Greener, more digital, and highly efficient thanks to IoT
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Devices connected via the Internet of Things (IoT) help us obtain data to better understand processes, allowing us to identify where inefficiencies and waste are occurring. The IoT therefore not only helps us to reduce costs and the consumption of raw materials, but also helps in cutting CO2 emissions and waste.
For example, a smart energy solution for buildings which only illuminates and heats rooms when they are in use significantly reduces owners’ electricity bills. It thus eliminates greenhouse gases that would be produced in power generation. Not only the owners of the building benefit, but also society as a whole.
According to an analysis conducted by the World Economic Forum, 84 percent of IoT applications currently or potentially support the 17 Sustainable Development Goals (SDGs) adopted by the United Nations General Assembly in 2015 using similar methods. And according to a 2021 study commissioned by the digital association Bitkom, 34% of Germany’s climate goals can be achieved through the targeted and accelerated use of digital solutions alone.
Of course, such digitalization initiatives have their own carbon footprint: communications networks, data centers, and end devices generate greenhouse gases in their creation and operation. But as Bitkom’s calculations show, the positive effects outweigh the negative ones many times over.
These digital innovations not only cut greenhouse gas emissions and costs, but also enable completely new, sustainable business models, such as Call a Bike, as a carbon-neutral way of getting around.
On both a national and a European level, legislators are currently expanding the legal framework to provide customers and investors with greater transparency regarding corporate sustainability. Additionally, they are aiming to create incentives for switching to sustainable technologies. Companies situated in Germany must therefore comply with the following legal framework on the subject of sustainability.
Obligation to report on sustainability
In Germany, the Corporate Social Responsibility (CSR) Directive Implementation Act is currently in force, affecting publicly traded companies with upwards of 500 employees. In their annual report, they are required to provide information on the sustainability of their business activities. In doing so, they must specifically document the corporate strategy, climate-related opportunities and risks, sustainability targets, and progress in implementing climate management.
This reporting obligation is supplemented by the EU taxonomy, which is a set of rules for defining sustainability that creates a framework for classifying sustainable economic activities within the EU, making them comparable across sectors. The CSR reporting obligation and EU taxonomy are intended to provide investors and customers with a guideline for assessing the sustainability of companies.
However, the legal basis for sustainability reporting is set to change soon. The new Corporate Sustainability Report Directive (CSRD) will introduce extended reporting obligations for companies and is intended to give sustainability reporting a similarly important status to financial reporting. In the future, it will no longer be carried out separately, but will be an integral part of companies’ management reports. The CSRD will also affect all large companies with 250 or more employees which have either more than 20 million euros in total assets or 40 million euros in sales – regardless of their stock market listing. It will apply from January 2024 onwards and will thus affect reports for the 2023 fiscal year.
CSR reporting is not only a duty, but also an opportunity for companies. The progress achieved with IoT solutions can be used to create awareness of your company’s sustainable actions, facilitating your ability to provide information and build trust with capital providers, investors, and customers.
If require assistance in implementing your CSR reporting obligation, the German Sustainability Code can help you. This initiative provides companies with a reporting standard for sustainability aspects and gives them guidance on how the CSR reporting obligation can be implemented in practice.
Putting a price tag on CO2 emissions
In 2021, the German federal government introduced a tax on CO2 emissions generated as a byproduct of heating and fuels, such as heating oil, natural gas, gasoline, and diesel. This is intended to create incentives for the use of climate-friendly technologies such as heat pumps, electromobility, renewable energy, and energy conservation.
These certificates are issued by the German Emissions Trading Authority (DEHSt) at the Federal Environment Agency. They are traded via the national emissions trading system (nEHS). The German government intends to invest the revenue in climate protection measures or pass it on to citizens as relief. The CO2 cost has initially been set to 25 euros since January 2021. It will then gradually increase up to 55 euros in 2025. A prince range of a minimum of 55 euros and a maximum of 65 euros is to apply for 2026.
This national CO2 tax for heating and fuels supplemented an already existing European tax for the energy industry, energy-intensive industry, and intra-European air traffic. This is processed by the European Emissions Trading Scheme (EU ETS). The companies covered by the ETS are not affected by the national certificate trader DEHSt.
National and European CO2 taxation affects a large swath of companies – either directly, by requiring them to purchase emissions allowances, or indirectly, by passing costs on to them. IoT solutions for the smart heating of buildings or for fleet management can help reduce these costs.
There are two main ways for companies to objectively determine the impact of their production on the environment: life-cycle assessment (LCA) and the Greenhouse Gas Protocol.
