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May 11, 2009

Avoiding the Pitfalls of Product-level Carbon Footprinting

David Walker
Director Environmental Sustainability
PepsiCo International

As companies implement their GHG reduction strategies, many are turning to product level carbon footprinting for insight. By mapping carbon throughout a product’s lifecycle — from the raw material stage to final disposal — it becomes easy to pinpoint where emissions are highest. This powerful (often surprising) insight can trigger the will to drive sustainability deeper into the business.

But measuring footprints at the product level presents a number of challenges.

While there is an emerging consensus on global footprinting standards; these are only starting to be adapted for specific industry sectors. Product level data can be difficult and expensive to gather, with secondary data potentially leading to inaccurate results. When faced with these obstacles, companies can easily shy away from undertaking this type of research.

But product level footprinting sparks a potent combination of sustainability gains, financial returns and innovation. Efforts to establish the carbon footprint of a basket of products representative of a company’s business can help tailor sustainability strategies more effectively while generating awareness among peers, employees and consumers about the significance of carbon reduction efforts.

When Walkers Crisps, the first product in Europe whose footprint was certified by the UK’s Carbon Trust, determined that almost one-third of emissions were produced in the raw materials stage, the company developed a number of efforts with suppliers. It was also the first company to put a carbon label on pack, a move which has stimulated greater accountability and consumer awareness. These efforts have resulted in energy reductions of more than 30% per crisp (as of October 2008).

Engaging in partnerships with key organizations outside and within one’s own industry is key. For instance, in beverage-related carbon footprint surveys, we engaged the Carbon Trust, Columbia University’s Earth Institute and the Beverage Industry Environmental Roundtable (BIER). In each case, the intention has been to insure that the carbon footprint to be published is aligned with globally recognized protocols and calibrated with other companies within the industry.

In addition to PepsiCo., BIER also represents many of the largest beverage companies in the world including: ABInBev, Bacardi, Brown-Forman, Nestle Waters, The Coca Cola Company, and several others.

BIER came together in 2006, as a private voluntary group, to help drive industry practices on water conservation. Through a process of benchmarking, sharing best practices and tools, and advocating for public policy, BIER members created a shared understanding of what constitutes “leadership” in water stewardship.

The process established by BIER has helped to drive consistency and inform policy through an externally validated process. It has led to a clearer understanding among industry peers about what constitutes leading practice and to consistency in reporting. By engaging a number of stakeholders, members have also submitted their benchmarking work to external review by organizations that are establishing standards across industries. According to BIER data, collectively, the beverage industry achieved 9% improvement in water efficiency (2005-2007) and avoided the use of 30 billion liters of water.

Now, BIER members are taking a similar approach to addressing climate change and developing guidance on carbon reporting. This process is proving valuable to refining the emerging global standards as well as to helping industry work for sustainable solutions.

The BIER group has developed a Sector Guidance Protocol to help members publish enterprise level carbon reports and product level carbon footprints that are appropriate for the industry and easy to calibrate among members. For Product Level Carbon Footprints, the BIER Group members have agreed to follow the PAS 2050 protocol, developed in large part by the Carbon Trust.

Although following the Sector Guidance will not automatically lead a company to Carbon Trust certification, it is important that the principal beverage companies have agreed to use a single protocol for this purpose. The Carbon Trust, engaged early as a key stakeholder, has reviewed the document and provides guidance as final drafts are developed. In addition, prestigious outside organizations — including the World Resource Institute, the California Climate Registry and the Carbon Disclosure Project — have also reviewed the proposed sector guidance.

BIER provides a helpful forum for industry peers to address common challenges. Members are currently working jointly to resolve industry specific issues for carbon footprints such as: solving for cold bottle storage emissions, accounting for recycling of packaging and determining the proper baseline years for distilled spirits that are aged for many years.

The Outdoor Industry Association is an example of another industry engaging in Sector Guidance development. BIER and OIA have already begun a dialogue in order to insure a minimal level of calibration between industries.

An industry peer approach, with effective stakeholder engagement, can create valuable sector level guidance on carbon footprinting. As companies seek ways to embed sustainability further at the product level, this approach pays long term dividends.

David Walker is Director of Environmental Sustainability for PepsiCo International.

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