Recently, companies have faced growing pressure to report product carbon footprints (PCF) of extensive product sets or their entire portfolios. This need is driven by impending EU regulations (such as the Digital Product Passport), demands from institutional buyers and customers, as well as internal strategies for product development and decarbonization.
This article discusses the key drivers for scaling product carbon footprints, the implementation challenges, and a structured approach for LCA reporting at scale to meet growing demands.
Businesses have used product carbon footprints (PCF), life cycle assessments (LCA) and Environmental Product Declarations (EPD) for decades to understand the carbon emissions embodied in their products, assessing environmental impacts beyond their own gates and across the value chain.
A Product Carbon Footprint (PCF) quantifies the total greenhouse gas emissions directly and indirectly associated with a product throughout its life cycle, from material acquisition to production, distribution, use, and disposal. It is one of the applications of Life Cycle Assessment (LCA), which provides a comprehensive analysis of overall environmental performance, including pollution of air, water and land, and resource use, in addition to carbon emissions.
When LCA calculation and reporting guidance in the form of Product Category Rules (PCR) exist for the product under study, LCA results and findings may be summarized in an Environmental Product Declaration (EPD). The purpose of the PCR/EPD framework is to standardize LCA calculations and environmental attribute reporting, enabling purchasers to make comparative decisions.
Learn more about our process-based LCA approach in our blog.
Over the past decade, the European Commission has been developing the means to harness the power of the European market and enable the economic transformation necessary to avoid the most catastrophic effects of climate change.
Approved by the EU Council on May 27, 2024, the ESPR builds on years of development and pilot testing of product footprinting guidance under the Product Environmental Footprint (PEF) initiative, foundational work enabling LCA to be used comparatively in purchasing decision-making. Under ESPR, the Commission has defined requirements for Digital Product Passports (DPP) to be required for any product put on the European market, which shall contain critical information related to that product’s sustainability and compliance.
A DPP is a digital record linked to a label code, providing detailed information about a product’s environmental attributes, such as composition, origin, and environmental impact, to facilitate better consumer decisions and public controls.
In December of 2023, it was confirmed that Digital Product Passports will contain LCA or product carbon footprint data. The Commission has set timeframes for when DPP will become a requirement for specific sectors and categories of products, with batteries, textiles/apparel and electronics, identified as among the highest priority.
The most advanced category with the earliest DPP deadline is that of light industrial and electric vehicle batteries. The DPP for batteries will enter into force in February 2027 and the detailed product category rules for batteries provide an indication of how implementation will proceed for other categories. Textiles will be the first sector as a whole to require DPP, with mandatory DPP entering into force in the summer of 2027. Iron and steel will follow, with mandatory DPP required in October 2027.
Over the period of 2028-2030, DPP will become a requirement for aluminum, furniture, tires, detergents, paints, lubricants, chemicals, ICT and other electronics, as well as the broader cross-sector category of energy-related products (ErP), which includes products that use energy as well as devices that conserve energy.
The EU CBAM is a policy tool to prevent “carbon leakage” via key imports like cement, iron and steel, aluminum, fertilizers, electricity, and hydrogen. CBAM aims to ensure fairness by imposing tariffs on imported goods with high carbon footprints, encouraging global partners to adopt emission controls commensurate with those found in Europe. CBAM effectively levels the playing field, as EU producers of the commodities covered by CBAM are required to pay for higher GHG emissions under the EU Emissions Trading System.
During the transitional phase (2023-2026), CBAM requires importers to register PCFs for their products upon import into the EU using provisional data sources, without paying a carbon adjustment fee.
In the definitive regime, starting from 2026, companies will be required to supply verifiable primary data on their carbon emissions or use default values from the highest emitting 10% of EU producers. They will also need to buy CBAM certificates as a financial adjustment for excess embedded carbon, equivalent to the EU’s carbon price.
While data reported under CBAM are not full product carbon footprints, but rather a more limited scope of product carbon emissions. CBAM is driving capabilities and fluency in supply chain carbon reporting with small, medium and large enterprises in key industrial sectors.
The EPBD is a critical legislative measure designed to enhance the environmental performance of buildings throughout the European Union. Last revised in April 2024, the directive mandates that member states improve the energy performance of both new and existing buildings. Key requirements include setting minimum energy performance standards, issuing energy performance certificates, and ensuring all new buildings are nearly zero-energy buildings (NZEBs).
By 2027, the directive will also require a whole building LCA for new constructions, i.e., an EPD for all the construction products that make up the structural aspect of your building before you build it. Several member states, including the Netherlands, France, Sweden, Norway and Finland, have already implemented this requirement for whole building LCA.
Large institutional buyers in government, education, and finance rely on product carbon footprint data for environmentally preferable purchasing. While some green purchasing has recently become a regulatory requirement, most is currently voluntary.
