Category: PLM

Increasing competitiveness with product-centric ESG reporting

ESG compliance is no longer a nice-to-have. It has become essential for competing in an increasingly sustainability-conscious market, saving resources and costs, and meeting ever-stricter regulatory requirements. Regulations such as the European Commission’s Corporate Sustainability Reporting Directive (CSRD) or the Supply Chain Act require companies to report ESG data transparently. While many organizations still rely on document-centric approaches and struggle with isolated solutions, a strategic competitive advantage is emerging elsewhere: product-centric ESG reporting.

What is ESG reporting?

Sustainable business practices have many facets. The ESG approach breaks them down into three core dimensions:

• E = Environmental
• S = Social
• G = Governance

In an ESG report, companies provide information on all three areas. This includes data such as CO2 footprints, energy consumption in production and operations, as well as information on promoting biodiversity and reducing waste. It also covers aspects like compliance with fair labor conditions and human rights, ensuring diversity, implementing effective risk management and compliance practices.

Data management is key in ESG reporting

This data – especially environmental KPIs – are often scattered across multiple sources: internal IT tools, external environmental databases, or supplier and partner systems. For many companies, preparing an ESG report therefore comes down to one central question: How can reliable ESG data from diverse sources across the entire value chain be collected and analyzed?

A bar chart with three bars on the topic
Companies consider the multitude of data sources and the varying data quality to be among the biggest challenges in ESG reporting. (BARC GmbH 2024)

One key solution lies in anchoring ESG reporting directly within product development – specifically, in the PLM system. This is where crucial data across the entire product lifecycle is stored: information about the product portfolio, the materials used and their sourcing, emissions from production and the supply chain, as well as data from later lifecycle phases such as use, disposal, and recycling. With this structured and traceable data foundation, a PLM system provides the ideal basis for a precise, transparent, and strategically valuable sustainability assessment.

Product-centric single source of truth as an enabler

An open integration platform like CONTACT Elements offers another crucial advantage for ESG reporting: it seamlessly incorporates information from a variety of internal and external sources. Through APIs, it exchanges data with third-party systems such as ERP tools. Supply chain information can be integrated via standardized exchange formats like the Asset Administration Shell (AAS) or data ecosystems (such as Pontus-X or Catena-X). This makes the platform a single source of truth for company-wide ESG reporting.

A schematic representation of ESG reporting based on the CONTACT Elements platform.
ESG reporting powered by CONTACT Elements.

Ideally, such a solution comes with built-in capabilities to assess and analyze the data. For example, CONTACT Elements uses AI methods to evaluate data quality. In the next step, powerful modules – such as for calculating the Product Carbon Footprint – then generate a compliant ESG report. This creates a comprehensive, audit-ready reporting that meets all market-specific requirements.

From ESG reporting to a sustainability strategy

Companies that rely on product-centric, integrated solutions like CONTACT Elements don’t just tackle the mandatory task of ESG reporting – they have the chance to strategically embed sustainability across the organization. For example, ESG data in CONTACT Elements can be directly linked to product structures and development processes. This allows developers to make early assessments of potential CO2 emissions across the product portfolio or in specific manufacturing processes, and to optimize them in a targeted way.

The result: sustainable innovations, more attractive products, streamlined processes, and lower costs. The foundation for this is always a software platform like CONTACT Elements: open, scalable, and equipped with powerful business applications.

Learn in this article by consulting firm CIMdata how companies can systematically embed sustainability in PLM to reduce their environmental impact across the entire product lifecycle.

Sustainability as a competitive edge: one step ahead with PLM

Sustainable thinking is no longer a “nice-to-have” – regulations and customer demands have made it a central pillar of modern innovation. A growing number of companies are realizing that ecological responsibility and economic success can go hand in hand. This is especially evident in product development: where cost-effectiveness used to dominate, sustainability has emerged as another key factor.

The right balance between economic and ecological aspects

While cost and efficiency remain crucial, staying competitive in the future requires taking the environmental balance into account when making business decisions. The challenge lies in finding the right balance between economic performance and ecological responsibility. This is most successful when sustainability is considered from the very beginning – at the design stage – rather than at the very end.

Why the product development process is crucial

Around 80% of a product’s environmental impact is already determined during the development phase. Decisions about materials, manufacturing processes, energy use, and recyclability made during this stage play a decisive role. Leveraging reliable and transparent data in the decision-making process enables companies to lower the environmental impact of their products.

LCA vs. PCF: Two key terms briefly explained

Anyone involved in sustainable product development will inevitably encounter these two concepts:

  • Life Cycle Assessment (LCA): The assessment of a product’s environmental impact throughout its lifecycle, from raw material extraction to disposal.
  • Product Carbon Footprint (PCF): The environmental footprint of a product, expressed in CO₂ equivalents. The PCF is often part of a broader LCA.

Implementing sustainability directly in the PLM system

CONTACT’s sustainability solution allows this environmental data to be recorded and used directly in CIM Database PLM. This enables a systematic evaluation of materials, processes, and product structures. Whether entered manually or imported automatically from environmental databases, a product’s environmental impact can be analyzed and improved directly within the system.

Asset Administration Shell: a key to data exchange in the supply chain?

Sustainability is not a solo effort. Especially for complex products involving multiple suppliers, effective data exchange is crucial. This is where the concept of the Asset Administration Shell (AAS) comes into play – a standardized representation of digital twins for industrial components.

Using AAS submodels like the Carbon Footprint, companies can communicate environmental data in a standardized way, both internally and externally. This creates a seamless data foundation across the entire value chain. Using submodels like the Carbon Footprint, companies can communicate environmental data in a standardized way – both internally and externally, enabling them to integrate data from purchased components.

Three key takeaways:

  1. Sustainability starts with engineering, where crucial decisions are made.
  2. Standardized data formats enable the integration of environmental data into the product lifecycle.
  3. With IT tools like CONTACT Elements Sustainability Cloud, companies can not only plan eco-friendly operations but also implement sustainability early in the development process.

Conclusion

Developing sustainable products is no longer a vision for the future – it’s a reality today. Companies that adopt the right tools at an early stage and rely on standardized processes gain not only ecological advantages but also economic benefits.