Life Cycle Assessment (LCA)
Life Cycle Assessment evaluates the impact of a product on the environment throughout its lifetime. LCA takes into account greenhouse gas emissions, the depletion of natural resources, and other direct and indirect factors that affect the environment. The main international standards for conducting these LCAs are ISO 14040 and ISO 14044. In Germany, for instance, LCA is conducted by the Fraunhofer Institute Umsicht.
Greenhouse Gas Protocol
The Greenhouse Gas Protocol, or GHG Protocol, is a comprehensive framework for measuring and managing greenhouse gas emissions. It was created through the collaboration of international organizations and companies, providing companies and government agencies with accounting and reporting standards, industry-specific guidelines, calculation tools, and training. It is coordinated by the World Business Council for Sustainable Development (WBCSD) and the World Resources Institute (WRI).
It divides emissions into three scopes:
Scope 1 measures direct emissions from sources that a company owns or controls. Examples include company vehicles and fuel combustion for heating.
Scope 2 includes indirect emissions from purchased electricity, steam, heating, or cooling.
Scope 3 includes other indirect emissions from upstream or downstream processes. This can include employee commuting, waste disposal, purchased goods or services.
More information can be found on the website of the Greenhouse Gas Protocol.
To increase the sustainability of your production, it is crucial to consider the entire life cycle of a product, from manufacturing to product disposal and recycling.
Design
Decisions made in the design phase of a product have an impact on its environmental footprint throughout its lifetime. A digital twin helps product designers and engineers to better understand their effects. This term refers to a virtual simulation of products or entire business processes that replicates their entire lifecycle, making it possible to better understand the impact of ideas and processes during the planning phase before physical resources are consumed. According to a study by the industry association Bitkom, 5 to 8 percent of the expected primary energy emissions for manufacturing processes in 2030 can be avoided using such simulations and optimizations of physical products or processes.
Manufacturing
At this stage, IoT deployment can help companies by having sensors monitor production equipment to report potential failures early on. This increases the lifespan of equipment, reduces energy consumption, eliminates visits by service technicians, and ensures that no faulty products are produced that would add to the amount of waste. Bitkom estimates that between 5 to 8 percent of emissions in manufacturing can be avoided by reducing manual intervention and optimizing processes using control systems, IT, and other technologies.
During the manufacturing phase, a lot of energy is also wasted in buildings when rooms that are not currently being used are heated or illuminated. Bitkom estimates that 9 to 12 percent of emissions caused by commercially used buildings can be cut using smart energy management solutions. Read more about the potential of IoT in facility management in this blog post.
Sales and distribution
An IoT route optimization solution that analyzes data from vehicle-mounted GPS trackers helps avoid empty runs and finds the shortest routes for delivery trips. Using this information, companies can reduce fuel consumption to lower their carbon emissions. For information on Telekom’s Drive & Track fleet management solution, click here.
When transporting goods, it is vital to avoid damage so as not to produce unnecessary waste. This can be ensured by IoT systems that warn when sensitive products are exposed to excessive heat, cold, or vibrations. This is particularly important when transporting food item, as food waste is a major source of greenhouse gases. The United Nations Food and Agriculture Organization (FAO) estimates that 14 percent of the world's food is thrown away before it can be offered for sale. Reducing food waste is therefore also one of the United Nation’s sustainability goals.
Waste collection and recycling
Waste is also an indirect source of greenhouse gases. After all, energy was expended to produce the products that ultimately end up as waste, which is usually incinerated, releasing additional CO2. IoT technologies for paperless management can help companies save paper and plastic. Wireless sensors can also help operators monitor the level in waste disposal bins to plan the best time for collection. For example, waste management specialists Rhenus and Remondis were able to optimize their logistics with the help of fill level sensors from Telekom.
No matter at which stage of the product lifecycle you deploy your IoT solution, it will always need components which are perfectly aligned to ensure low energy consumption. Our IoT Solution Optimizer helps you find the best set of components in our catalog, combine hardware solutions, set application properties, and configure energy-saving features – and models the expected results within seconds.
If your company is determined to commit to reducing its greenhouse gas emissions, the Science Based Targets (SBTi) initiative is one way to get advice and exchange information on this process.
A Science Based Target is a climate goal that a company or community can set for itself. It is not set arbitrarily, but focuses on the number of emissions that must be reduced in order to meet the goals of the Paris Agreement – limiting global warming to 1.5°C.
The initiative provides companies with best practices that are in line with the current state of science and enables independent evaluation and validation of the targets. It also provides a public platform and regular review, advice, and feedback on the set targets.
For more information, visit the initiative's website.