February 12, 2025 5 min to read

(ENG) ESG Survival Business WEEK 3

Written by ESG Team

Chapter3: The Final Destination of the Supply Chain: Carbon Neutrality

3-1

The environmental field allows for setting quantitative goals and easy measurement. However, it requires high costs, expertise, and can be burdensome for small and medium-sized enterprises (SMEs).

What is Carbon Neutrality?

It refers to the process of offsetting carbon dioxide emissions produced by individuals, companies, or organizations by absorbing an equivalent amount, resulting in net-zero emissions.

What is Net Zero?

Net Zero applies to all greenhouse gases, including carbon dioxide. It refers to a state where the sum of greenhouse gas emissions and removals equals zero over a given period.

MRV (Measurement, Reporting, Verification) Activities

MRV is a fundamental component for achieving carbon neutrality, allowing businesses to measure and reduce carbon emissions more systematically and conveniently.

Scope of Carbon Emissions

Corporate carbon emissions can be categorized into three main scopes:

• Scope 1: Direct greenhouse gas emissions from facilities owned or controlled by the company.
• Scope 2: Indirect emissions from purchased electricity, steam, heating, and cooling consumed by the company.
• Scope 3: Indirect emissions from supply chains and product consumption outside of the company’s ownership or control.

Since Scope 3 emissions are extremely difficult to control, global evaluation institutions such as “Initiatives” require companies to set specific reduction goals, aiming for net-zero emissions by 2050.

From Nature to Factories, From Consumers Back to Nature…

LCA (Life Cycle Assessment)

LCA quantitatively assesses the environmental impact of a product or service throughout its entire lifecycle, from raw material extraction to disposal.

Tracking the carbon footprint and summing all values is the core of the LCA approach.

Steps to Reduce the Carbon Footprint

Each phase—pre-manufacturing, manufacturing, usage, and disposal—must be carefully reviewed.

Pre-Manufacturing Stage

• Consider ESG (Environmental, Social, and Governance) management in raw material sourcing and transportation.

Manufacturing Stage

• The most significant stage for reducing the carbon footprint.
• Companies should adopt eco-friendly manufacturing methods and materials to reduce emissions.

Usage & Disposal Stage

• Manufacturers must explore ways for consumers to reduce carbon emissions during product use.
• Both companies and consumers should aim for carbon neutrality when disposing of products.

While electric and hydrogen vehicles are more eco-friendly than internal combustion engine (ICE) vehicles during the usage stage, battery disposal generates significantly higher carbon emissions. Thus, the right choice must be carefully considered.

Build a Circular Economy to Enhance Carbon Neutrality

3-2

Linear Economy

A one-way flow of materials where resources are used and discarded.

Circular Economy

A system where materials introduced into the economy are continuously reused instead of being discarded.

Recycling Economy

A system where materials are recycled once before being disposed of, still constrained by the limitations of a linear economy.

Global Regulations on Plastics

EU - European Green Deal

• Proposes sustainable product policies for a circular economy.

UN & U.S. Environmental Protection Agency

• The best waste management practice is preventing waste generation.

Key Terms

• Recycled Content: The proportion of waste materials incorporated into production.
• Recyclability: The potential for a product to be recycled.

Pre-Use vs. Post-Use Recycling

• Pre-Use Recycling: Utilization of waste generated during production before the product reaches consumers (also called post-manufacturing recycling).
• Post-Use Recycling: Recycling waste generated after consumers use the product.

Types of Recycling

• Chemical Recycling
• Material Recycling
• Energy Recycling

Bioplastics

Biodegradable Plastics

• Plastics that decompose naturally by microorganisms under composting conditions such as landfills.

Oxodegradable Plastics

• Plastics that include oxidation-promoting additives to accelerate decomposition.

Bio-Based Plastics

• Durable plastics used in electronics, automobiles, cosmetic containers, etc., which are not biodegradable.

Microplastics

• Plastics smaller than 5mm in size.
• Primary Microplastics: Intentionally manufactured as small particles.
• Secondary Microplastics: Produced by the wear and breakdown of larger plastics.

Major Industries Driving Demand for Resource Circulation

Green Buildings

• According to the International Energy Agency, the construction sector accounts for approximately 40% of global carbon emissions.

Retail Industry

• Acts as a bridge between eco-friendly production and sustainable consumption by providing sustainability information through products.

Automobile Industry

• A crucial industry in the mobility era, particularly in Korea.
• A high-energy-consuming sector that includes multiple industries such as chemicals, steel, batteries, and semiconductors.
• Increasing regulations and environmental initiatives place greater responsibility on automakers.

Ensure Transparency to Avoid Greenwashing

3-3

What is Greenwashing?

• The practice of falsely marketing products as environmentally friendly when they are not.
• Various programs and regulations must be implemented to prevent greenwashing.

Toxicity Prediction Programs for Raw Material Production

• All products are composed of chemicals.
• The safety of newly synthesized chemicals must be evaluated before use.

Environmental Regulations for Raw Materials, Products, and Retail

• To distribute raw materials, intermediate components, and finished products, companies must comply with national regulations and guidelines at each stage.

Purchasing Tools in B2C and B2B Markets

• Secondhand market platforms contribute to resource circulation.
• Platforms for eco-friendly building materials aligned with green building requirements.

Although it may seem late, there is still time. By enhancing supply chain transparency and reducing costs and carbon emissions, businesses can build resilience against greenwashing risks.

With unwavering dedication, we can move closer to the ultimate goal of carbon neutrality in the corporate supply chain.