Digital Twin for sustainability standards (ISO and CSRD)
The growing focus on industrial sustainability has prompted the creation of numerous standards and certifications, established by international organizations like ISO and global alliances. These frameworks aim to ensure that companies align with global objectives, including limiting temperature increases to 1.5°C, as stated in the Paris Agreement.
While adopting these standards demonstrates transparency and commitment to environmental sustainability, many organizations face challenges in practically implementing them. The lack of standardized tools to integrate, compute, and manage the required data creates significant hurdles. Digital twins and simulation models present a transformative solution by providing the structure and analytical power needed to meet these requirements effectively.
ISO Standards: Quantitative Approaches to Sustainability
ISO 14064-1:2018 – Greenhouse Gas Inventories for Organizations
The ISO 14064-1:2018, Greenhouse Gas Inventories for Organizations, provides a framework for quantifying and reporting greenhouse gas (GHG) emissions and removals. The standard emphasizes accuracy, consistency, and reproducibility in its “Quantification Approach” section, stating:
- “The organization shall select and use quantification methodologies that minimize uncertainty and yield accurate, consistent, and reproducible results.”
- “GHG emissions or removals can be obtained through measurement or modeling.”
- “A model is a simplification of physical processes with assumptions and limitations, converting source or sink data into emissions or removals.”
These requirements highlight the critical role of digital twins in supply chain modeling. Digital twins help organizations meet these guidelines by offering:
- Minimization of uncertainty: A simulation model is tailored to the company’s specific characteristics, refined over time to represent actual and expected performance reliably. This process ensures a high degree of accuracy while balancing data availability, modeling effort, and result precision.
- Consistency in results: Supply chain simulations validate traditional metrics (e.g., costs, service levels, and productivity) against real-world observations. Fine-tuning ensures models align operationally and environmentally, supporting consistent outcomes.
- Reproducibility over time: Once validated, models can be reused periodically (e.g., monthly or quarterly) to monitor performance and adjust strategies based on evolving company needs.
Additionally, simulation models allow:
- Dynamic scenario analysis: Testing interventions for emissions reductions under varying operational conditions.
- Granular insights: Identifying inefficiencies across the supply chain, such as energy usage, transportation modes, or resource allocation, to improve overall performance.
ISO 14068-1:2023 – Carbon Neutrality
The ISO 14068-1:2023, Carbon Neutrality, focuses on achieving and maintaining carbon neutrality through comprehensive planning and robust decision-making. Key elements include:
- Establishing a carbon neutrality management plan with clear timelines, reduction targets, and methodologies for GHG quantification.
- Identifying a base period and defining target years for achieving residual GHG reductions, supported by rationale for timing.
- Developing systems to track and report progress toward carbon neutrality goals.
Digital twins address these requirements by:
- Tracking emissions over time: Simulating current and future emissions scenarios to support effective planning.
- Integrating financial and environmental data: Aligning carbon neutrality efforts with financial objectives to ensure long-term viability.
- Scenario-based planning: Evaluating the impact of different strategies to prioritize the most effective interventions.
Moreover, digital twins enable organizations to:
- Monitor real-time performance: Ensuring alignment with both short-term goals and long-term targets.
- Evaluate systemic impacts: Understanding interdependencies within the supply chain to identify opportunities for simultaneous cost savings and emissions reductions.
- Validate assumptions: Continuously improving accuracy by refining models with real-world data.
CSRD and ESRS: Aligning Strategies with Sustainability Goals
The Corporate Sustainability Reporting Directive (CSRD) and its Environmental, Social, and Governance Reporting standards, specifically ESRS E1, require companies to disclose comprehensive information on their environmental impact. These standards push organizations to think systemically and integrate sustainability into their core strategies.
Key ESRS E1 Requirements
The ESRS E1 framework mandates the disclosure of:
- A carbon footprint assessment of GHG emissions, covering seven key gases: carbon dioxide (CO₂), methane (CH₄), nitrous oxide (N₂O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF₆), and nitrogen trifluoride (NF₃).
- Plans to align with the Paris Agreement’s 1.5°C target and achieve carbon neutrality by 2050.
- An integrated strategy combining sustainability with financial objectives, supported by CapEx and OpEx budgets for decarbonization.
- Risk assessments related to climate change and organizational resilience under different scenarios.
Digital twins serve as essential tools for meeting these requirements by:
- Integrating supply chain data: Linking production, logistics, and sales data to compute a detailed carbon footprint.
- Scenario modeling: Simulating interventions to evaluate their impact on emissions and financial performance, identifying optimal strategies.
- Evaluating trade-offs: Balancing sustainability initiatives with financial goals, such as profitability and operational efficiency.
- Dynamic resource allocation: Adjusting plans in real-time to address emerging risks or opportunities.
- Simulating climate resilience: Testing various scenarios to assess supply chain vulnerabilities and develop robust contingency plans.
- Optimization of sustainability levers: Exploring combinations of actions to maximize environmental and financial performance.
Bridging Financial and Non-Financial Metrics
A significant innovation introduced by ESRS E1 is the integration of financial and non-financial indicators. This requirement encourages companies to assess the systemic relationship between sustainability and business performance. Digital twins, with their ability to simulate complex interactions, offer the ideal platform for achieving this integration.
By modeling the interplay between sustainability measures (e.g., emissions reductions) and business metrics (e.g., costs, revenues, and productivity), digital twins provide insights that are otherwise difficult to uncover. This capability not only supports regulatory compliance but also strengthens strategic decision-making.
Conclusion
Sustainability standards like ISO, CSRD, and ESRS provide a structured framework for companies to address global environmental challenges. However, the path to compliance requires advanced tools capable of bridging data, strategy, and operations.
Digital twins and simulation models empower organizations to navigate this complexity. They provide the means to quantify emissions, plan sustainability initiatives, and align these efforts with financial goals. By adopting these technologies, companies demonstrate their commitment to sustainability while enhancing their operational resilience and competitiveness.
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