Strategic Insights into Product Carbon Footprint (PCF)

The role and definition of Product Carbon Footprint

A Product Carbon Footprint (PCF) is a focused methodology used to quantify the total greenhouse gas (GHG) emissions associated with a specific product. This usually follows a “Cradle-to-Gate” approach (extraction to factory exit), but this may vary by use case (e.g., cradle-to-customer-gate, cradle-to-grave). It is increasingly becoming a prerequisite for doing business in the European market.

A Life Cycle Assessment (LCA), on the other hand, is a systemic approach which supports the integration of sustainability into design, innovation and evaluation of products and services and related policies in the EU and internationally. It follows a “Cradle-to-Grave” approach (including use & disposal).

Different stakeholders leverage PCF in the market in distinct ways. Suppliers use PCF defensively to avoid being de-risked by major buyers, and offensively to win tenders by demonstrating that they are the low-carbon options. Manufacturers use upstream PCFs to procure lower-carbon inputs and inform product design; and develop PCFs to provide to brands that require them. Brands use upstream PCFs to reduce Scope 3.1 emissions (often a major concentration) via smarter procurement; and use cradle-to-gate PCFs for credible product/consumer communications.

Technological evolution

Adopting PCF measurement has historically been a challenge because of manual data collection and static results that were outdated upon arrival. Indeed, supply chains are complex, products can be composed of hundreds of components and those can come from multiple suppliers. This implies that manual PCFs can take months to complete and are difficult to connect to the corporate carbon footprint. Additionally, less than 5% of supplier interactions contain actual PCF data and companies record less than 30% responsive rates from survey suppliers for PCFs.

Technology is now bridging the gap, in creating a digital twin of your products. Platforms like Watershed allow companies to build “production models” (i.e., the framework or methodology used in manufacturing and production processes to transform inputs into finished goods or services) once, by injecting primary data into a constant framework. This enables an 80-90% reduction in collection time compared to traditional methods.

Key benefits include:

• Velocity and efficiency: Measurement speed is controlled by the buyer, not the supplier’s reporting cycle. Technology can reduce data collection and calculation time to up to 2 minutes.
• Scenario simulation: Technology enables scenario simulation, allowing rapid comparison of material adaptations and their impacts.
• Comparability: Results are consistent year-over-year and from supplier-to-supplier.

Why would organizations adopt PCF now?

Organizations are moving beyond compliance to leverage PCF measurement for commercial advantage, through securing market access, meeting regulatory compliance, capturing operational value, and driving innovation.

In procurement, PCFs are becoming essential in securing market access: the NHS will require suppliers to provide PCFs by 2028, and Green Public Procurement (GPP) mandates PCF thresholds. In the B2B context, PCF data is becoming a supplier qualification requirement. Without PCFs, companies often can’t credibly quantify and claim credit for supply-chain actions in their carbon footprinting.

PCFs are also a regulatory necessity as regulatory pressures are intensifying. The Digital Product Passport mandates PCFs for batteries, with requirements phasing in during 2026-2027. Other key sectors are likely to follow, as provided under the Eco-design requirements for sustainable products (ESPR) delegated acts. The EU’s Carbon Border Adjustment Mechanism (CBAM) requires EU importers to report actual embedded emissions through PCFs to avoid costly “default value” penalties. Construction regulations (CPR 2024/3110) mandates environmental disclosures by 2028, with carbon backstops for certain sectors, such as cement, by 2029.

Beyond compliance, PCFs offer operational value and foster innovation. Several manufacturing and chemical companies leverage PCF data to secure lower-carbon supply chains. Tech companies already managed to significantly cut emission by using component carbon data. Subsequently, companies across several sectors embed PCF in supplier assessments, enabling them to reduce GHG emissions.

In summary, organisations are leveraging PCFs not only to meet regulatory demands but also to unlock commercial benefits, improve operational efficiency, and drive sustainability innovation.

PCF as a competitive requirement: partner with Deloitte and Watershed

Carbon data has transitioned from a transparency exercise to a business requirement. Reach out to us today to adopt dynamic, technology-driven PCF measurement. This approach will not only help you to achieve regulatory compliance but also secure a strategic advantage in procurement, optimise manufacturing costs, and future-proof your “right to supply” in a rapidly decarbonising global economy.