Emissions from global logistics are set to increase by 42% by 2050 – making it the highest emitting sector by 2050 if nothing changes – yet need to halve by 2030 and reach zero by 2050 to meet Paris Agreement goals.
Industry leaders from global logistics discussed the best routes to decarbonisation and share thoughts on how they can meet these targets. Here are the ten outcomes and insights from their discussion:
1. Voluntary initiatives help, but cannot be a full substitute to regulatory drivers
While voluntary initiatives, such as the SFC’s Global Logistics Emissions Council (GLEC) Framework, play a crucial role in fostering collaboration amongst industry leaders to elevate climate ambitions and strategise implementation, they cannot serve as a complete substitute for regulatory frameworks. Voluntary initiatives contribute to industry standards and best practices, as exemplified by the GLEC Framework. This framework, rooted in the GHG Protocol and integrated into CDP disclosures, forms the basis for the ISO14083 standard.
Regulations are indispensable. They provide the necessary structure to ensure uniformity and offer investment certainty across the entire sector. The GLEC Framework’s influence is evident in regulatory schemes such as the EU Corporate Sustainability Disclosure Directive (CSRD) and the proposed regulations by the US SEC, illustrating the relationship between voluntary initiatives and regulatory measures in advancing harmonised logistics emissions accounting.
2. Kick off your emissions measurement journey even if the data isn’t perfect
Calculating emissions, particularly scope 3 emissions from freight suppliers, can be a daunting task for Members grappling with incomplete or varied data quality. Companies should begin with available data, adopt a conservative approach, and progressively implement processes for more accurate calculations over time.
The GLEC Framework and the SFC-accredited calculation tools exemplify this approach by helping companies in transitioning from default emission factors, such as fuel type, to more sophisticated modelling, like average fuel use per trade lane. Eventually, companies can move toward utilising primary data collected directly from suppliers, including fuel usage by supplier fleets and ideally by individual vehicles. This evolution in granularity and accuracy enhances a company’s capacity to pinpoint reduction opportunities and substantiate investments. For instance, a company achieved confidence in the efficacy of fuel switching by meticulously registering the types of freight vehicles, thereby validating the potential for emission reductions.
3. Help stakeholders understand the value of decarbonisation initiatives
While measurement is crucial, effective communication presents its own set of challenges. Management often scrutinises the costs associated with climate action, and hesitates when these costs are presented as absolute figures or percentage premiums compared to the current status quo.
To simplify decision-making, it’s essential to identify indicators that convey the value of decarbonisation initiatives in ways stakeholders can easily understand. Consider the case of sustainable aviation fuels (SAF), which may be 2-5 times pricier than fossil jet fuel. However, when SAF replaces only a small percentage of fuel, the per-flight cost premium for an airline carrier or freight forwarder becomes more manageable. Similarly, when persuading shippers as freight buyers to invest, presenting per-unit costs can enhance understanding and buy-in. For instance, a business heavily reliant on air freight for importing mobile phones might be deterred by a large annual sum for SAF. Yet, if the premium investment translates to a modest increase like 50 cents per mobile phone, it becomes more palatable. Embedding emission reduction costs into the cost structure of products lays the groundwork for a business-focused decarbonisation strategy.
4. Scope 3 emission measurement unlocks significant reduction opportunities on the journey to net zero
Scope 3 emissions typically contribute to over 70% of a business’s carbon footprint. This means that even small, quick wins in scope 3 emissions can exert a substantial impact on the total emissions profile. Remarkably, some companies find that the costs associated with decarbonisation measures are now lower for scope 3 emissions compared to their own operations and electricity use (scope 1 and 2). In scope 1 and 2, where many cost-effective measures like efficient machines and solar panels have already been implemented, scope 3 offers potential for impactful initiatives. For instance, modal switching stands out as a strategy allowing companies to significantly reduce scope 3 emissions with minimal disruption to existing supply chains.
5. Procurement is the lynchpin for scope 3 decarbonisation
Scope 3 emissions from upstream and downstream transportation typically fall under the purview of sustainability teams, but a pivotal role lies with procurement teams that make purchasing decisions – like freight. The relentless focus on lower prices by procurement has led to a race to the bottom, leaving carriers with limited room for future planning or investments.
To bridge this gap between financial incentives and emission reduction opportunities, integrate climate considerations into procurement. This can involve adding carbon emissions costs to the product’s overall cost, embedding sustainability metrics in the procurement process, and making emissions data sharing and reduction targets standard in every supplier contract.
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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.
