Sustainability is now a top priority for B2B buyers. A recent Bain survey reveals that 36% of buyers are willing to leave non-compliant suppliers now, and nearly 60% will do so in three years. Despite 85% of suppliers claiming to offer sustainable solutions, only 53% of buyers feel their needs are being met.
Demonstrating how sustainability is integrated into your product offering is crucial. For example, as a data center server provider, you may need to assess greenhouse gas emissions and energy consumption for thousands of server configurations to meet buyers’ data requests. Relying on traditional methods that use a single footprint result to represent many variations can obscure environmental performance, potentially leading to lost contracts.
To stand out, you need a scalable, transparent approach to product footprinting. This blog explores how companies can accurately and efficiently calculate environmental footprints for every product in their portfolio and streamline customer communication.
Businesses increasingly require supplier product footprint data to comply with Scope 3 regulations, meet sustainability goals (e.g., Science-based Targets), satisfy consumer expectations, and mitigate supply chain risks.
Unilever’s Supplier Climate Programme, for instance, asks hundreds of key suppliers to provide product carbon footprint data for their products by September 2024. The iMasons Climate Accord, led by AWS, Google, Meta, Microsoft, and others, urges data center suppliers to measure their product environmental impact through lifecycle assessments (LCA) and report transparently via Environmental Product Declarations (EPDs).
In addition, companies like Nestlé and Levi Strauss now require suppliers to share greenhouse gas emissions data as part of their responsible sourcing standards.
Read our blog for an overview of regulatory and market drivers for product LCA reporting at scale.
To meet buyer demands for granular, transparent product environmental footprints, companies should adopt an approach to LCA that tracks all activities throughout a product’s lifecycle—from raw material extraction and manufacturing to distribution, use, and disposal. Unlike high-level averaging methods, activity-based LCA (or process-based LCA) provides more accurate footprints by capturing product-specific differences, allowing companies to effectively showcase their sustainability efforts and product benefits to customers.
Deploying activity-based LCAs across a company’s entire product portfolio is highly resource-intensive, typically requiring custom models for hundreds of thousands of product variations. Aligned Incentives addresses this challenge by combining scalable modeling with advanced automation in its software, AITrack, to maintain granularity while efficiently developing LCAs for all products.
An illustrative example
The diagram shows the lifecycle of a server, with each yellow block representing an activity, such as manufacturing, transport, use, and disposal. For example, solid-state drive (SSD) manufacturing involves processing materials, specialty chemicals and metals, and fabricating wafers using energy and water while emitting CO₂, SO₂, and other outputs. Each activity block has specific inputs and outputs, shown by green and blue shadows.
Aligned Incentives’ approach models each activity using a custom LCA that accounts for temporal, geographical, and technological factors, capturing the full environmental impact at each step across the product lifecycle and value chain.
By combining customizable LCA inventory and data pipelines, the system can easily generate thousands of versions of a single activity and dynamically control inputs through parameters. It allows users to:
The example dashboard below shows granular carbon emissions for a server by assembly and product model tier. The results generated from activity-based product LCAs at scale provide a solid analytical foundation to meet customer demands. This approach also enables companies to focus on high-impact components (such as SSDs for servers), target data collection from key suppliers, and evaluate alternative product designs and mitigation levers through scenario modeling.
Companies should communicate granular product-level footprint metrics in ways that resonate with their customers. For example, in the technology sector, Apple and Google provide product environmental reports for all of their consumer products. In the food industry, Oatly discloses the carbon footprint of each US product publicly to customers, and calls on other companies to follow suit. AWS and BASF develop interactive tools that let customers explore footprint metrics by SKU, region, and lifecycle stage – and calculate their footprints based on usage.
By partnering with customers to convey tailored sustainability benefits —such as emission mitigation, energy saving, and market expansion—companies can strategically position their sustainable products as valuable assets to enhance customer operations and bottom lines. This can further help companies justify green premiums, enhancing profitability.
To build trust with customers, companies should follow industry standards for product footprint assessments, i.e. ISO 14040/14044 or ISO 14067, and apply Product Category Rules where applicable. Clear explanations of methodologies, along with third-party assurance, help customers understand how product impacts are measured and managed, adding an extra layer of credibility.
To fully integrate sustainability into the sales process, companies should foster cross-functional collaboration and train their sales team. By involving the sustainability team in customer discussions about product carbon footprints, HPE secured $1.3 billion in new contracts in fiscal year 2022 — a 400% increase from 2018. Building on this success, HPE launched a training program to equip salespeople with the knowledge and skills to promote sustainable solutions.
Aligned Incentives provides an AI-powered sustainability planning solution enabling efficient, accurate product footprinting at scale. Speak to our experts to learn more.
