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.
Supplying high-quality and correctly formatted carbon reports allows you to foster strong customer relationships, position your business as a sustainability knowledge leader and save valuable time and money for your customers by providing a beneficial service.
To help Members better format scope 3 carbon reports, we’ve published the below article (credited to Pledge) to help you understand what criteria you need to include to meet industry standards, and help your customers meet the scope 3 reporting requirements.
Why do you need to provide scope 3 carbon reports?
- Commitment to net zero pledges: Also known as voluntary reporting, this means companies have voluntarily signed up to meet ESG targets. Many companies have also committed to achieving or retaining B-corp certification which requires publishing annual ESG performance reports verified by a third-party standard
- Climate disclosure regulations: Also known as mandatory reporting, this is being driven by government-implemented legislation. While only a few have passed so far, like the EU’s Corporate Sustainability Reporting Directive (CSRD) and the California Climate Corporate Data Accountability Act (SB 253), there are several regulations being drafted across the globe that will soon require businesses to comply with reporting scope 3 emissions
- Consumer demand and brand perception: Consumer demand is shifting in favour of more sustainable brands. According to the Deloitte Sustainable Consumer Report 2023, “Companies from every industry are facing increasing calls … to play a greater role in accelerating the transition to more sustainable business practices”, with transparency about claims and the carbon footprint of products being pulled out as one of the main concerns for consumers.
Helping shippers simplify carbon reporting
Shippers face a huge challenge reporting their scope 3 emissions when collecting and processing the large volumes of data involved both, efficiently and accurately. Manually calculating scope 3 emissions is time-consuming, subject to errors and doesn’t provide the level of accuracy and precision shippers require to meet their ESG reporting requirements.
This is where our Members can provide a valuable service. With visibility and access to shippers’ end-to-end shipment data, you can accurately calculate the carbon emissions for a given shipment and deliver this to your customers. Carbon reporting software can help you automate data collection, streamline calculations and generate comprehensive reports, empowering your customers to easily integrate scope 3 emissions data into their ESG declarations without needing to edit or make adjustments.
Beyond simply providing transparency, understanding emissions enables shippers to implement strategies to reduce their carbon footprint, ultimately improving brand perception while meeting climate disclosure regulations.
Scope 3 reporting frameworks for logistics
There are several frameworks or standards to choose from when it comes to creating reports. The two most widely used and globally accepted are the Greenhouse Gas Protocol’s (GHG) Corporate Value Chain (Scope 3) Standard and the Smart Freight Centre’s reporting requirements under the GLEC Framework.
Below is a breakdown of the key criteria you need to include for each framework to help you decide which one is best suited for your customers’ needs:
Greenhouse Gas Protocol reporting standards
The GHG has been around for over 20 years, providing reporting guidance across all emissions scopes. It’s the recommended standard for reporting by the International Sustainability Standards Board’s (ISSB) recently published IFRS S2 standards with which many national governments have aligned their climate disclosure regulations.
The GHG states that a comprehensive carbon report should be based on “principles of relevance, accuracy, completeness, consistency, and transparency”, and provide the “best data available and be transparent about its limitations”.
Here’s what needs to be included:
- Total emissions by category: Report total greenhouse gas (CO2, CH4, N2O, HFCs, PFCs, SF6) emissions for each scope 3 category in metric tons of CO2 equivalent. This excludes biogenic CO2 (included below) and any offset purchases/sales.
- Included categories and activities: List all scope 3 categories and specific activities considered in your report.
- Excluded categories and justification: List any scope 3 categories or activities you have excluded, along with reasons for their exclusion.
- Biogenic CO2 reporting: Report any biogenic CO2 emissions separately for each scope 3 category.
- Data sources and quality: Describe the types and sources of data used for each category including activity data, emission factors, global warming potential values and its overall quality.
- Calculation methods and assumptions: Explain the methodologies, allocation methods and assumptions used to calculate emissions for each category.
