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The preparation of a GHG balance sheet varies slightly depending on the standard, but the entire supply chain of the company is generally covered. Implementation requires not only comprehensive consumption data but also the correct allocation of emission factors. 

In scopes 1 and 2 (direct emissions and indirect emissions from purchased energy), the complexity is low, as emission factors for energy sources are valid and in some cases specifically known from the supplier. In contrast, scope 3 (indirect emissions in the supply chain) is more challenging. Secondary factors are drivers for inaccuracies here. 

The product groups in procurement (upstream scope 3) are particularly problematic. A spend-based approach is of little use here in the long term. The inadequate maintenance of master data (e.g., material, weight) makes a volume or weight-based approach difficult. A thorough cleansing of master data is therefore essential for carbon management. In the context of downstream scope 3, assumption-based approaches must be found that estimate emissions for product use, further processing, and disposal. Documentation of the assumptions is essential for traceability and external validation.

There is a trend towards companies defining short and long-term climate targets as part of science-based targets (SBTi). Aside from the risks of greenwashing, this development is fundamentally positive, as companies are taking decarbonization seriously. The decision-making factors for setting climate targets are diverse and include both internal and external influences. Internal factors such as growth ambitions, access to technology, and efficiency in processes play just as decisive a role as external influences, including customer expectations, regulation, competition, and the development of the industry. The customer themselves often plays a key role, whether in the B2B or B2C market. 

Reduction measures with the clear aim of realizing the climate transformation plan in scopes 1-3 on the basis of the company’s own ambition are central to carbon management. Although CAPEX is a significant part of this, considerable progress can also be made through efficiency gains, OPEX optimization, and other approaches. Functional strategies play a crucial role, particularly in the extensive scope 3. Procurement, for example, faces the challenge of reducing emissions as a “gatekeeper” with limited influence, even if the majority of emissions are in the “upstream area” of the supply chain and are therefore purchased from suppliers. As the transformation of the industry progresses, the demand for sustainable materials will increase and with it the supply from suppliers. However, actually reducing emissions is still a major challenge for companies. Supplier management should therefore lay the foundations today. 

In scope 1 and 2, the focus lies on infrastructure and vehicle fleets. Although a rapid transformation is possible here, it is costly: Consistent planning and the inclusion of CAPEX in budgets is important. Funding opportunities should not be overlooked. 

It is essential to prioritize and analyze measures. The value proposition of a measure must be assessed and dependencies analyzed in order to ensure effective and sustainable implementation.

Our studies have shown that customer requirements come before regulatory requirements as the starting point for sustainability efforts. Nevertheless, the CSRD is a key driver for efforts within in carbon management. The various data points, especially within the European Sustainability Reporting Standards (ESRS) E1, set clear requirements for companies with regard to their entire value chain.  Particular attention is paid to the scope 1-3 GHG balance.  

From an internal viewpoint, the recording of greenhouse gas emissions should be integrated into performance management at both top management and operational level. Integrated reporting is crucial here so that emissions can be placed on the same level as costs and quality, for example. Driver trees help to create an understanding of unclear developments in scope 1-3 emissions. The progress of the implementation of measures and the associated achievement of targets must also be monitored at company level as a whole, but also in detail according to the scope and detailed category.

The green transformation faces a key challenge: It is expensive. The true success of carbon management only becomes apparent when decisions that have a negative impact on the environment or the greenhouse gas balance are avoided. This means that sustainable alternatives must be given preference, even if they are presumed to be more expensive. The solution to this dilemma lies in the complete integration of emissions into the management models of companies along all dimensions. Greenhouse gas aspects must be integrated into all existing management tools, including along the planning cycle or in the various end-to-end processes. The introduction of an internal CO2 price can be helpful here, for example to steer investment decisions towards sustainability. 

Another facet of management efforts within carbon management is compensation and incentivization. From top management to operational level, incentives should be integrated into target agreements according to emissions intensity, reduction targets, or other relevant dimensions. These can include, for example, quotas for sustainable materials in Procurement or minimum turnover with sustainable products in Sales. 

The final challenge of carbon management is long-term integration into software solutions. The market is currently very heterogeneous and continues to develop rapidly. In the long term, it makes sense to rely on a platform that enables integrated carbon management. Ideally, this should be integrated into existing platforms such as BI systems or data warehouses and also fit in with the other ESG dimensions. External reporting often places the most urgent demands on the system solution, but internal management should not be ignored on the system side either. Building on existing solutions as a first step and understanding the integration of the system landscape as a long-term journey has proven worthwhile