software based organisations, the level of input required to get Scope 3 data sharing right and scalable to enable carbon transparency and whole-of-system decarbonisation is a notoriously difficult proposition that requires input from a range of stakeholders, all bringing together unique insights which benefits all parties involved.
Examples of members of the PACT Ecosystem:
The PACT Ecosystem can be considered far more broadly than PACT itself and its members, for example, ZeroTwentyFifty is not currently a member of PACT itself, however, we are part of the PACT Ecosystem through our product, solutions and service offerings that aim to assist organisations looking to utilise Product Carbon Footprints within their supply chain and decarbonisation efforts. Furthermore, we intend to support the ecosystem through best in class Open Source solutions that enable organisations wishing to onboard or utilise the massive benefits of the PACT Methodology and Network a frictionless transition to being part of the future of product-level carbon accounting.
The PACT Ecosystem is a comprehensive framework and network designed to facilitate the exchange of standardised, reliable, and transparent product carbon footprint data. It consists of three key components:
The PACT Ecosystem is a range of organisations and initiatives that have an interest or need for the data provided by PACT. The way we like to think about it is that an
Some examples of various members of the PACT Ecosystem:
- ZeroTwentyFifty - An Open Source Software company providing consultancy services and deployable solutions for the exchange of PACT Conformant Product Carbon Footprint exchange.
- A third party supplier in a PACT members supply chain: for this example we will use Unilever as an example, this is a non-factual completely hypothetical example, I have zero knowledge of what their actual supply chain looks like, but they are huge and so we can use them as a picture perfect example of this function. So fictional Unilever provides a brand of shampoo which they source various components for, maybe they produce the liquid in the bottle themselves, or maybe they use a white-label contract producer for the formulation, in this situation, the contract producer may get a request from Unilever to provide a PCF to explain the product-level carbon emissions of their product, so that Unilever can take this primary data driven PCF, incorporate it into their own PCF for the end user product, and replace the secondary-emission factor they currently have for the formulation. This could be the end of it, but it’s probably not, because it’s likely that the white-label provider uses other suppliers, so they need to now ask their suppliers, maybe a chemical company that’s a member of the TfS initiative, and so on and so forth. As a side note, this is a good example of the “Primary Data Share” value in a PACT Conformant PCF, where as secondary data is reduced and verified primary data driven PCFs are used, the PDS figure improves, increasing reliability and data integrity for the user. Which would be reflected in the use of the DQI entity [LINK TO PM DOCS] of the PACT Methodology.
What goals do PACT ecosystem participants work towards?
From ZeroTwentyFifty’s perspective, the goals of PACT ecosystem participants can be broken down into two primary areas, those projects that are best suited to the PACT Methodology and those that are best served by the PACT Network. With these organisations utilising the PACT Methodology and PACT Network according to their organisations market offering and business function.
The PACT Methodology
A set of guidelines and standards for measuring, calculating, and reporting product carbon footprints consistently across industries.
The PACT Network
A collaborative network of companies, organisations, and stakeholders committed to advancing carbon transparency and data exchange.
A brief note on the “PACT Data Exchange Protocol”: In the past, the network was based off what was previously referred to as the “PACT Data Exchange Protocol”, which has now been subsumed into the PACT Network spec, so these are one in the same conceptually. A standardised method for sharing product carbon footprint data securely and efficiently between supply chain partners.
How is the PACT ecosystem structured?
The structure of the PACT ecosystem can be considered as an exercise in self-determination, with a variety of organisational types, goals and capabilities, each organisational seeking to serve the ecosystem using the unique skillsets they bring. However, PACT have produced a general idea of this with their listings on the official website. The partners page on the pact website can offer a bit of a guide to the structure of the pact ecosystem, which has been included here.
This looks as such:
- Initiatives such as the WEF and SME Climate Hub.
- Standards and Guidance like the GHG Protocol and EPD
- Targets and Disclosure Programs: Ecovadis, CDP
- Industry Initiatives: TfS, SFC, Catena-X, Digital Catapult
- Auditors: Deloitte, KPMG
- Data Providers: Ecoinvent, PRe Sustainability
- Solution Providers such as ZeroTwentyFifty
As you can see, there are many different organisations that serve different needs, and that is ultimately the best way to explain the pact ecosystem and i will take a moment to discuss a few of these and the type of work they may provide in order to assist move the ecosystem forward and to the end goal of better scope 3 coverage with primary data.
- Environmental consultancy: Organisations that wish to use the PACT Methodology to create Product Carbon Footprints using manual means for net zero plans, ways to set up CDP programs, building out LCA models etc.
- Technology providers: Organisations that are in need of an automated solution to Product Carbon Footprint storage, usage, analysis and exchange.
- Standard setters: organisations like the GHG protocol continue to advance the state of the art in carbon accounting in conjunction with feedback from industry, which then filters back in the form of updated methodology and guidance.
Want to get more involved with PACT?
- Interested in knowing more about how you can get involved in the pact ecosystem from a technical perspective? https://www.zerotwentyfifty.com/services/pact-methodology-network-advisory
Why the PACT Ecosystem Matters:
Why is the PACT Ecosystem important?
The PACT Ecosystem’s importance cannot be overstated, the need for good quality product-level carbon accounting data is vitally important for effective decarbonisation. With a recent BCG and CO2 AI study showing that companies that calculated PCF’s share a 4x improvement in their share of significant benefits.