The EPEAT program is an internationally recognized labeling scheme for electronic products that grants an ecolabel based on multiple sustainability criteria. Many governments, school districts, financial institutions, and other large procurement organizations require ICT purchases to carry an EPEAT label. EPEAT first began awarding points related to conducting and publishing a product LCA in 2012. While EPEAT initially focused on office equipment, the need for green procurement decision-making expanded the program to cover mobile phones, servers and even photovoltaic modules.
In the construction sector, LEED, BREEAM and other leading green building standards (DGNB in Germany, Energie Carbone in France) award points related to whole building LCA. Architects and contractors can submit proof of the sustainability performance of their design using EPDs for their structural and enclosure materials, as a part of green building certification. Green building schemes have been driving requests for construction material EPDs for over a decade, with LEED first including whole building LCA criteria in 2013.
The U.S. federal government is the largest purchaser in the world, with an annual purchasing power of over $630 billion. In December 2021, President Biden charged his Administration to launch the Buy Clean Task Force and initiative, aiming to reduce greenhouse gas emissions by prioritizing the purchase of construction materials with low-carbon footprints for federal projects.
Together with the Infrastructure Investment and Jobs Act (Bipartisan Infrastructure Law), the Federal Buy Clean Initiative slated $2 billion in funding to support the publishing of construction materials EPD. Funding has a minimum threshold of $200K/grant, so activity is limited to industry groups/consortia.
In March 2022, the General Services Administration (GSA) incorporated its first “Buy Clean” standards for concrete and asphalt into the Facilities Standards (P100). GSA mandates suppliers to provide EPDs and adhere to low embodied carbon concrete and environmentally preferable asphalt standards for all new projects involving more than one truckload of material.
In March 2023, the Biden-Harris Administration launched the Federal-State Buy Clean Partnership with 12 leading states, later including Minnesota. These states committed to prioritizing the procurement of lower-carbon infrastructure materials for state-funded projects and collaborating with the Federal government and each other to harmonize market demand for these materials. By early 2023, several states had already taken the initiative to define their own laws around green procurement in government-funded construction, highlighting the need for collaboration on common requirements.
Since 2017, 8 states in the U.S. have passed laws that require EPDs in government-funded building and construction. Some of these are even more progressive than the European Energy Performance of Buildings Directive in that they mandate that EPDs be supply chain-specific or even facility-specific, requiring more widespread LCA reporting throughout structural material supply chains.
The table below summarizes key information on state-level Buy Clean Laws.
| State | Regulation | Year signed | Compliance date | GWP limit | EPD type | Material categories |
| California | Buy Clean California Act (AB-262) | 2017 | July 1, 2022 (Originally January 1, 2019) | Yes | Facility-specific | Structural steel, concrete reinforcing steel, flat glass, and mineral wool board insulation. |
| Colorado | Buy Clean Colorado Act (HB 21-1303): Global Warming Potential for Public Project Materials Bill | 2021 | January 1, 2024 | Yes | Supply chain- specific | Asphalt and asphalt mixtures, cement and concrete mixtures, glass, post-tension steel, reinforced steel, structural steel, and wood structural elements. |
| New York | Low Embodied Carbon Concrete Leadership Act (Senate Bill S542A signed as Finance Law 135-d) | 2021 | January 1, 2025 | Yes | Product supply chain, or facility-specific | Concrete mixes used in state construction projects. |
| Oregon | An Act Relating to reductions of greenhouse gas emissions in the state’s transportation system (HB 4139) | 2022 | January 1, 2027 | No | Product-specific | Concrete, asphalt paving mixtures, steel, and other materials specified by the Department of Transportation for state-funded transportation projects. |
| New Jersey | Low Embodied Carbon Concrete Leadership Act (Senate Bill S287) | 2023 | January 1, 2024 | No | Product-specific | Tax credits for concrete or major components of concrete. |
| Maryland | Buy Clean Maryland Act, Eligible Project – Procurement of Construction Materials (HB 261) | 2023 | December 31, 2024 | Yes (TBD) | Facility-specific | Concrete and cement. |
| Minnesota | Minnesota HF 2310 Buy Clean Buy Fair Act | 2023 | TBD | Yes (TBD) | Supply chain- specific | Carbon steel rebar, structural steel, concrete, and asphalt paving mixtures. |
| Washington | Washington HB 1282 Buy Clean Buy Fair Act | 2024 | July 1, 2025 | No | Supply chain- specific, if available | Structural concrete, reinforcing steel, structural steel, and engineered wood products. |
Download our Product Footprinting Regulatory Overview for a detailed summary of the timelines and requirements for each state’s Buy Clean policy, as well as other EU and US regulations.
