Product Carbon Footprinting: Strategic Importance, Challenges and Solutions for Companies

What is the PCF and why is it relevant?

Climate change and the associated regulatory, economic, and societal developments are placing enormous pressure on companies worldwide. While in the past the Corporate Carbon Footprint (CCF) – the total climate impact of a company – was often the primary focus, attention is now shifting toward the impact of individual products: the Product Carbon Footprint (PCF).

The PCF measures the greenhouse gas emissions a product causes over its entire life cycle – from raw material extraction, through production and use, to disposal. It provides a more precise picture of climate impacts and, for many companies, is the key to meeting regulatory requirements, securing market access, and maintaining long-term competitiveness.

This article explains why PCF is becoming increasingly important for companies – especially in the manufacturing industry – what challenges exist, and how digital solutions, particularly the new PCF module in the EQS Sustainability Cockpit, can help companies manage this complex task efficiently and effectively.

Why Product Carbon Footprinting is Becoming More Important

1. Regulatory requirements

The European Union has set ambitious climate targets through the Green Deal and complementary measures. Instruments such as the Corporate Sustainability Reporting Directive (CSRD) make clear that companies will not only need to report aggregated emissions but also provide transparency at the product level.

2. Market pressure from OEMs

Pressure is particularly strong in the manufacturing industry. Large OEMs (Original Equipment Manufacturers) have set ambitious climate goals – such as net zero by 2040 or 2050 – and are now passing these obligations on to their suppliers.

For suppliers this means: they must provide product-level emissions data in order to remain part of supply chains. Without transparent and reliable PCF data, they risk being excluded from tenders or replaced by competitors. Sustainability has thus become a prerequisite for market access.

3. Competitive advantages

Companies that establish a robust PCF strategy early on gain clear advantages. They can credibly position their products as climate-friendly, win tenders, and strengthen their brand reputation. PCF is becoming a central differentiation factor in global competition.

4. Expectations of investors and banks

Capital providers are increasingly factoring climate risks into investment decisions. A transparent Product Carbon Footprint sends a strong signal to investors and banks who want to understand not only a company’s overall emissions but also how product-related emissions are being managed.

The Challenges of Product Carbon Footprinting

Data availability

The biggest hurdle is the availability of relevant data. PCF requires information from nearly all business units – from procurement and production to logistics and sales – and from external suppliers. For companies with complex global supply chains, this is a major challenge.

Methodological complexity

PCF calculation is methodologically demanding. Defining system boundaries is critical: Should the footprint include only processes up to the factory gate (“Cradle-to-Gate”), the entire life cycle (“Cradle-to-Grave”), or even recycling and reuse (“Cradle-to-Cradle”)?

Selecting appropriate emission factors adds another layer of complexity. These vary by industry, region, and material, and must be accurately matched to the activity data collected.

Comparability

Despite international frameworks such as the GHG Protocol Product Standard or ISO 14067, practical application still differs. This makes benchmarking across companies and industries difficult. Without harmonization, results may not be comparable or reliable.

Integration into management

PCF is often treated as a one-off project. To be truly effective, however, it must be integrated into core business processes – from product development and procurement to pricing and sustainability reporting. Only then can climate targets be consistently linked to product-level decisions.

How Companies Can Successfully Implement PCF

Step-by-step introduction

A staged approach makes sense. Companies can begin with pilot products to establish processes, identify data sources, and resolve methodological issues. From there, PCF can be gradually rolled out to other products.

Use of digital tools

Manual calculations quickly reach their limits given the number of products and data points. Digital solutions enable automated data capture, systematic assignment of emission factors, and consistent documentation. Interfaces with ERP systems or supplier portals further simplify data exchange.

Collaboration in the supply chain

A significant share of emissions arises in upstream value chains. Companies must therefore actively collaborate with their suppliers to obtain valid data. This requires training, common standards, and long-term partnerships.

Embedding in ESG strategies

PCF should not be treated in isolation. It should be embedded in broader ESG strategies, ensuring that climate targets, action plans, and sustainability reports are aligned and consistent.

EQS Support: The New PCF Module

To specifically support manufacturing companies in this complex task, EQS will soon launch a new PCF module in the Sustainability Cockpit.

The unique value lies in AI-powered data extraction and calculation:

• Companies can upload documents such as invoices, delivery notes, or production reports.
• The module uses artificial intelligence to extract the relevant information and automatically match it with the appropriate emission factors.
• This enables the rapid generation of reliable PCF results, consistently documented and audit-ready.

Additional benefits:

• Speed and efficiency: Complex calculations that previously took weeks can be carried out in significantly less time.
• Industry-specific tailoring: The module addresses the specific needs of manufacturing companies, where supply chains and production processes are particularly complex.
• Integration into ESG management: PCF data can be directly linked to climate targets, action plans, and reporting requirements (e.g., CSRD).
• Scalability: From a single pilot product to an entire portfolio, the module is designed to grow with a company’s requirements.

This transforms PCF from a time-consuming individual calculation into a strategic management tool that enhances efficiency, transparency, and competitiveness.

Conclusion

The Product Carbon Footprint is no longer a niche topic – it is becoming a central management and competitiveness factor for manufacturing companies in Germany and across Europe.

• Regulatory frameworks like CSRD make it mandatory.
• OEMs demand product-level emissions data from their suppliers.
• Investors and banks use it as a criterion for capital allocation and risk assessment.

With the new PCF module in the EQS Sustainability Cockpit, companies can not only meet these requirements but also leverage PCF as a driver of innovation and resilience. Thanks to AI-driven document processing and emission factor matching, calculations can be performed efficiently, consistently, and in a way that is ready for audit.

Companies that invest in robust PCF processes today secure not only compliance but also market access, competitiveness in supply chains, and the long-term viability of their business models.

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