Capgemini: Manufacturers Must Cut Supply Chain Emissions

As global temperatures continue to rise, manufacturing sectors are increasingly under pressure to adapt to climate imperatives and geopolitical disruptions while maintaining cost efficiency.

The industrial sector contributes to over 35% of total greenhouse gas emissions, with Scope 3 emissions accounting for a substantial 70% of this impact, as highlighted by Capgemini.

In its report on Building Sustainable Value Chains, Capgemini forecasts a potential increase in global temperatures by 4.1–4.8°C by the year 2100 unless emissions are controlled.

Achieving the targets set by the Paris Agreement, which aims to limit temperature rise to 1.5–2°C, seems ever more crucial.

However, this evolving landscape presents an opportunity for manufacturers to achieve cost savings, enhance durability and secure a competitive advantage through sustainable transformation.

Complexities of decarbonising manufacturing chains

Despite sustainability becoming a strategic priority, many manufacturing businesses face hurdles in implementing effective decarbonisation strategies.

Approximately half of the companies surveyed acknowledge falling behind on Scope 3 emission reduction efforts, with 67% doubting their ability to craft comprehensive decarbonisation plans.

Several barriers contribute to these challenges, such as difficulties in formulating a business case for sustainability investments, the intricacy of accurately tracking and reporting emissions and the decarbonisation of supply chains, alongside the limited scalability of low-carbon technologies.

Different sectors encounter unique challenges. For instance, industries such as cement, steel and mining grapple more with Scope 1 emissions, whilst sectors like chemicals and electronics must tackle Scope 3 challenges, necessitating cooperation across the board with suppliers and retailers.

“Building a sustainable value chain is an iterative process,” says Cyril Garcia Group Executive Board Member and Head of Sustainability, Capgemini and Charlotte Pierron-Perlès Global Head of Intelligent Industry, Capgemini Invent in the report.

“It requires a balanced approach between short-term quick wins, such as energy efficiency and sustainable product design improvements and long-term action, such as strategising on the product portfolio, sustainable asset investment and supply chain re-design.”

Sustainability as a business imperative

The evidence supporting the transition to sustainable value chains is compelling.

Sustainable practices within manufacturing can notably reduce energy consumption, mitigate carbon taxation and streamline operations, all leading to improved financial performance.

Examples include redesigning packaging, which helped decrease the carbon footprint of products from 10 kgCO₂e to 3 kgCO₂e and also reduced costs.

An automotive initiative achieved notable CO₂ reductions, including 27% in Scope 1 and 13% in Scope 2, from multiple locations.

Similarly, adopters of circular business models in the water and automotive industries report material savings of up to 50% and cost reductions reaching 70%.

Additionally, the use of digital twins and AI has allowed a significant reduction in energy consumption in heavy industry projects.

Embedding sustainability into manufacturing operations can thus deliver tangible business advantages along with notable environmental benefits.

Framework for value chain overhaul

Capgemini outlines three core pillars essential for transforming value chains successfully:

• Sustainable Product Design: Incorporating eco-friendly materials and circularity from the initial design phase yields cost reductions, extends the lifespan of products and boosts competitive prowess.
• Sustainable Manufacturing: Shifting to low-carbon energy usage, enhancing water use and waste management and embracing circular production models to reduce emissions and operating costs.
• Sustainable Supply Chains: Implementing responsible sourcing, logistics optimisation and ESG transparency to lower dependency on sensitive resources and increase resilience against market fluctuations.

Complementing these efforts are enablers like the adoption of low-carbon technologies, enhanced product traceability and automated carbon assessment across extensive product ranges.

Digitalisation and AI in manufacturing sustainability

Digital technology and AI are integral to accelerating sustainable transformation in manufacturing.

These technologies aid in predictive analytics, enhance decision-making processes and ensure comprehensive traceability across supply chains.

In practice, an automated carbon footprint system enabled a manufacturer to comprehensively evaluate emissions across a vast network of 8,000 suppliers and 350,000 products, laying the groundwork for a robust decarbonisation plan.

“Digital transformation and AI are a formidable opportunity to get faster and improve decision-making throughout this transformation, as they help achieve better designs, more productive assets and more flexible supply chains,” say Cyril and Charlotte in the report. 

Harnessing these digital tools helps manufacturers navigate complexities and promote a collaborative ecosystem, transitioning from siloed approaches to an integrated management of sustainable value chains.

Ultimately, sustainable value chains extend beyond regulatory compliance, catalysing growth and positioning companies as leaders in resilient, future-focused industries.