Unveiling and Assessing Emerging Tools with a Spotlight on Purchasing Goods and Services

Main Presenter:    Widiene Essouid;Janet Salem 

Co-Authors:   Guido Sonnemann     Philippe Loubet      Stephane Trebucq                                    

Background: The current focus on environmental awareness, exemplified by initiatives like Europe’s Corporate Sustainability Reporting Directive (CSRD) and the imperative to decarbonize business operations, demands a comprehensive grasp of environmental impacts. This includes a keen understanding of greenhouse gas (GHG) emissions , particularly those associated with an organization’s actions, notably the scope 3 emissions from purchasing goods and services within an Organizational Life Cycle Assessment (OLCA) perspective; statistics reveal that over 70% of total scope 3 upstream emissions stem from the operation of purchasing goods and services.

Gap: Despiteinitiatives like the GHG Protocol providing guidance on calculating corporate scope 3 emissions, many companies primarily focus on assessing their scope 1 and scope 2 emissions. This omission isdue to the complexity of understanding and applying the guidance, often requiring a level of Life Cycle Assessment (LCA) skills that financial professionals may lack. Consequently, this gap can resultunderestimation of emissions, casting doubt on the accuracy of calculated values. To address this, a burgeoning trend toward developing innovative automatized tools designed for both local and global applications, to simplify the assessment of carbon footprints encompassing direct and indirect emissions, with a particular focus on those associated with the procurement of goods and services (Scope 3 – Category 1). Various tools use data extracted from accounting systems to ensure auditability, control, and accurate inputs for calculating emissions associated with procurement operations.

Goal: Our research is dedicated to conducting a thorough evaluation and comparison of various carbon calculators in order to capitalize on the strengths of their methodologies while actively addressing their limitations. This initiative is aimed at advancing the creation of a more comprehensive methodology for accurately measuring greenhouse gas emissions related to procurement activities.

Method: Initially, we adopted a survey-based approach to assess the convergence, divergence, challenges, and potential areas for improvement among various carbon calculators. Additionally, we mined existing scientific literature to extract diverse approaches and methodologies for calculating the carbon footprint of purchases, culminating in a comprehensive state-of-the-art analysis. This review serves as a benchmark for emerging tools, employing scientific criteria such as calculation methodology, relevance of input data, contribution to accounting practices…, as well as technological aspects such as the integration of Artificial Intelligence (AI) or other innovative technologies.

Results: While current tools exhibit efficacy, their limitations pose challenges. The identification of limitations within current methodologies not only reveals a niche for further research development but also underscores the necessity for a unified methodology that transcends inherent limitations. . This new approach distinctly focuses on calculating greenhouse gas (GHG) emissions associated with purchased goods and services in a systematic and accurate way, leveraging accounting data.

Conclusion: In essence, this review illuminates the intricate landscape of environmental impact assessments, particularly focusing on the often-neglected yet crucial realm of greenhouse gas emissions associated with goods and services purchasing. It underscores the pressing need for a holistic approach, intertwining scientific rigor, financial data with technological innovation. This integration remains vital in ensuring accurate, auditable, and inclusive emissions calculation, meeting the demands of an increasingly conscientious world for transparency. The call for the development of refined methodologies stands as a beacon, guiding us toward a more precise understanding and effective mitigation of organizational environmental footprints.

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