Sustainability is top of mind for businesses as regulatory, investor and consumer pressures mount. Governments around the world are increasingly introducing various sustainability regulations requiring organizations to report on emissions and climate-related risks and heightened awareness of our supply chain in recent years has driven a new sense of urgency in identifying solutions to emissions challenges. Sustainability is no longer a “nice to have”; it’s become business critical and an important competitive differentiator.
To meet stakeholder expectations, many businesses are committing to emissions reduction goals with targets of 2030 and 2040. Emissions reduction goals are frequently focused on measurement, reporting and reduction of scope 3 emissions – the indirect emissions that occur upstream or downstream in their supply chain. According to the U.S. Environmental Protection Agency, supply chains often account for more than 90% of an organization’s greenhouse gas emissions.
However, reporting on and reducing scope 3 emissions is no easy feat. While many industries operate their supply chains using ‘just-in-time' inventory management, a ‘just-in-time’ approach is not an effective strategy when working toward emissions reduction goals. Measuring and understanding scope 3 emissions takes time and a trusted partner, and reducing emissions tends to require more long-term solutions.
What Shippers Need to Know
You can’t manage what you don’t measure, so use technology tools to track emissions data.
To better address scope 3 emissions, companies first need to understand a baseline of their current emissions across their supply chain. Calculating this data can be complex because scope 3 emissions are those that fall outside a company’s direct control. It requires rigorous supplier engagement and credible, data-driven insights.
A C.H. Robinson 2024 shipper survey found that of the shippers who are changing their strategies to meet sustainability goals, 27% of respondents plan to leverage technology more than ever before. Working with a transportation or logistics provider that has the technological capabilities to provide accurate, quality emissions data is a tangible benefit to a company. It allows businesses to benchmark performance and track trends over time. With a greater understanding of emissions by mode, location, and supplier, for example, shippers can gain insights and identify possible opportunities and strategies for reductions.
The same data that’s used to inform emissions reduction strategies may also be needed to meet regulatory reporting requirements. That’s why it’s important to work with logistics partners and tools that align with globally recognized standards. For example, the Smart Freight Centre Global Logistics Emissions Council (GLEC) Framework is the premier globally recognized standard. This means when shippers work with a GLEC-accredited tool they can be confident their scope 3 emissions reporting meets the highest levels of quality.
The sustainable choice can sometimes be the more efficient and cost-effective choice.
Supply chain professionals have historically balanced cost and service when making shipping decisions. Now, emissions are also part of those strategic conversations and having the right data is key.
Using accurate, quality data, shippers can consider emissions reduction opportunities in combination with cost-effectiveness and transit time and then make informed decisions that best fit their sustainability goals and supply chain needs. For example, shifting freight from air to ocean or truck to rail is not always feasible based on inventory needs or transit time, so understanding other opportunities for emissions reduction is key.
A more efficient supply chain is, by nature, a more sustainable one and many traditional supply chain management techniques are also core tenets of sustainability strategies. When shifting from a carbon-intense mode to a lower-emitting mode isn’t possible, freight consolidation can be a reliable, cost-effective option. If shippers can optimize their network and freight to fill a truck or container completely, they can avoid wasted space. If they are shipping only enough freight to fill half a container or truck, they can work with a logistics partner to consolidate with other cargo headed in the same direction or aggregate purchase orders to ensure inventory can support longer transit times. While many businesses are using nearshoring to mitigate disruption risks, moving manufacturing or supplier operations closer to the product’s end destination can also save costs, enhance efficiency and lower emissions.
Watch for more sustainable innovations to be available at scale, but don’t wait for it to get started.
Innovation can help accelerate change and the shipping industry has seen a rapid increase in green solutions like EVs and sustainable fuel alternatives. These are exciting innovations that provide additional opportunities to reduce emissions; however, these new technologies are not currently available at scale and expansion and widespread adoption won’t happen overnight.
As research and development continues and as these technologies evolve, there may be more opportunities for shippers to incorporate or transition to green technologies. By leveraging different approaches and technologies today, shippers can gain a better understanding of where these technologies could potentially provide benefits and be better prepared to integrate green solutions more broadly going forward.
Now is the time to build and strengthen supply chain sustainability programs.
Every supply chain is different, and each has unique factors and vulnerabilities that can make reaching sustainability goals complex. With many companies having emissions reduction timelines and target dates coming to a head in 2030, it’s essential for companies to move sustainability strategies forward now.
No one company or individual can tackle sustainability alone. Collaboration is critical and it takes the right technologies to drive progress. For shippers who are eager to move forward with their sustainability aspirations, it’s more important than ever to work with the right partners to build cost-effective and environmentally conscious supply chains. Whether that’s a logistics company, nongovernmental organization or academic institution, it’s going to take all of us working together to address global sustainability challenges.
