SABIC, Cicularise team up on carbon footprint project

Chemicals company SABIC has launched a pilot study with blockchain specialist Circularise that will aim to trace the carbon footprint of raw materials as they move through the supply chain.

The project aims to solve a big challenge facing companies as they try to meet pledges to reduce their carbon emissions and corporate reporting standards on environmental, social, and corporate governance (ESG).

Calculating Scope 1 and Scope 2 emissions – i.e. company-owned and controlled resources and indirect emissions from energy generation – can often be reasonably straightforward for organisations, but getting a handle on indirect emissions that arise across the supply chain (Scope 3) is a big challenge.

SABIC and Circularise are hoping to demonstrate that their pilot will capture Scope 1 and 2 data from all partners – from original producer through to recyclers and converters – allowing the Scope 3 emissions for the whole supply chain to be calculated, with the blockchain technology ensuring that the process is transparent and accountable.

At the heart of the project is the use of blockchain-powered digital product passports to help businesses to track product emissions on a large scale and over time.

"Accurately mapping emissions, especially Scope 3 emissions, will allow SABIC and others to identify and minimise hot spots along the value chain, a critical tool in our pathways to decarbonisation," said SABIC's head of polymers technology and innovation Waleed Al-Shalfan.

"We encourage other upstream and downstream partners to join and consider how this technology can unlock sustainable growth at every level moving forward," he added.

Last year, the International Sustainability Standards Board (ISSB) – part of the International Financial Reporting Standards (IFRS) body – said that reporting on Scope 3 greenhouse gas emissions will be included as part of new company disclosure standards.

The decision was a milestone in climate and sustainability-related reporting standards for companies, as investors and other stakeholders increasingly demand information on their management of climate risks.