The focus on corporate emissions reporting is intensifying: while much of today’s reporting, usually reliant on the GHG protocol, is voluntary, mandatory regulations are on the horizon. In fact, the UK’s Financial Conduct Authority (FCA) is currently considering proposals to implement new disclosure rules for listed companies.
As regulations tighten and corporate scrutiny increases, logistics companies need to reduce their own emissions, and their impact on their customers - or risk losing their place in the value chain.
What are Scope 3 emissions?
Scope 3 emissions are indirect emissions that occur in a company’s value chain from upstream and downstream activities. Given their broad and distributed nature, Scope 3 emissions on average account for over 80% of corporate carbon footprints.
Source: Scope 3 Standard, page 5.
Scope 3 emissions are split into 15 categories across upstream and downstream activities, with varied focus across industries. The availability of data for accurate reporting is a huge challenge, so transparency throughout the value chain is critical.
Source: Scope 3 Standard, page 32.
As a logistics company, you’ll need to consider:
The contributions of your upstream and downstream activities to your own emissions reporting.
How your operations contribute to your customers’ emissions, from the fuel and energy-related upstream and downstream transportation and distribution services you provide in their value chain. The emissions, as well as the transparency with which you report them, will impact their choice of supplier.
The adoption of renewable energy and integration of electric vehicle fleets can significantly improve these factors.
Improving your own Scope 3 emissions
As Scope 3 emissions are by definition indirect, let’s focus on a significant category that’s within your control: Category 8 (Upstream leased assets). These are the emissions associated with the operation of your leased spaces, such as a warehouse or storage facility.
The primary reduction methods are:
Improve building energy efficiency, including through upgraded lighting and HVAC.
Adopt renewable energy options, like installing on-site solar on the roof of the leased space.
There are two important upsides to adopting on-site renewable energy:
High level of transparency:The REGOs granted with the purchase of renewable energy can be leveraged directly in your Scope 3 reporting.
Energy cost reduction: Solar energy can be significantly cheaper than dirty energy from the grid, creating an added benefit.
Note that if your lessor is the one managing and paying for the energy, you can still work with them to make the necessary upgrades to reduce emissions.
Impacting your customers’ Scope 3 emissions
As companies become more shrewd in their choice of logistics partners, you’ll want to focus on significant ways to reduce their emissions based on your operations. Categories 4 & 9 (Upstream and downstream transportation and distribution) are the clear focus areas for your sector.
A close at hand method is to invest in low-emission vehicles, and electrify your fleet. In this adoption, it’s important to consider:
These vehicles require EV infrastructure at their charging location, and that infrastructure must have sufficient grid availability at the supply point.
To maximise emissions reductions, these EV chargers should run on renewable energy, such as from an on-site PV system, which can be augmented with a battery to account for charging needs outside of daylight hours. It's important to note that such energy sources can also reduce grid requirements, as the energy is generated on-site.
Like the impact on Category 8 above, these reductions are also highly trackable. You can easily report on the emissions reduction in the burning of fossil fuel, and the amount of grid energy required to charge your fleet which was not met by on-site renewable energy.
Practical navigation of Scope 3 reporting
With many categories and challenges in data access, addressing Scope 3 can be daunting. It’s important to keep in mind that, according to research from FTSE Russell, focusing on the two most material Scope 3 categories for your industry will account for an average of 81% of your total Scope 3 emissions. So, you don’t need to tackle it all to make a dent.
It’s important to keep in mind the associated ease of abatement - the relative difficulty and speed with which you can reduce your emissions in a particular category - based on economic and technical considerations, as well as the access to data and reporting on these achieved abatements.
In the logistics industry, adoption of clean energy both for powering leased facilities and in the electrification of fleets can be not only close at hand, but also present significant economic ROI, and lead to accurate data for reporting.
InRange is streamlining the entire renewable energy procurement process, unlocking new revenue streams for landlords and saving energy costs for tenants. The InRange platform provides guaranteed 10-year fixed export tariffs, with AI-powered matching of surplus energy to data centre and other in-network building demand through the InRange Marketplace.