Guest Blog Post | BIFA is cooperating with Pledge, an integrated carbon measurement and offsetting platform, to help its members better understand and address the environmental issues that affect how they manage international supply chains.
This article will walk you through everything you need to know as a freight forwarder about your customer’s scope 3 emissions. This post includes:
- What are scope 3 emissions?
- Which emissions do I need to worry about?
- Why you need to start measuring your emissions now.
What Are The Emissions Scopes?
The Greenhouse Gas Protocol categorises emissions into three scopes:
- Scope 1 Emissions: the direct emissions produced by your company’s owned/controlled sources. This can include on-sit combustion and company vehicles.
- Scope 2 Emissions: these are the indirect emissions that are generated through the production of electricity, heat, or steam purchased and consumed by your company.
- Scope 3 Emissions: any other indirect emissions that occur. These could include the emissions produced by your suppliers, transportation, and distribution.
What Are Scope 3 Emissions?
Scope 3 emissions are a total of your company’s entire supply chain emissions. For many companies, this can be as high as 80% of the total carbon footprint! As there are so many factors that can effect your scope 3 emissions value, it can be one of the hardest emissions to calculate and manage on a day-to-day basis.
Under the GHG (Greenhouse Gas) Protocol, scope 3 is divided into 15 different categories that are divided into up- or downstream emissions.
Upstream emissions: occur BEFORE a company’s product/service reaches the customer.
Downstream emissions: occur AFTER a company’s product/service reach the customer and the overall transportation of those goods to the customer. This can also include the final use of the product by the customer.
How Scope 3 Impacts Members
Sustainability regulations are making it mandatory for many businesses to report their scope 3 emissions — for example the EU’s Corporate Sustainability Reporting Directive (CSRD) will require businesses to report their 2024 scope 3 emissions. Businesses that fail to meet these regulations will face large fines. More information on this can be found HERE.
There are two scope 3 emission categories that directly involve freight forwarders and supply chain activity:
- Category 4: Upstream transportation and distribution of goods. This includes the transportation of goods that a company purchases from a supplier.
- Category 9: Downstream transportation and distribution of goods. This is the emissions produced from the transportation of products from the warehouse to the customer.
As coordinators of freight in the supply chain, Members have visibility of each client’s shipment data and breakdowns that are critical to informing reduction strategies. Access to this level of detail within the data means that you can help your clients meet emissions reporting obligations or reach their reduction goals.
As a result of this, more and more shippers are turning to freight forwarders to fulfil these emission reporting requirements for categories 4 and 9.
The Benefits of Measuring Scope 3 Emissions For Forwarders
Forwarders can promote the benefits of measuring and managing scope 3 emissions for shippers as a value-add that they can provide:
- Meeting sustainability regulations and standards
- Making more informed supply chain decisions
- Reducing the impact your business has on the environment
- Helping build an ‘eco-conscious’ brand
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Source: Pledge
PLEASE NOTE: All information contained in this article was correct at time of publication and obtained directly from Pledge. Please ensure information is cross-checked against current legislations before taking any action.
