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Sustainability

Proactively Managing European Sustainability Regulations With the Support of Tset

As European sustainability regulations tighten, multinational companies must adapt quickly to stay compliant and profitable. Tset supports businesses by integrating carbon and cost factors into key processes, helping to align target costs with emission goals. With tools to manage the EU's Carbon Border Adjustment Mechanism (CBAM) and simulate supply chain impacts, Tset ensures companies can navigate regulatory challenges while optimising costs.

The landscape of sustainability is becoming increasingly dominated by regulations. Jurisdictions worldwide are rapidly implementing sustainability-related legislation, with the European Union being at the forefront with its 27 Member States including big industrial players such as Germany, France and Italy. Their umbrella initiative is the so-called “European Green Deal” which includes law packages regarding greenhouse gasses and emission trading systems, critical and strategic minerals, electricity and natural gas markets, recycling rates, energy efficiency and much more. Non-EU countries such as Switzerland and Norway are also closely aligning with these regulations.

Multinational corporations operating within the European market and supply chain face numerous compliance requirements and obligations.

The year 2024 is pivotal, with significant political changes including the election of a new president in the USA and the renewal of the European Commission and Parliament. In these transformative times, it is crucial for multinational companies to anticipate various scenarios and prepare accordingly.

Where Tset Helps

This is where Tset excels in assisting you with the proactive management of European sustainability regulations. We offer comprehensive support in several critical areas directly linked to your product profitability:

Ensure your target setting process aligns cost, emissions and specifications.
Identify supply chain structures which are resilient to sustainability-induced price shocks.
Include new cost factors into your cost calculation process, such as the EU’s Carbon Border Adjustment Mechanism (CBAM).

While many multinationals already have overarching sustainability strategies, our support focuses on operational improvements that directly impact your bottom line, translating strategy into your current supply chain framework.

Target Costing

Incorporating target costing into your product development process ensures that material costs align with your business model. Emissions must also be factored into this equation in order to meet your top-down emission targets. Tset can assist in conducting these assessments and training your staff to integrate emission calculations into their processes.

Supplier Selection Process

Regulatory burdens will impact your suppliers, leading to increased material costs. Examples include rising steel prices due to emission allowance cuts, higher magnet prices from recycling rate requirements, and elevated costs for pre-fabricated parts from energy efficiency investments. Our expertise in bottom-up cost modeling and master data management enables you to simulate raw material costs and make informed decisions. We provide analysis to optimize locations towards best practice, update contract clauses, and implement dual sourcing strategies, thereby mitigating risk and strengthening your negotiation position.

New Cost Factors

Importers into the EU will soon face the Carbon Border Adjustment Mechanism for certain imported goods. The CBAM imposes an import levy based on product carbon footprint and the greenhouse gas pricing disparity between the source country and the EU. By combining detailed bottom-up product cost calculations with emission intensity data, you can simulate these additional costs. Tset offers transparency and expertise in this area.

Building Organizational Capabilities

Our goal is to empower your organization to independently conduct target setting, supply chain analysis, and emission cost simulations. We provide not only consulting support but also training and software to establish these capabilities within your team.

Let Tset help you navigate the complexities of European sustainability regulations, ensuring compliance and optimizing profitability.

Would you like to know more?

For more information about cost and CO₂ engineering, read our whitepaper: "Carbon reduction in automotive supply chains". Explore the urgency of climate action and business resilience in more detail.

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Author

Jakob Etzel

VP Customer Success

04.10.2024

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