Ready for Scope 3 Reporting? Take Charge of Your Materials and Emissions
New EU directives on sustainability reporting will drive towards full control of all materials used in manufacturing and its greenhouse gas emissions. Teaming up with Tampere University of Applied Sciences, PDSVISION aims to develop new methods for reporting and minimizing emissions. Here is what is required of all manufacturing industries–and what the so-called scope 3 emissions are all about.
The EU Corporate Sustainability Reporting Directive, CSRD, will be implemented between 2024 and 2028, with different start dates depending on the size of the company. It applies to nearly 50,000 EU companies and includes reporting scope 3 emissions. This will have a huge impact on all manufacturing industries–not only to report but also to gain control over all materials and processes, from cradle to gate, and ultimately minimize CO2 emissions.
What is scope 3?
Scope 3 is part of the established Green House Gas Protocols Corporate Standard (GHG). This standard divides the reporting into three so-called scopes:
- Scope 1 includes direct emissions from company facilities and vehicles.
- Scope 2 includes indirect emissions from purchased electricity, heating, and cooling.
- Scope 3 is much more comprehensive. It includes more or less all other indirect emissions that the company does not own or control. Scope 3 divides these into 15 different categories, labeled as upstream and downstream activities. According to CSRD, organizations must report emissions from all relevant scope 3 categories. These are:
- Purchased goods and services.
- Capital goods.
- Fuel- and energy-related activities.
- Upstream transportation and distribution.
- Waste generated in operations.
- Business travel.
- Employee commuting.
- Upstream leased assets.
- Downstream transportation and distribution.
- Processing of sold products.
- Use of sold products.
- End-of-life treatment of sold products.
- Downstream leased assets.
- Franchises.
- Investments.
An opportunity to gain business benefits
You might understand this as another administrative burden. But you could also consider it an opportunity to use smarter materials with lower carbon emissions, reduce energy costs, be more competitive and gain business benefits.
Katri Salminen is Project Manager of Industrial Engineering at Tampere University of Applied Sciences, TAMK, in Finland. Together with PDSVISION, she and TAMK’s team of experts have developed a methodology to comply with the new CSRD, including scope 3 measurements.
But we have not done a complete and holistic deep dive into all 15 categories. For example, measuring commuting is not within our scope. We are more focused on production and design,” Katri Salminen explains.
The value of an intelligence material database
TAMK is currently testing Ansys Granta as its intelligence material database to integrate CO2 emission calculations in the mechanical design process. TAMK already uses Windchill as its PLM system for educational and research purposes.
Our idea is to run calculations automatically during the design process. The PLM system will collect all needed data of the parts and assembly, and the result of the calculations will be specified in the bill of materials,” Juuso Huhtiniemi, senior lecturer at TAMK, says.
Collecting data will be mandatory
The EU Commission adopted the CSRD in November 2022 and it has just been implemented in national laws around Europe. This means it is all new for businesses, service providers, consultants, research institutes and universities as TAMK. To find methods to comply with the directive is a work in progress, like all reporting will be, and will develop over time, Katri Salminen says.
At the moment, I don’t think anyone has an answer on what the exact requirements for the bill of materials the scope 3 emission reporting will bring. What we know is that collecting data from cradle to gate emissions will slowly become mandatory,” Katri Salminen says.
Gathering reliable data from all these categories will be difficult.
For example, how do you collect valid data on employers commuting? It is most likely that, at least in some of these categories, some sort of averages or questionnaires will be used instead of actually measuring anything,” she predicts.
Three advice on tackling scope 3
Although the research at TAMK on scope 3 reporting methods is at its cradle, Katri Salminen has three main pieces of advice for companies, not least small and medium enterprises.
- Start by assessing how prepared you are. What data do you already have? What measurements are you already taking that support the reporting? What new data need to be collected?
- Pair up with service providers, like software companies and consultants, and universities that are already reporting and developing methods in line with scope 3. They can bring valuable expertise regarding the topic.
- Understand the regulations. Follow how it develops and analyze what it will mean for your business. Don’t consider it another mandatory and awful regulation, something you do just because you must. See the opportunities.
Understand your material’s impact at an early stage
The outcome of scope 3 will be a more holistic view of the emissions of the manufacturing supply chain, resulting in sustainable production based on life cycle analysis and sustainable design methods. This is not only about reporting. It is also about what companies actively do to reduce emissions,” Katri Salminen states.
Here, design engineers responsible for product development will have a key role. Reducing emissions starts with understanding the impact of the materials used in the manufacturing process at an early stage. For this, integrating Granta into Windchill and the CAD and simulation software enables fundamental reductions of CO2 emissions. By leveraging simulation tools, engineers can virtually validate material choices and optimize designs for both cost and performance before physical prototypes are made. This not only accelerates the development process but also ensures that the selected materials meet sustainability goals.
The integration of Granta with PTC’s Creo CAD products, which include simulation capabilities, allows for the consideration of sustainability during the mechanical design phase. As Granta connects material intelligence to the Creo interface, it enables mechanical designers to consider more sustainable material options during the design process and efficiently validate the impact of a new material candidate on the performance of the mechanical design, without leaving Creo. Furthermore, advanced simulation tools such as those provided by Ansys, supported by PDSVISION, allow for in-depth virtual analysis, further optimizing design performance while minimizing environmental impact. This combined approach ensures that material decisions are not only theoretically sound but practically validated, leading to more sustainable manufacturing outcomes.
When the designer defines the materials in the CAD software, Granta gives all data needed, while Windchill collects it and calculates the emissions. This way, the designers will have full control of the environmental impact of different materials. Ten years ago, the primary goal for design engineers was to reduce weight. In the future, the primary goal will be to reduce the emissions,” Juuso Huhtiniemi says.
Cradle-to-gate analysis makes business more lucrative
Katri Salminen is sceptical that the first reports according to CSRD will contain absolutely accurate, measured and validated data. She hopes the university’s applied research, together with the PDSVISION partnership, will contribute to SME:s ability to not only comply with the new reporting directive but also actually lower their emissions.
We hope to develop and introduce novel methods and ideas, enabling manufacturing industries to take control over their product life cycles by design and cradle-to-gate analysis, thereby optimizing their emissions. That would make their business more lucrative and attractive to buyers and consumers.”
Facts
ESRS–the mandatory standards bundle
As part of the CSRD, the EU has developed a comprehensive set of guidelines to standardize the sustainability reporting according to CSRD. These are called The European Sustainability Reporting Standards, ESRS. They define the rules of the CSRD and replace the earlier Non-Financial Reporting Directive, NFRD.
The adoption of ESRS is mandatory for companies within its scope. It is organized into different standards, each covering specific aspects of sustainability reporting.
ESRS takes a so-called double materiality perspective–companies must report both on how they affect people and the environment, and on how social and environmental issues create financial risks and opportunities for the company.
The primary objectives of ESRS include:
- Improving corporate transparency: Ensuring that companies provide high-quality, comparable, and reliable sustainability information to investors, consumers, and other stakeholders.
- Supporting the EU’s Green Deal: Aligning corporate reporting with the EU’s ambitious climate and sustainability goals, including the transition to a low-carbon economy.
- Mitigating greenwashing: Reducing the risk of misleading claims about sustainability by setting clear and standardized reporting requirements.
Want to learn more about Sustainable Manufacturing?
Join us for an insightful event on Sustainability in Manufacturing on September 18th in Tampere, Finland!
We are glad to host a breakfast together with Finnish Industrial Internet Forum – FIIF, to talk about the latest innovations, trends, and developments happening with Sustainable Products Design. Check the complete agenda here: pdsvision.com/events/sustainable-product-design
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