A value chain analysis helps you determine where the most emissions in your chain occur and where the greatest reduction opportunities lie. This analysis is an important instrument within the CO₂ Performance Ladder for giving substance to ‘cross-scope’ thinking. In this blog we explain how, both within and beyond the boundaries of your own organisation, you investigate how you can really make an impact.
A value chain analysis is an inventory and analysis of the CO₂ emissions that occur in the value chain in which your organisation is active. The aim of such an analysis is to give you insight into the size and origin of these emissions and the options you have to limit them. This can be done, for example, by adjusting production processes, material and design choices, and by collaborating with partners in the value chain.
For Step 2 and 3 of the CO₂ Performance Ladder you are required to produce a value chain analysis. The value chain analysis is, to a large extent, decisive for other elements and requirements of the Ladder. The outcome of the analysis forms, for example, the basis for the choices you make in your Climate Transition Plan and the translation of these into the short term, the action plan.
If you are certified at Level 4 or 5 of version 3.1 of the CO₂ Performance Ladder, you will already have come across the term value chain analysis. The version 4.0 analysis differs from its predecessor on two important points:
To determine the most important activities you carry out an impact and influence analysis, following these three steps:
After determining the most important activities, you can start drawing up your value chain analysis. Again, you do this step by step.
Every year you review your value chain analysis to check whether it is still up to date. If changes have taken place, for example as regards the most important activities, you adjust your value chain analysis. At a recertification audit – which takes place every three years – you are required to update the value chain analysis.
Another aspect of the value chain analysis is external communication. This means that you publish your value chain analysis on your own and the CO2 Performance Ladder websites. The aim of this is that you are accountable, show that you are transparent, and that other organisations can learn from your value chain analysis.
Although we strive for maximum transparency, we do not expect you to share commercially sensitive information. If, on grounds of sensitivity, you leave something out, such as the name of a supplier, you must clearly indicate that you are omitting something. You may, where relevant, also indicate what type of company is involved.
“The value chain analysis of CO₂ Performance Ladder 4.0 maps even more broadly what the emissions are within scope 3 and beyond, and what influence your organisation has to reduce emissions together with your value chain partners.”
Tijmen de Groot, SKAO
For mapping the emissions of your value chain partners, you can use two methods: spend-based and activity-based.
With spend-based, you calculate the emissions by linking your expenditure per category to macro-economic key figures for CO₂ emissions. The advantage of this method is that it is relatively simple and aligns with your accounts. The disadvantage is that the method works with national average figures and is therefore imprecise. This makes the method suitable for a hotspot analysis, but not for setting targets, monitoring and comparing services or products within a category.
With activity-based, you look at the emissions per activity, such as the purchase of material or equipment. You multiply this activity by CO₂ information from an Environmental Product Declaration (EPD) or a life cycle assessment (LCA) from your supplier. Due to its high accuracy, this method is very well suited to comparing products and suppliers, setting concrete targets and monitoring. A limitation, however, is that in many sectors it is difficult to obtain EPD or LCA information.
The activity-based method is therefore the most accurate for a value chain analysis, but because of the limited data in many sectors it is still very complex. To make the step from spend-based to activity-based, you can use an intermediate method: company spend-based, in other words company-specific spend-based.
With company-specific spend-based, you divide the climate impact of your supplier by the turnover of your purchasing from this supplier. Instead of a macro-economic average, you therefore use company-specific information, but still spend-based. This method is especially suitable for an analysis of suppliers from which you purchase many different services and/or products.
Your value chain analysis does not have to be perfect straight away. Especially with many different suppliers, it will not be possible to make everything activity-based at once. The best way is to work, in a multi-year programme, from a hotspot analysis using spend-based, via company spend-based, towards activity-based. In doing so, you aim to begin with your most important suppliers and suppliers that already have a lot of information about their emissions available.
It can sometimes take a long time to get the required information from your suppliers out into the open. For example, because you are referred to various departments at a supplier, or because a company does not have its emission figures well mapped or does not make them available. It helps to sit down with companies, so that in the following years they may have the figures in order and make them public. You can also obtain figures from financial and environmental annual reports.
“It is important to work out carefully which part of your scope 3 emissions you make activity-based to begin with, and what you leave somewhat more general at the start. If you want to do everything in detail in one go, you will get completely stuck.”
Geert Bergsma, CE Delft
In the webinar below, Tijmen de Groot, project leader of CO₂ Performance Ladder 4.0, explains what a value chain analysis is and how you draw one up. In addition, Geert Bergsma of CE Delft explains how the spend-based and activity-based method, and a variant on these, can help you in mapping the emissions of your purchases.
In the video (with English subtitles), the speakers also answer questions from companies and organisations that attended the session. If you still have questions after watching the webinar session, please contact us.
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