Production: Decarbonization as a Business Opportunity

Production: Decarbonization as a business opportunity

Customized roadmaps lead to climate strategies that pay off – for the environment and for the company.

The will is there: Nearly all of Germany’s largest publicly-listed companies (90 percent) already transparently disclose their direct and indirect greenhouse gas emissions. More than 66 percent have set themselves the long-term goal of reducing Scope 1 and Scope 2 emissions. And a good third is even planning to reduce greenhouse gases occurring indirectly in the organizations’ upstream and downstream value chains (Scope 3). This was the finding of the 2024 decarbonization study, for which auditor KPMG analyzed the sustainability reports of the 160 largest companies listed on the DAX, MDAX and SDAX exchanges.

However, the study also revealed that more than half of the companies surveyed (57 percent) are lagging behind their own targets. 63 percent are currently unwilling to predict when they will become climate-neutral or emission-free. Willpower alone is not enough – the path to net zero must also be clear.

A scientific navigational aid for climate targets

In the KliMaWirtschaft project in 2024, the Berlin-based Fraunhofer Institute for Production Systems and Design Technology IPK supported small and medium-sized companies in measurably reducing their CO₂ emissions through holistic climate protection management. “More than 300 small and medium-sized companies have participated in the three-year project and explored climate management solutions,” reports Felix Budde, research scientist in the Corporate Management division at Fraunhofer IPK and expert in sustainable business and sustainability management. One of the results of the project is a toolbox (www.klimaschutz-wirtschaft.de/klimaschutztoolbox) that is now freely accessible online and contains more than 90 individual measures to help SMEs develop the right solutions for their own climate strategies.

But we can also take it up a notch. This has been demonstrated by Fraunhofer researcher Felix Budde in a new project: In collaboration with the Fraunhofer Institute for Manufacturing Engineering and Automation IPA and the Fraunhofer Institute for Surface Engineering and Thin Films IST, he advised an international electrical appliance manufacturer in developing a decarbonization strategy for its entire value chain. “At the start of the project, this large industrial company had already identified and implemented a number of individual measures, such as introducing a product class with higher energy-efficiency and using more sustainable materials,” explains Budde. “However, they lacked an overall strategy based on practical and reliable data.” This situation is currently a reality in many companies.

Emissions Reduction: Fraunhofer as a Pioneer

What is so special about a consortium of three Fraunhofer institutes charting a company’s path to decarbonization? “It’s probably our scientific approach, which is very strategic and analytical,” says Budde. In the project, the researchers not only identified suitable measures but also calculated the costs of avoiding emissions: How will the use of a technology with lower CO₂ emissions affect the bottom line? The individual measures that were already in progress contributed significantly to the complexity of the project, according to Michael Rentschler, research scientist in the Sustainability Modeling and Analytics research team at Fraunhofer IPA. “In the validation phase, we not only had to check the data that had already been collected for compliance with standards, we also had to evaluate the effectiveness and efficiency of the measures that had already been implemented.” The costs were then presented in marginal abatement cost curves (MACCs) and compared with each other: Where does not only the environment benefit from reduced greenhouse gas emissions, but also the company financially?

The researchers advised that the company starts with those measures promising the greatest efficiency. This specifically involved potential materials savings, as eliminating metals or plastics that do not have to be produced in the first place is especially effective in reducing emissions and costs. However, material substitution also plays an important role, such as the use of low-emission steel or secondary aluminum. The Fraunhofer team also presented alternatives with a lower greenhouse effect for the coolants previously used in the electrical appliances manufactured. This highlighted another benefit of using Fraunhofer as a scientific partner for decarbonization, emphasizes Michael Rentschler. “The 75 Fraunhofer institutes have experts for almost every technical question and every industrial process – and we are right there where innovation is taking place in areas such as materials.”

Decarbonization Pays Off: Capitalizing on Competitive Advantages

The question of transport was also raised: How do the raw materials get to manufacturing and how does the end product get to the customer? “We worked together to identify points in the supply chain where solutions like air freight could be replaced by ships, as well as those points where this would not make sense because the customer might then have to wait too long for the goods,” explains Rentschler. The catalog of measures even included recommendations for more generous work from home arrangements in order to manage emissions from commuter traffic.

The Fraunhofer researchers are already working on their next consulting project, developing a decarbonization strategy for the Brazilian steel and cement industry. Their hope is that the approach of viewing climate management as a business case and climate protection measures as an economic option will prevail in the long term. Because: “Decarbonization offers real opportunities for SMEs and large corporations alike, not only for reducing costs but also for reaching new markets and customers,” emphasizes Rentschler. Felix Budde adds: “We want to help companies discover these opportunities for themselves – always accounting for economic feasibility and operational reality.”

Comprehensive Climate Management