Capgemini: Building Clean Energy Value Chains for Net Zero

Global value chains are facing considerable pressure to change due to a combination of climate change, geopolitical instability and the need for cost containment.

The industrial sector is a major contributor to this environmental challenge.

According to Capgemini, the sector is responsible for more than 35% of greenhouse gas emissions, with Scope 3 emissions accounting for 70% of this figure.

Capgemini’s 'Building Sustainable Value Chains' report states that without intervention, rising emissions could lead to a global temperature increase of 4.1–4.8°C by 2100, which far surpasses the 1.5–2°C target set by the Paris Agreement.

However, this push for sustainable transformation also offers a considerable opportunity for businesses to improve cost efficiency, resilience and long-term competitiveness.

The complexities of corporate decarbonisation

While sustainability is a priority for many corporations, executing a successful strategy remains a substantial challenge.

Half of all companies acknowledge they are not on schedule with their Scope 3 decarbonisation targets and 67% report having low confidence in their ability to create and implement mature roadmaps for change.

Several barriers contribute to this difficulty, including:

• difficulty in making a strong business case for long-term sustainability investments.
• complexity in tracking and accurately reporting carbon emissions.
• obstacles in decarbonising supply chains.
• limited scalability of low-carbon technologies.

The challenge is further complicated by variations between sectors. In industries such as cement, steel and mining, Scope 1 emissions are the primary concern.

In contrast, for sectors like chemicals, electronics and food, the main issue lies with Scope 3 emissions, necessitating deep collaboration with suppliers, manufacturers and consumer brands.

“Building a sustainable value chain is an iterative process,” explain Cyril Garcia, Group Executive Board Member and Head of Sustainability at Capgemini and Charlotte Pierron-Perlès, Global Head of Intelligent Industry at 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 redesign.”

The business case for sustainability

Despite these obstacles, there is strong evidence supporting the advantages of developing sustainable value chains.

Sustainable practices can directly improve cost efficiency by lowering energy consumption, reducing carbon taxes and optimising operational processes.

For instance, a packaging redesign guided by a life-cycle assessment cut a product's carbon footprint from 10 to three kgCO₂e while also reducing costs.

In another case, an automotive project successfully lowered Scope 1 emissions by 27% and Scope 2 emissions by 13% across 17 different sites.

Circular business models have also shown impressive results, with the water and automotive sectors demonstrating material savings of up to 50% and cost reductions of 70%.

Furthermore, the use of digital twins and AI models enabled one heavy industry client to decrease its kiln energy consumption by 15% and shorten development cycles by 70%.

A framework for successful transformation

Capgemini has outlined three core pillars that underpin a successful value chain transformation.

The first is sustainable product design, which involves integrating eco-friendly materials, energy efficiency and circularity from the initial design phase to lower costs, extend product life and enhance competitiveness.

The second pillar, sustainable manufacturing, focuses on moving to low-carbon energy sources, improving water and waste efficiency and adopting circular production models to reduce both emissions and operational expenses.

The final pillar, sustainable supply chains, involves responsible sourcing, logistics optimisation and ESG transparency to minimise reliance on vulnerable resources and bolster resilience against market volatility.

Data, digitalisation and AI are crucial in expediting this sustainable transformation.

These technologies facilitate predictive modelling, improved decision-making and traceability throughout the value chain.

For example, one manufacturer with 8,000 suppliers and 350,000 product references used an automated product carbon footprint system to develop a thorough decarbonisation roadmap. “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.