The business landscape is rapidly evolving with companies racing to develop connected appliances and dispensers that cater to their consumers’ needs. While this trend is gaining momentum, it’s essential to be mindful of the sustainability aspect and scope 3 emissions associated with these devices. The stakes are high as regulatory bodies are increasing their scrutiny on environmentally harmful practices, and the obligation to adopt eco-design is looming on the horizon. In this dynamic environment, it’s imperative to strike a balance between meeting customer demands and minimizing the environmental impact of connected devices
The changing ecosystem of appliances
All across the industry, there’s a trend towards more connected appliances developed by FMCG companies. For instance the Perfect Draft Pro by AB Inbev, Henkel’s Somat Smart and Nestlé Professional’s Roastellier. These devices enable new channels for growth, differentiation and valuable user data, but they also have an environmental impact. The production of the devices, shipping, energy use and disposal only further increase the ecological impact of these companies. On the other hand, that same connected system can also help the user to save energy and reduce waste.
Scope 3 – what is it and why is it so relevant for appliances?
In order to decarbonize the production process, companies first need to measure and track CO2 emissions. The frameworks and standards of the GHG Protocol classify 3 scopes, which are considered a worldwide standard (> 90% of Fortune500 companies use it or a program based on it):
- Scope 1 emissions are direct emissions from owned or controlled sources.
- Scope 2 emissions are indirect emissions from the generation of purchased energy, like heating and electricity.
- Scope 3 emissions are all indirect emissions (not in scope 2) that occur in the value chain of the company, both upstream and downstream. These include outsourced logistics, air travel and the emissions of suppliers and customers, but also the energy that products use during their lifetime. Therefore, they are very relevant to appliances.
Comparison scope 1, 2 and 3 emissions – Source: GHG Protocol ©VERHAERT
The awareness and focus on Scope 3 emissions has grown in the past months and years. This is mainly because they are the biggest contributor to many companies’ CO2 emissions and hence represent a massive opportunity for improvement. Also for appliances, scope 3 emissions are the main factor to look at.
Share of scope 3 emissions to total emissions by sector – Data source: CDP ©VERHAERT
An increasing number of companies are reporting them and including them in their targets. In March 2022, the US Securities and Exchange Commission drafted a proposal to include them in future non-financial reporting requirements if they represent a ‘material risk’.
Regulatory pressure is mounting
New regulation is being drafted that will force products (and hence also these new appliances that were not yet in the scope of existing regulations) to become more sustainable. The Ecodesign for Sustainable Products Regulation (ESPR) proposal, for example, is a new European proposal that will most likely have a huge impact on how products will be designed, built, and used.
The ESPR is a proposal by the Commission that is part of the Sustainable Products Initiative (SPI) package to support the Circular Economy Action Plan and the Green Deal. It’s currently being pushed through the legislative process to be a framework for eco-design requirements and will be translated into regulation. Just think of how light bulbs, refrigerators and vacuum cleaners got detailed rules on how much energy they can use, that same path is now being prepared for more products.
The goal of the SPI is to “make sustainable products the norm in the EU”, by increasing their durability, reusability, repairability, recyclability and energy efficiency, hence reducing scope 3 emissions. Although the initial list of identified products for the first working plan includes textiles, furniture, mattresses, tires, detergents, paints and lubricants, in the end it will apply ‘to the broadest possible range of products’.
Sustainable opportunities and paradoxes
As a result of new regulations coming into play, it’s crucial for companies that are developing appliances to start taking action today to prepare for these changes. You need to understand upcoming regulations and their impact and assess current products and services. Through innovation and product improvements, you can then apply the eco-design and circular economy principles throughout the product lifecycle. Make sure to apply a Life Cycle Approach, including business model and function. As such, you’ll be able to build your capacity to innovate sustainably and deal with the inherent complexity.
Interested in reducing supply chain emissions? Make sure to watch our webinar on this topic.