- Supplier data reliance: For each category, indicate the percentage of emissions calculated using data from suppliers or other partners in your value chain.
When creating reports that meet the requirements of the GHG Protocol’s Corporate Value Chain (Scope 3) Standard, make sure you include all these criteria to help your customers meet their ESG reporting requirements.
Global Logistics Emissions Council (GLEC) reporting standards
The Smart Freight Centre’s End-to-End GHG Reporting of Logistics Operations Guidance is designed to allow better comparability of logistics emissions between organisations, enabling them to quantify and reduce emissions from logistics operations. This framework also forms the basis of the recently published ISO 14083 standard. As a result, it focuses on data quality, including a Data Quality Indicator (DQI), and requires a more granular breakdown of the methodology used at each leg of the end-to-end shipment than the GHG reporting standard.
The SFC specifies that for reports to be in conformance with the principles of the GLEC Declaration, it should include the following criteria:
- Total emissions by Transport Chain Element (TCE): Report total emissions (specify pollutants) for each transport chain element in metric tons or a relevant unit.
- Transport activity of each TCE: List the specific transport activities (e.g., road freight, air travel) associated with each TCE.
- DQI for each TCE: Provide the data quality indicator for each TCE, indicating the level of confidence in the reported emissions data.
- Emission intensity of each Transport Operation Category (TOC)/Hub Operation Category (HOC): Report emissions intensity factors for activity (e.g., kg CO2 equivalent per kilometre) for each TOC/HOC.
- DQI of each TOC/HOC: Provide the data quality indicator for each TOC/HOC, indicating the level of confidence in the reported emission intensity at a more granular level.
- Definitions of used TOC/HOC: Provide clear definitions for each TOC/HOC used in the report.
GLEC reports provide more granularity of the methodology and data quality used to calculate the emissions than the GHG reporting standard. This helps provide added transparency and accountability throughout the supply chain but increases the workload and knowledge needed to develop such reports.
Itemised emissions report
If your customers don’t have a specific standard to adhere to, or just want an overview of their emissions, an itemised report should suffice! Providing customers with a breakdown of the carbon footprint on specific shipments, it allows them to better understand their environmental impact.
Here’s what a detailed itemised report should include:
- Reporting period: Clearly state the timeframe covered by the report.
- Who it’s prepared for: Identify the customer receiving the report.
- Who it’s prepared by: Indicate the freight forwarder generating the report.
- Number of shipments: Highlight the total number of shipments included in the report.
- Number of shipment legs: Specify the total number of individual legs of each shipment comprised in the report.
- Total Emissions (CO₂e): The total amount of carbon dioxide equivalent emissions generated by all shipments in the reporting period, expressed in tonnes.
- Activity (distance travelled): The total distance travelled across all shipments in the reporting period, typically expressed in kilometres (km).
- Intensity (CO₂e/t-km): This metric indicates the average carbon efficiency of the shipment, calculated by dividing total emissions by the total distance and weight of goods transported. A lower value signifies better efficiency.
- Lifecycle (CO₂e): This accounts for the total carbon footprint across the entire supply chain, encompassing production, transportation, and disposal of goods.
- Lifecycle – Tank-to-Wheel (TTW)/Wheel-to-Tank (WTT)/Other Breakdown: This section provides a more granular view by differentiating emissions based on when they are produced in the value chain lifecyle. Additionally, emissions from other sources like warehousing or handling can be included.
Lastly, the report should include an itemised breakdown of each shipment, which should specify the time and date of each shipment, the shipment ID, the emissions ID and the start and end destinations. For each individual shipment, it should also list the following:
- Mode
- Cargo weight
- Activity (distance travelled)
- Emissions intensity (CO₂e per t-km)
- WTT (CO₂e)
- TTW (CO₂e)
- Other (CO₂e)
- Total (CO₂e)
By incorporating these elements into your customers’ itemised emissions report, you’ll empower them to understand the environmental impact of their shipments and make informed decisions that align with their sustainability goals.
Source: pledge.io
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.
