When talking about CO2 emissions, there are three different dimensions to consider. In the industry, we refer to them as Scope 1, Scope 2, and Scope 3. If you need a refresher on the different scopes, take a look at our other article where we explain the differences.
The importance of Scope 3
Scope 3 is more than just the transport of the manufactured goods. In order to really reduce your CO2 emissions as a company, it is not enough to only look at your own factory. Let’s take Snickers as an example: The mixing of the bars in their factory and transporting them to the store is only a fragment of the CO2 produced throughout the whole process. Getting the cacao and the peanuts into the factory is not an emissions-free business; and this will count towards the total CO2 imprint of every single bar. There are sub-suppliers and sub-sub-suppliers that also need to be taken into consideration. The ingredients of a Snickers bar come to the factory via sub-suppliers, who in turn might have their own suppliers, all the way along the supply chain.
Measuring and Disclosing the Emissions from Transport
Whereas the measurement of these steps is extremely difficult, there are methods for disclosing realistic and accurate CO2 emissions from this part of the supply chain. The real problem arises when we deal with CO2 emissions caused by transport – most notably road transport.
Where the four other modes of transport (air, sea, rivers, and rail) are dominated by few large companies, and/or their goods are transported directly from A to B (from harbor to harbor or from airport to airport), the road transport industry is very fragmented, complex, and a majority of its actors are small companies. Reporting their CO2 emissions is a costly and difficult task for them, with next-to no reward. As they are already operating on margins around 3%, there is little incentive for them to implement accurate measuring tools and to dedicate the time, effort, and money for CO2 reporting.
According to a recent white paper from Smart Freight Centre and the Carbon Disclosure Project, the result of this was that in 2019 less than 1% of global road freight was captured under Scope 1 and an infinitesimal share was disclosed under Scope 3. With an industry responsible for an estimated yearly 1.8m tons of CO2, this is an extreme, and extremely dangerous, under-disclosure.
We will not be able to reduce the worldwide emissions if Scope 3 emissions are not properly measured and disclosed, as a report by Smart Freight Centre shows. To achieve this, Tracks has developed methods to streamline data sharing between companies in the supply chain and thereby make it easier for companies to disclose their Scope 3 emissions.
Tracks has been doing exactly that for transport providers in the road freight industry (‘carriers’) and transport buyers (‘shippers’) since April 2020. We have now expanded our core technology and Tracks can now monitor emissions and create GLEC Framework-accredited reports for all modes of transport. By offering automated data sharing companies get a precise picture of the CO2 emissions from the freight and logistics activities all along their supply chain. Within the next few years, we’ll see more companies like Tracks, that work to develop different building blocks needed to help each company create a full emissions picture of their supply chain and enable a precise and automated measurement, allocation, and disclosure of its Scope 3 emissions.