In both B2B and B2C markets, the demand for transparent carbon footprints of individual products has been growing over the past years. Businesses are driven to purchase low-carbon and energy-efficient products to reduce the GHG emissions of their own operations as well as across the supply chain to meet regulatory requirements and corporate targets. Many consumers are now more informed about the environmental impacts of their purchases and choose to support companies that align with their values of reducing carbon footprints. A 2023 PwC survey revealed that 96% of companies in multiple sectors noted their customers’ interest in product sustainability. A different survey revealed that 80% of consumers are willing to pay up to 5% more for goods produced sustainably.
Companies that can provide credible, product-level carbon footprint data not only meet this demand but also distinguish themselves from competitors who offer only high-level assessments. This enhanced transparency enables companies to justify the “green premium” associated with their decarbonization efforts, boost product sales, and cultivate stronger customer loyalty. For example, HPE found its sustainability team’s efforts in promoting energy efficiency and circularity in sales conversations led to $1.3 billion in new contracts in fiscal year 2022 — a 400% increase from 2018.
Over 80% of all product-related environmental impacts are determined during the design phase. Growing regulatory and market pressures have propelled more companies to adopt the eco-design approach and Design for the Environment (DfE) guidelines to reduce environmental impacts throughout a product’s entire life cycle.
LCAs for individual products are used internally to inform critical design decisions, such as material selection, energy efficiency, waste reduction, and product longevity. Ideally, these evaluations begin even before the prototyping phase and extend beyond the initial manufacturing gate to involve collaboration with suppliers. The LCA must be iterated several times over the development cycle, and there may be part or module-specific LCA models to address specific scenarios under consideration for design and fabrication.
Having a view of LCA results for all of a company’s products enables one to develop a proactive sustainability strategy, with a view to all environmental impact categories, rather than being buffeted by volatile public sentiment or reacting to environmental issues as they arise. For large companies with diversified products, implementing eco-design across all product lines and development stages requires a sophisticated approach to scale granular LCAs for a few products to hundreds of thousands. Platforms and tools that facilitate collaboration across departments are also crucial to support a comprehensive product sustainability program.
The Corporate Sustainability Due Diligence Directive (CSDDD), approved in May 2024, brings into law the need for carbon accounting not only to communicate to financial markets, but also to inform the company’s strategy through transition planning. The CSDDD requires the development of a climate transition plan, to adapt their own operations and that of their supply chain to function within a 1.5-degree global warming scenario.
Companies that have set SBTi targets, developed Scope 1, 2 and 3 carbon mitigation strategies and communicated about their plans publicly are in a good position to respond to the reporting requirements of CSDDD. For many companies, the requirements of CSDDD will be new, particularly entities that are struggling to respond to the Corporate Sustainability Reporting Directive (CSRD) as CSDDD builds upon this comprehensive framework.
Developing a data-driven decarbonization strategy requires accurate modeling of Scope 3, which for many companies entails the development of PCF results for all of their products. Aligning carbon footprints for individual products with corporate reporting allows companies to show how changes at the product level drive corporate mitigation progress. This approach allows them to identify emission hotspots down to specific products, purchases, and suppliers, facilitating actionable mitigation efforts in collaboration with stakeholders, that can then translate into publicly visible progress.
Learn more about how to apply process-based PCFs at scale to inform corporate sustainability strategies in our blog.
Generating PCFs at a corporate scale is inhibited by two main challenges:
Current LCA software is geared towards modeling one product at a time on desktop machines with limited processing capabilities. It lacks the scalability required to generate LCA results for hundreds or thousands of product variations, with the granularity required to serve the needs of mitigation strategy as well as product and corporate reporting.
Obtaining, cleaning, and organizing data for a full portfolio of products from various software systems and business departments demands considerable effort. The typical LCA data collection approach, based on manual one-off data collection processes, cannot accommodate the corporate scale.
Assessing product carbon footprints at scale requires the development of customized process-based LCAs for every product in the corporate product portfolio, often hundreds of thousands of products and variations. Aligned Incentives has employed a cutting-edge approach, which combines an extensive LCA database, top-tier LCA expertise, and advanced data and computing infrastructures to achieve the necessary scale while retaining the high granularity of results necessary to inform mitigation strategy.
Learn more about our process-based LCA approach in our blog.
The graph below is a snapshot of the product carbon footprint report for an illustrative apparel company, generated by our AITrack software. Each row in the “Product Drilldown” table shows the embedded and avoided carbon emissions for each SKU in the “Casual Khaki” category, with reports accessible for all product categories. Emissions summaries and drill-downs are also available by life cycle stage and sourcing location.
Regulatory-driven demand for LCA is primarily in the form of EPDs following specific Product Category Rules (PCR). To develop EPDs, a PCR for the category must exist and EPD verification is required in addition to the product LCA report.
With structured data management and process automation, the time to generate each EPD can be dramatically reduced, when producing hundreds or thousands of EPDs.
Speak to our product expert to learn more about the latest developments and best practices for LCA and EPD at scale.