Ultimately, without an adequate understanding of empirical data and the ability to analyse this data at a relevant level, change made to production systems and manufacturing processes will always be a shot in the dark. The use of PCF’s constructed using the expertise of the PACT Ecosystem, the rigor of the PACT Methodology and the technological breakthroughs of the PACT Network, efforts will fall short to utilise the inherent benefits of the PCF process. With this in mind, let’s talk a bit more about the current state of PCF Calculation and Exchange, what these processes will look like under a PACT future and some of the more structured benefits of the ecosystem.
What does PCF calculation and exchange look like currently?
Poor Data Quality
“What data to collect?”
Lack of granular, accurate, and verified primary data based on difficult data gathering processes within complex value chains outside of company control
Underdeveloped standards & methods
“What rules to follow to calculate and exchange data?”
Existing standards are underdeveloped and leave room for interpretation
Lack of harmonization across standards
Immature Carbon Accounting Technology
“How to share data in a standardized and secure way?”
Lack of mature, automated carbon accounting systems
Lack of at-scale verification and auditing of product carbon footprint
Lack of value chain collaboration & trust
“How to engage suppliers to share granular data?”
Fragmentation across global supply chains and lack of trust for sharing product level data due to compliance concerns
What will PCF Calculation and Exchange look like in a PACT driven future?
Considering the various business functions that exist in the global supply chain and what is required to incorporate embedded product carbon figures into decision making, it is a good idea to phrase what a change such as PACT will do to various parts of the business and how it will be crystalised to deliver business value, sustainability and carbon transparency.
Procurement
- Embed carbon intensity into supplier selection and identify new sourcing opportunities
- Inform contract negotiations
- Partner with suppliers to decarbonize
R&D
- Make product design decisions and choose low-carbon emitting materials
- Design new low-to-zero-carbon products
Sales & marketing
- Implement carbon labels and tags to enhance transparency and introduce premium pricing for low-to-zero-carbon products
Sustainability
- Establish a robust carbon baseline
- Set decarbonization targets and track progress
- Comply with regulations (e.g., CSRD)
- Disclose voluntary Sustainability reports
Enables Scope 3 Emissions Management
"Accurately quantifying and reducing emissions, particularly those in value chains (Scope 3), are key enablers for changing the global warming trajectory and avoiding the worst effects of climate change." (PACT Methodology 2.0)
Managing Scope 3 emissions is crucial for businesses to achieve comprehensive sustainability targets. The PACT Methodology provides standardised methods that make this complex task more manageable and verifiable.
CDP's 2021 Global Supply Chain Report highlights the importance of transparency to drive transformation in managing these emissions
Enhances Supply Chain Collaboration
The creation of a free and open digital network will significantly facilitate data exchange (upstream to downstream, but also downstream to upstream) and strengthen quality and credibility.
This open exchange not only promotes transparency but also fosters trust among all stakeholders in the supply chain, paving the way for more effective sustainability strategies and initiatives.
As noted by the World Business Council for Sustainable Development in their discussions on collaborative approaches.
Supports Decarbonisation Efforts
By enabling access to reliable and transparent product carbon footprint data, companies can make informed decisions to reduce their environmental impact and support the transition to a low-carbon economy.
"It is important to emphasize that the goal to accelerate decarbonisation of value chains cannot be solved by individual actors in isolation. It requires an aligned, coordinated, and open approach, driven jointly by stakeholders across all industries and value chains, including SMEs. Radical collaboration is key." (PACT Methodology 2.0”.
McKinsey & Company discuss the increasing demand for sustainable products and how companies are adapting to meet these needs in their latest insights.
Facilitates Compliance and Reporting
Aligning with emerging regulations is critical as companies globally are required to disclose more detailed and standardised climate-related information. This compliance not only meets regulatory demands but also helps companies stay ahead by managing risks and capitalising on opportunities related to climate change.
"The PACT Methodology builds on the longstanding work with the World Resources Institute under the GHG Protocol to take a cross-sectoral approach to help organisations develop and exchange primary data-based product carbon footprints (PCFs) across the value chain. The requirements captured in it seek to further enhance data reliability and consistency across industries and value chains, for instance via the inclusion of a verification and assurance roadmap."
The Securities and Exchange Commission (SEC) in the United States has recently adopted rules to enhance and standardise climate-related disclosures by public companies, which underscores the global momentum towards more consistent and transparent reporting frameworks. This includes the disclosure of material climate-related risks and their impact on business strategy, as well as governance and risk management processes related to climate change). In Europe, the Corporate Sustainability Reporting Directive (CSRD) will require large companies to report their impacts on people and the planet, increasing the transparency of non-financial disclosures.
The Role of ZeroTwentyFifty:
At ZeroTwentyFifty, we are proud to be part of the PACT Ecosystem. Our software solutions are designed to help companies seamlessly integrate with the PACT Network Data Exchange Protocol, enabling them to efficiently measure, manage, and exchange product carbon footprint data. With our expertise in Scope 3 emissions management and our commitment to advancing carbon transparency, we are well-equipped to support businesses in navigating this critical aspect of their sustainability journey.
The PACT Ecosystem represents a significant step forward in the global effort to combat climate change by promoting carbon transparency and collaboration across supply chains. By understanding and engaging with this ecosystem, companies can unlock new opportunities to drive decarbonisation, meet stakeholder expectations, and contribute to a more sustainable future. Stay tuned for future posts, where we'll dive deeper into the components of the PACT Ecosystem and explore how ZeroTwentyFifty's solutions can help your business thrive in this new era of carbon transparency.
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