1thyssenkrupp - Value Chain Sustainability

thyssenkruppSupporting sustainable business decisions through measuring and making sense of complex global value chain data

thyssenkrupp is a large multinational industrial group employing nearly 155,000 staff across 80 countries, with sales of €43 billion in 2015. The business provides components and systems for a number of sectors, including the automotive industry, elevators, material trading and industrial engineering. It is also one of the largest steel producers globally.

A key part of thyssenkrupp’s strategy is to work with its customers around the world and provide them with innovative solutions that help them to secure sustainable success, taking into account environmental, economic and social considerations. To support this goal thyssenkrupp recognised the importance of mapping out the broad value chain emissions associated with its products and business operations across different regions, to improve decision-making.

We worked with thyssenkrupp to create a value chain footprinting tool to evaluate the upstream and downstream impact of the business globally, providing a better understanding of how the company’s product innovations and technical expertise can be used to achieve reductions beyond their direct operational control.

Finding the value in the value chain

Many organisations already measure the direct greenhouse gas emissions associated with their business operations (scope 1) and purchased electricity, heat or steam (scope 2). This process can highlight obvious areas of inefficiency and opportunities for direct cost savings.

But there are a number of additional indirect benefits that can be gained from going beyond this and measuring full value chain (scope 3) emissions. For most businesses this is where the greatest emissions and cost reduction opportunities exist, although it can be more challenging to take advantage of them.

Measuring value chain greenhouse gas emissions can help a business to:

• Understand emissions hotspots in the supply chain, company operations, and use of products

• Identify opportunities for energy efficiency and cost reduction, or highlight areas of resource risk

• Benchmark the sustainability performance of suppliers and target engagement

• Reduce downstream impacts of products, for example through improving energy efficiency

• Demonstrate to customers the full lifetime savings achievable from using more efficient products

• Engage with employees to reduce emissions from business travel and commuting

2thyssenkrupp - Value Chain Sustainability

The Business Need

thyssenkrupp is made up of six large business areas: Steel Europe; Steel Americas; Materials Services; Elevator Technology; Industrial Solutions; and Components Technology. So a major challenge in measuring the company’s value chain emissions is the sheer size and complexity of the organisation, with a huge diversity of applications for its products across many different regions of the world.

The sustainability team at thyssenkrupp wanted to ensure that each individual business area would be able to understand its own value chain emissions, so that they could then work more closely with partners across the value chain, redesign products to make them more sustainable, or find innovative ways to deliver ongoing reductions.

However, measuring all downstream emissions is a mammoth task. Many of thyssenkrupp’s products are raw materials and components, used as intermediate products by customers and passing through many supply chain tiers before reaching the end consumer. The company also designs and oversees the construction of manufacturing plants used by customer companies to manufacture products and materials themselves.

The sustainability team needed a way to collect and bring together huge amounts of data to complete a value chain analysis at a sufficiently granular level of detail to properly inform decision-making, but without adding the burden of unnecessary data collection onto business areas.

thyssenkrupp’s sustainability team already had excellent carbon footprinting data for their own operations, as well as several life cycle assessments had been conducted on their products. This meant that they felt ready to take on the challenge of developing a model to assess all life cycle value chain emissions related to the business. But to get it right they wanted detailed guidance and support from experienced international footprinting experts at the Carbon Trust, to make sure that their approach was appropriate, robust and effective.

3thyssenkrupp - Value Chain Sustainability

Our Solution

The Carbon Trust helped thyssenkrupp’s team to develop a scope 3 footprinting tool that analyses data to support a range of different business decisions. Another key task was modelling the lifetime emissions of product applications with a distinct level of uncertainty. This support was delivered in a variety of ways, including through development workshops hosted at the company’s global headquarters in Essen, Germany and through webinars. thyssenkrupp’s progress on the footprinting model and the broader data collection exercise was then regularly reviewed and detailed feedback provided throughout the process.

The project revealed a number of important insights on areas to target for improvement especially related to the final application of products and the related lifetime.

The footprinting tool that was developed was able to visualise data that thyssenkrupp collected, enabling it to be analysed and presented in an efficient manner. Heat maps were created to identify emissions, linking them to regional operations across the globe. The tool also allowed for analysis of emissions across different dimensions, such as individual products, whole product categories and entire business areas. Thus the tool represents a sophisticated tool with strong focus on management and analysis rather than reporting purposes.

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Positive Outcomes

Undertaking a value chain footprinting exercise indicated the significant impact of downstream emissions and highlighted key areas to address. thyssenkrupp is now working to further quantify how product innovations and the company’s technical expertise can be used to help customers gain advantage by increasing their energy and resource efficiency, which will in turn result in emissions reductions.

The value chain data and footprint model is also being used by thyssenkrupp to evaluate and improve the company’s strategy to reduce the impact of particular products, regions or business areas. This allows the sustainability team to identify and target those parts of the business which may need additional support to meet their ambitious goals.

Finally, the work on value chain emissions is helping thyssenkrupp take a leadership position on climate change issues. The company is now better able to play a critical role to provide the sustainable products and materials that will be needed in the transition to a low carbon economy, that are increasingly being demanded by governments, cities, corporates and investors.

To find out more about how the Carbon Trust can help your business to make the most of understanding your sustainability risks and opportunities email businessadvice@carbontrust.com or call +44 (0)20 7170 7000.

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thyssenkrupp - Value Chain Sustainability