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Automotive Industry Embraces Sustainability: ERP Systems as the Guide to Carbon Tracking

Reading Time: 4 Minutes 07.02.2024 Currents & Trends

ERP systems as a guide to Carbon Tracking in the automotive industry

The key to carbon tracking, a competitive advantage and a pioneer for a sustainable future: ERP systems are currently revolutionizing the automotive industry. They are helping companies to proactively meet the challenges posed by changes in legislation and market conditions. Automotive suppliers in particular are using ERP systems to reduce their carbon footprint and put their ambitions for a green future into practice Read for yourself.

Automotive suppliers are faced with the significant challenge of measuring and reducing their energy consumption, not only for cost reasons but also due to their market position and regulatory requirements. The current Global Risks Report published by the World Economic Forum has identified inadequate climate protection measures as the greatest global risk for the next ten years.

In response, the European Union has introduced a binding emission reduction target to be reached by 2030, known as the "Green Deal". It imposes additional obligations on the automotive industry. Companies like BMW and Volkswagen have already set their own climate goals, including achieving full carbon neutrality. These efforts will help them enhance their image and establish themselves as companies that are committed to ecological responsibility. By proactively following this path, suppliers set themselves apart from competition. 

Carbon footprint: corporate and product carbon tracking

Suppliers must complete comprehensive energy management questionnaires to qualify for commissioning. Companies that can already present a verifiable carbon footprint enjoy a significant competitive advantage in this respect. In some instances, companies that have not yet implemented carbon tracking are automatically disqualified from commissioning.

The systematic evaluation of greenhouse gas emissions, also known as "carbon footprint," distinguishes between corporate and product carbon tracking. The Corporate Carbon Footprint (CCF) accounts for all emissions generated throughout the supplier's value chain. This includes not only carbon dioxide but also other climate-altering gases. In Germany, the ISO standard 14064-1 serves as the benchmark for this process. Emissions are categorized into different Scopes.

In each carbon assessment, companies must specify which pollutants are generated within the scope of their own operations, including indirect energy-related emissions. Often, upstream and downstream emissions are also assessed, as a significant amount of pollutants can arise outside of direct production processes.

The Product Carbon Footprint (PCF) refers to the life cycle of a product and its entire value chain. The comprehensive assessment of these emissions poses significant challenges for the supplier industry, as they include:

  • the extraction, manufacturing, and transportation of raw materials and intermediate products,
  • the entire production process,
  • and the distribution, use, and disposal of the product.
The basis for assessing the Product Carbon Footprint (PCF) is the functional unit. It refers to the product's utility and ensures that only production systems with identical utility are compared. In addition, it is crucial to clearly define the product life phases and system boundaries.

Carbon data from the ERP system

Corporate and product carbon tracking is quite laborious and time-consuming. Professional sustainability management helps to comprehensively record, manage and document energy consumption and the carbon footprint throughout the company. To support companies in meeting sustainability regulations and market demands, ERP provider proALPHA, a partner of the mid-market manufacturing industry, has tailored its ERP+ portfolio accordingly. 

By integrating energy management solutions, the ERP system serves as a data hub for monitoring and controlling all energy flows ‒ in the case of proALPHA, this is accomplished by the group company and energy management expert ENIT. The ERP system transparently presents consumptions and emissions. 

As the single source of truth, an ERP system that is supplemented with energy management and carbon tracking components creates the basis for suppliers to becoming carbon neutral. It contains all relevant data for the corporate carbon footprint and the product carbon footprint, provided that they are collected. In addition, it enables the development of reduction strategies, the implementation of corresponding measures, and the monitoring of emissions trends.

Catching up on reduction goals

The automotive industry is facing the urgent task of significantly increasing its ambitions regarding climate targets and emission reductions to ensure its own sustainability. While the current focus on carbon footprints and related measures may still be motivated by competition, they will soon become standard requirements. 

Short-term saving goals will only serve as interim milestones on the path to the net zero point, which is used to prove that a company no longer emits pollutants. According to the German government's climate protection plan, greenhouse gas neutrality is to be achieved by 2050. 

Therefore, it is expected that pressure on companies to reach the net zero point will further increase through legal requirements in the coming years. Energy consumption and emissions must therefore become an integral part of business processes. These aspects will continue to gain relevance as accelerating industry decarbonization becomes necessary to ensure a sustainable environment for future generations.

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