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Carbon Labelling

Worldwide there is an increased awareness of the need to make lifestyle changes to sustain our environment. With increasing environmental concerns and the state of the world, businesses are being asked to commit to measuring and reducing carbon emissions.

Labelling, or marking of products based on various parameters have been a standard approach to pin down accountability in terms of product content, raw material usage in a product, as health indicators and also to mark energy efficiency. However, environmental concerns have pushed the boundary to businesses being asked for green accounting, in other words accounting for the effect their activities have on the climate, both direct as well as indirect.

'Carbon Labelling' or putting a figure to the amount of CO2 emissions that a product or process emanates is being used by organisations worldwide as a measure of an organisation's emissions management efficiency.  Every aspect that influences a product's life is being accounted for - raw materials, every stage of production activity, distribution and disposal are being precisely measured through the entire life cycle of a product before it is delivered to the end-user.

The debate is on to fix standards across the world as divergent methodologies have evolved over the years to compute emissions. Difficulties have cropped up on how to measure disparate elements, spread across diverse geographies. The complexities involved in measuring, monitoring and collating all the data elements precisely proves to be a back-breaking exercise.

Despite the ambiguities and current difference in approaches, the world is increasingly getting united on the need to regulate emissions. Organisations across the world have voluntarily come forward to commit themselves to measurement and reduction strategies with an increase in awareness of the need to make lifestyle changes to sustain our environment. Governments and private initiatives are deliberating not on the need but on the best approach to calculate and capture carbon data. Most of these efforts revolve around devising methods and agreeing to a common approach to carbon footprint all products and services. Research and application has shown definite benefits in terms of increasing operational efficiency and cost reductions that organisations can achieve over and above emissions reduction.

There is a looming energy crisis worldwide. There is now a significant risk of an 'energy gap', where the supply of energy is no longer sufficient to cope with the levels of demand. Energy outages are becoming a more common occurrence across the world.  In order to tackle the gap, the way we look at energy management has to change. A re-look at existing practices across the product lifecycle becomes imperative. Some of the important areas that could significantly enhance the efficiencies are by revisiting the way the 'Supply Chains' and 'Service delivery and logistics' are handled.

Consumer awareness is accelerating quickly - investors are starting to increase pressure on corporates to take action. Organisations are being put under the scanner and are being asked for environmental accountability in an appeal to their responsibilities as corporate social citizens. Businesses thus have to respond to:

§  Government regulation

§  Business risk mitigation

§  Consumer and market pressure

Emission measurement is based on a Life Cycle Assessment (LCA) of a product. Multi-layered life cycle analysis considers all of the inputs and outputs throughout the procurement, manufacturing, distribution, disposal and recycling phases of a product.

By using the LCA method, an organisation can estimate the carbon emissions at each stage of a product's life cycle, and then target the stages at which large amounts of emissions are happening across the Supply chain. By devising reduction measures tailored for each stage, reductions can be efficiently achieved. Re-aligning processes and supply chain strategies to weed out energy gobbling inputs into the system can result in both cost savings and improving operational efficiencies. Besides improving the organisation's bottom line, operational and management staff can devise appropriate methodologies to switch to alternative sources that can help them gain new revenue opportunities from new low-carbon products and services. Accurate measurement, reporting and reduction strategies also help organisations improve their corporate social responsibility position. These differentiators cumulatively add up to help the organisation stand-out from the competition and also to have increased acceptability in the end-user markets.

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