As environmental concerns continue to shape global regulations, industries are facing increased scrutiny regarding their carbon emissions. The logistics sector, in particular, is being driven to address its environmental impact, leading to changing industry regulations in the United States and the European Union.
Read on to learn about the changing landscape of emissions reporting, the role of CO2 data providers, and how Chain.io can integrate this crucial data into the software of the global supply chain.
Changing Industry Reporting Regulations
Since 2021, there have been significant strides in establishing regulations to combat climate change impacts from the supply chain industry across the United States and in the EU.
In the US, the Securities and Exchange Commission (SEC) has proposed new rules that would require public companies to disclose their greenhouse gas (GHG) emissions. The proposed rules would cover Scope 1 and 2 emissions, which are direct emissions from company operations and indirect emissions from purchased electricity, respectively. The rules would also require companies to disclose their Scope 3 emissions, which are all other indirect emissions that occur in the value chain. The SEC is expected to finalize the rules in 2023.
In the EU, the European Commission has proposed a new regulation that would require all large companies to report their GHG emissions. The proposed regulation would cover Scope 1, 2, and 3 emissions. Recently, the EU Parliament also proposed a ban on green claims based solely on carbon offsetting. Instead, companies will be required to ensure the reliability of their voluntary environmental claims, which will need to be independently verified and proven with detailed evidence.
In addition to these regulatory changes, there are a number of voluntary reporting initiatives that companies can participate in. For example, the Carbon Disclosure Project (CDP) is a global disclosure system that allows companies to report their GHG emissions to investors and other stakeholders. The CDP has over 9,000 participating companies, including many in the logistics and supply chain industry.
Reducing Scope 1, 2, and 3 Emissions
Scope 1 and 2 emissions are typically easier to measure and report than Scope 3 emissions. However, Scope 3 emissions can account for a significant portion of a company's overall GHG emissions. According to a study by the UK consultancy, Carbon Trust, up to 90% of an organization’s environmental impact lies in its value chain – either upstream (in the supply chain) or downstream (the product use phase).
Scope 1 Emissions
Scope 1 emissions are direct emissions from sources owned or controlled by the reporting company. For logistics service providers and freight forwarders, this could include emissions from company-owned vehicles, aircraft, and ships.
To reduce Scope 1 emissions:
- Use electric or hybrid vehicles for last-mile delivery
- Use fuel-efficient aircraft and ships for long-distance transportation
- Install solar panels on company facilities to generate renewable energy
Scope 2 Emissions
Scope 2 emissions are indirect emissions from the generation of purchased electricity, steam, heating, and cooling. For logistics service providers and freight forwarders, this could include emissions from electricity used to power company facilities and equipment.
To reduce Scope 2 emissions:
- Switch to renewable energy providers for electricity
- Install energy-efficient lighting and appliances in company facilities
- Improve the insulation of company buildings to reduce energy consumption
Scope 3 Emissions
Scope 3 emissions encompass all other indirect emissions that occur in the value chain of the reporting company, including both upstream and downstream emissions. For logistics service providers and freight forwarders, this could include emissions from the transportation of goods, the production of packaging materials, and the disposal of waste.
To reduce Scope 3 emissions:
- Work with suppliers to reduce the environmental impact of their operations
- Use more sustainable packaging materials
- Donate to organizations that are working to reduce climate change
The Role of Third-Party Carbon Data Providers
To accurately measure emissions within the logistics industry, third-party carbon data providers play a crucial role.
These data providers employ advanced methodologies and algorithms to calculate emissions based on various factors like distance, mode of transport, fuel type, and weight of cargo. They leverage data from multiple sources, including government records, industry-specific databases, and real-time data from carriers and vessels, when available.
Benefits of Integrating CO2 Data into TMS or ERP Systems
Integrating CO2 data into Transportation Management Systems (TMS) or Enterprise Resource Planning (ERP) systems offers numerous benefits for shippers and freight forwarders including:
- Increased transparency: Reporting CO2 emissions can help to increase transparency about the environmental impact of a forwarder or shipper’s operations. This can be beneficial for both investors and customers, who are increasingly interested in companies that are taking steps to reduce their environmental impact.
- Accurate Emissions Reporting: Integrating CO2 data provides precise emissions measurements for each shipment, enabling companies to report emissions more accurately, meet regulatory requirements, and showcase their commitment to sustainability.
- Carbon Footprint Optimization: By accessing real-time emissions data, businesses can analyze and optimize their supply chain processes to reduce carbon footprints. This optimization leads to cost savings, improved operational efficiency, and enhanced environmental performance.
- Compliance and Competitive Advantage: Integrating CO2 data allows companies to comply with changing regulations and stay ahead of competitors. It demonstrates a commitment to sustainability and appeals to environmentally conscious customers, leading to potential business opportunities and a positive brand image.
- Positive Brand Perception: Companies that are seen as being environmentally responsible are generally well respected and can often command a premium price from customers. Reporting CO2 emissions can help to improve a company's brand image and make it more attractive to customers who are concerned about the environment.
CO2 Data Integration with Chain.io
As the focus on carbon footprints intensifies, accurate and reliable reporting becomes increasingly important. Businesses face growing pressure from stakeholders to transparently disclose their environmental impact. Chain.io, as a leading supply chain integration platform, offers a comprehensive solution to incorporate complex CO2 data into any system across the global supply chain.
Chain.io's integration capabilities streamline the process of connecting with third-party carbon data providers and seamlessly integrating emissions data into existing TMS or ERP systems. By doing so, Chain.io empowers businesses to accurately measure, monitor, and report their emissions, ultimately contributing to a greener and more sustainable future.
Aggregate data is not enough. Without automation and integration, reporting often can't be done on a per-shipment basis, which means you won’t be able to report on specific lanes, modes, carriers, or origin factories.
How Chain.io CO2 Data Integration Works
Using a CO2 data provider solution from Chain.io, you’ll be able to provide your customers with accurate and reliable CO2 and equivalent unit impact reporting from within your TMS. First, we gather shipment routing information from your existing systems, then connect it to your environmental impact data providers for seamless data transfer.
With pre-built integrations to the leading logistics software companies, we help shippers and LSPs optimize their supply chain operations, boost positive customer experiences, and improve their bottom line. If you’d like to learn more about integrating your carbon emissions data, get in touch with our team today!Explore CO2 Data AutomationBook a Demo