Scope 3 emissions are the biggest contributors to carbon emissions, yet they are the most complex to calculate, and many people don’t know where to begin.
Understanding your business’s carbon footprint is becoming increasingly necessary to address the current challenges of global warming.
This means going beyond your own operations but looking outward to other scopes. As businesses across all industries begin to set ambitious sustainability targets, Scope 3 has become the largest element to tackle.
Calculating Scope 3 category emissions is complex, as it isn’t within your direct control, especially when it comes to transport and distribution.
The Logistics industry is a large contributor to scope 3 emissions, while having a significant impact on the global economy. The European Environment Agency predicts that by 2050 that logistics will account for up to 40% of global carbon dioxide emissions unless effective measures are taken. And many businesses get raw materials from manufacturers and deliver purchased goods and services, all of which involve logistics.
This article explains how to calculate Scope 3 emissions, why they matter and a closer look at how we can begin to report on your transportation factors: Category 4 (upstream transportation and distribution) and Category 9 (downstream transportation and distribution).
What are Scope 3 Emissions?
Scope 3 emissions include all indirect greenhouse gas GHG emissions that occur outside a company’s direct operations. So, everything an organisation doesn’t directly control, but is responsible for.
The GHG protocol breaks all emission factors down into 3 scopes:
- Scope 1: Direct Emissions from owned or controlled sources
- Scope 2: Emissions associated with the production of energy consumed by a company
- Scope 3: Indirect emissions related to company activities from sources not owned or controlled by a company
For most businesses, Scope 3 makes up the majority of total emissions. It’s also where the biggest knowledge gaps usually are and where many customers are asking for more data.
To make things clearer, Scope 3 is divided into 15 categories. The two most relevant for businesses that move goods are:
- Category 4 – Upstream transportation and distribution
- Category 9 – Downstream transportation and distribution
Why is Scope 3 reporting becoming essential?
Right now, reporting against your emissions isn’t a required action that most businesses need to take. However, as all businesses face increasing pressure from consumers and governments to tackle emissions in support of climate change, the need to quantify both direct and indirect emissions is becoming more prevalent.
With many people becoming more aware of the environmental impacts and life cycles of products, it is creating demand within businesses to reduce their carbon footprint and, in turn, logistics services.
So why should it matter to your business?
- To satisfy larger customers who need your data for their own ESG or CSRD compliance
- To meet public procurement or tenders asking for emissions disclosures
- To assure investors or partners prioritising sustainability in supply chains
Understanding and reporting on your Scope 3 gives you a competitive advantage, improves supply chain transparency and helps futureproof your business against inevitable regulatory changes.
Transport-related Emissions: Categories 4 and 9
If you receive goods from suppliers or transport goods to customers, you’re already generating scope 3 emissions under these two categories.
- Category 4: Emissions from materials and goods being transported to you (suppliers, factories, imports)
- Category 9: Emissions from delivering goods to your customers (B2B shipments, exports, etc).
If you use third-party carriers (freight forwarders or hauliers), their emissions will still count towards your own Scope 3 emissions.
How to Calculate Scope 3 emissions
How to calculate Scope 3 emissions has been a problem kicked around by sustainability specialists for some time. The problem is that a company has little control and little insight into what is going on.
The solution has been an agreement to use a modelled data set method, with pre-determined methodologies. This enables all scope 3 emissions to be evaluated and contrasted consistently across various corporate footprints.
Each category of Scope 3 reporting has different methods for which they are calculated. For categories 4 and 9, both should be measured using fuel-based or distance-based measurements.
The limitation of this is that some accuracy is lost, of course, but it gets the conversation started and, more importantly, gets the strategy in motion to reduce the emissions reported.
These factors are available via online resources and are regularly updated, including the Greenhouse Gas Protocol. The standard for logistics emissions is through GLEC (Global Logistics Emissions Council). Choosing a regulated and standardised emissions calculator helps to ensure that your reporting is credible, comparable and aligned with global standards (even more important if you wish to report your emissions externally).
GLEC:
The GLEC Framework was created by the Smart Freight Centre to generate a standardised method for calculating and reporting logistics emissions.
GLEC reporting allows for real-world data from transport providers, mode-specific and region-specific values; more accurate comparisons and tracking over time, as well as being fully compatible with ESG frameworks like SBTi, CDP and CSRD.
Being GLEC-aligned signals to your stakeholders that your emissions data is robust, transparent, and trustworthy.
How can Baxter Freight Make this easier?
If this sounds too complicated or time-consuming, you are not alone.
That’s exactly why we created our Sustainable Freight Network (SFN), a three-step solution that helps your business Report, Reduce and Remove its transport carbon emissions. We want to integrate sustainability into our customers’ logistics system, providing clear, easy steps to decarbonise your supply chain and offer exceptional customer service.
Starting with what you can measure: Report Scope 3 Solutions
Our GLEC-aligned Scope 3 reporting solutions provide a clear picture of your carbon footprint within your supply chain.
This covers your category 4 and 9 emissions, based on real freight data (not just rough estimates and delivered in an easy-to-understand report for internal and external disclosure. Whether you’re responding to a customer request or your own reporting, this gives you the confidence to act and to inform your baseline.
Going beyond reporting?
Once you have more visibility, we can help you tackle the next steps.
Reduce: Offering expert consultation on intermodal logistics and low-carbon fuels to minimise emissions.
This isn’t one-size-fits-all recommendations; they are built around your supply chain, and our expert team can support you to make meaningful changes. With access to 100s of lower-carbon fuel methods, we can find an emissions reduction solution that works for you.
Remove: Decarbonising supply chains by neutralising emissions through the purchase of carbon reduction certificates, supporting sustainable infrastructure via the Book-and-Claim system.
Even with the best strategy, some emissions will remain. As we wait for sustainable infrastructure to be more accessible, we can tackle removing your emissions now, whilst investing in the future.
Ready to start your sustainability journey?
At Baxter Freight, we make it simple to start your journey and provide meaningful strategies to keep your logistics moving in the most sustainable way. Our Sustainable Freight Network helps you report with confidence, reduce them through smarter logistics decisions and remove what you cannot avoid.
Whether you’re responding to supply chain pressure or reporting for your own improvement, we’ll help you make credible, measurable progress with carbon-smart logistics.
Our team of experts is dedicated to guiding you every step of the way. We understand that sustainability can seem overwhelming, but we break it down into manageable actions.
At Baxter Freight, we believe that every small step counts. Together, we can create a more sustainable future for your business and the planet. Ready to take the next step? Let’s work together to make your logistics greener and more efficient.
Contact our team today!