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Navigating the path to a sustainable future

Decarbonization, Digital Passports, and the road to Net Zero

In his latest blog post, inriver CEO Niels Stenfeldt looks forward to the World Economic Forum 2024 and shares his thoughts on the need for clear and concise action on the climate crisis.

As the World Economic Forum (WEF) 2024 approaches next week, the global conversation on “Rebuilding Trust” takes center stage, acknowledging the complex geopolitical landscape. With the summit’s thematic focus on climate change and technology governance, my expectations are that global leaders will be addressing the critical question: How can we ensure that this year’s discussions lead to tangible progress in addressing the climate crisis, surpassing the achievements of previous years? We cannot wait to take action. In the 2024 WEF Global Risk Report, the category of environmental risks such as extreme weather events or natural resource shortages accounts for the four highest-impact risks over the next 10 years. 

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The decarbonization imperative: A call for bold action 

In the quest for a sustainable future, I anticipate a concerted effort at WEF 2024 to address the pressing need for decarbonization. According to McKinsey surveys, approximately 32% of global emissions stem from the industrial and manufacturing sectors, making it a pivotal battleground in the fight against climate change. Embracing the Pareto principle, which encourages addressing the most significant challenges first, the focus on decarbonizing manufacturing aligns with this strategic approach. 

The role of Digital Product Passports (DPPs) in reshaping industries 

To achieve a successful net-zero transition, we must recognize that emission reduction alone is insufficient. Businesses must grapple with the interconnected demands of affordability, reliability, and industrial competitiveness. The concern here lies in assigning the right individuals to solve these challenges. Like how Europe smartly allowed consumers to opt out of data sharing through GDPR, our approach to addressing environmental concerns should extend beyond just operational teams. 

Enter Digital Product Passports (DPP). As we evolve toward a more sustainable future, it is crucial not to place the burden solely on production teams, but to involve the entire business. In a nutshell, DPP associates digital product information with the physical product, empowering consumers to make informed decisions about the environmental impact of their purchases. This not only aligns with the principles of transparency but also fuels industrial competitiveness. 

Learning from GDPR and ESG: Avoiding the pitfalls 

The adoption of GDPR was a groundbreaking move, giving consumers control over their personal data. However, the execution turned into a bureaucratic challenge, as lawyers were tasked with its implementation through convoluted cookie acceptance policies and Data Processing Agreements that often lacked practical value. The same fate seems to befall ESG reporting, delegated to finance or compliance departments with reports that few stakeholders truly engage with. 

These instances highlight the critical lesson: We cannot afford to ask the wrong people to solve the right problems. As we embark on implementing Digital Product Passports, we need a different approach. DPP is not just about production; it’s about the entire business. It’s about enabling consumers to make informed decisions based on the environmental impact of their purchases. 

The steel industry: A crucible for change 

Consider the steel industry, a major contributor to global carbon emissions. In 2018, every ton of steel produced emitted an average of 1.85 tons of carbon dioxide, constituting 8% of global CO2 emissions. Beyond the requirements of the Paris Agreement, changing customer preferences, stricter emission regulations, and heightened investor scrutiny are propelling the steel industry toward a decarbonization challenge. 

Affordability, reliability, and competitiveness must accompany emission reductions. Achieving this balance necessitates a significant investment in low-emission technologies. Several research publications underscore the need for societal commitment, as current policy frameworks may not render many low-emission technologies cost-competitive by 2023.  

Navigating the complexities of the transition 

The transition to a sustainable future involves not only substantial spending on low-emission technologies but also a commitment to societal changes. Challenges include making the power system three times larger, electrifying various energy-consuming sectors, and ensuring the affordability of materials and energy products. 

Amidst these challenges, the progress in at COP28 UAE and initiatives like Neom in Saudi Arabia in building smart, sustainable cities serve as a beacon of optimism. With the right mindset and collaborative effort, global stakeholders can create enduring value. Recognizing that a poorly executed transition to these more sustainable models could compromise economic empowerment, supply chain resilience, and global competitiveness is crucial. 

The call to action: Embracing Digital Product Passports

In the face of these challenges, my call to all manufacturing industry delegates at the World Economic Forum annual meeting next week is to stand united and adopt Digital Product Passports. The natural inflection point for these passports lies in Product Information Management, where legacy architectures, often structured for static product information, need a paradigm shift. DPP requires businesses to cater not only to the moment a product is created but also to track its journey and monitor attributes like CO2 emissions throughout its lifecycle, especially for imported items like batteries or steel. Neglecting downstream scenarios and focusing solely on upstream traceability risks losing the holistic perspective that DPP brings. 

By making smart, sustainable business decisions and embracing a genuine belief in our collective ability to rebuild trust, we can drive lasting improvements. The adoption of DPP is not just a technological upgrade; it is a strategic move to empower consumers, enhance transparency, and foster global competitiveness. 

As we prepare for the WEF, let us approach these challenges with an unwavering commitment to a sustainable and prosperous future. Recognizing the pivotal role of DPP in reshaping how we manage and communicate product information, we have an opportunity to lead the way in transformative business practices that benefit the industry, consumers, and the planet. 

Together, we can rebuild trust and pave the way to lasting improvements for future generations. 

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