When it comes to creating international treaties on climate change, like the Paris Agreement, governments are in the driver’s seat. But businesses are increasingly feeling pressure to take a proactive role in tackling climate change and reducing their supply chain carbon footprint.
This isn’t surprising. Businesses and industries contribute a significant amount to greenhouse gas (GHG) emissions, particularly through their supply chains. CDP, the entity responsible for running the global environmental disclosure system, has revealed that GHG emissions in a company’s supply chain are, on average, 11.4 times higher than its operational emissions.
The supply chain carbon footprint is large. It’s also complicated to unpack when you consider the many entities involved – from suppliers of raw materials to manufacturers, distributors, and retailers, all the way through to third-party logistics (3PL) providers.
What is a supply chain carbon footprint?
A company’s supply chain carbon footprint is a measure of the environmental impact associated with the production and distribution of its goods and services. Any company that’s serious about reducing its footprint needs to think about tackling the full scope of emissions, including direct emissions from its own operations (Scope 1), indirect emissions from purchased energy (Scope 2), and indirect emissions from its supply chain (Scope 3).
Scope 3 emissions play a significant role
Scope 1 and 2 emissions are typically considered easier for brands to address. That’s because they’re under direct control of the organization. For example, a brand can choose to phase out the direct burning of fossil fuels or switch to purchasing renewable energy sources from suppliers. Scope 3 emissions require a different approach.
According to the United States Environmental Protection Agency, “Scope 3 emissions are the result of activities from assets not owned or controlled by the reporting organization, but that the organization indirectly affects in its value chain.” Both upstream and downstream sources generate Scope 3 emissions. For example, emissions generated during the production of materials by suppliers are considered upstream, while emissions created by burning gasoline in trucks used to deliver their goods to customers are considered downstream.
Scope 3 emissions are also a much bigger contributor to the overall GHG picture than are Scope 1 and 2. The World Resource Institute reports an average of 75% of companies’ emissions fall under Scope 3 (although it can approach 100% in some sectors). So it makes good sense for brands that are serious about addressing climate change to meaningfully tackle their Scope 3 emissions. This requires them to work closely with their partners and suppliers to effect change. Third-party logistics (3PL) is a great place to start.
How your 3PL impacts your Scope 3 emissions
For brands, in particular, shipping goods is a significant generator of Scope 3 emissions. Here are some things to look for in a 3PL partner to mindfully address the reduction of this class of harmful emissions.
- Sustainability commitment: Most 3PLs still follow a very traditional model, with emission-heavy operations and gas-guzzling vehicles. Don’t fall for greenwashing. Seek out a 3PL with a demonstrated commitment to sustainability, with clear goals and targets for reducing emissions, conserving resources, and minimizing waste.
Your 3PL should have a track record of implementing sustainable practices and be able to demonstrate the impact of its initiatives. For example, at GoBolt we’ve been focused on protecting the planet from day one. We’re in the midst of building a fully electric fleet and we are committed to providing carbon neutral first-party deliveries by the end of 2023.
Carbon neutral (or carbon neutrality) means having a total balance between the amount of CO2 that you emit, and the amount of CO2 that you remove or sequester from the atmosphere. This is also referred to as net-zero emissions, since you are bringing your emissions down to zero.
- Green logistics practices: Your 3PL should be able to point to sustainable logistics practices, such as using fuel-efficient vehicles (or, better yet, an electric vehicle (EV) fleet), reducing waste and emissions through optimized routing and scheduling, and choosing to use sustainable packaging wherever possible.
- Supplier engagement: Your 3PL should be actively engaging with suppliers and partners who help them adopt more sustainable practices. For example, GoBolt’s partnership with The Furniture Bank Network helps brands redirect returned or unsellable household items back into the community – getting children and their families the beds and furnishings they need as they exit homelessness.
- Emissions tracking: Due to their indirect nature, Scope 3 emissions are considered difficult to measure and manage. But Scope 3 reporting hinges on estimates or counting on supply chain partners for accurate emission measurements.
While it’s early days and many brands are still working out how to best report on emissions, your 3PL should be open and transparent about what information they can provide. Look for a willingness to provide tools that help you more clearly see the impact of your logistics operations on the environment.
To this end, GoBolt has launched a carbon calculator to calculate emissions from non-EV first-party deliveries. Using a distance-based methodology, the calculator provides GoBolt’s brand partners with a more accurate understanding of their Scope 3 emissions.
- Continuous improvement: The quest to conquer Scope 3 emissions can feel daunting. Whichever 3PL you choose to work with, pay attention to their words and actions. Are they actively seeking new ways to reduce emissions and minimize the environmental impact of their operations? Is the team open to collaboration and working with you to unlock enhanced transparency and control for your brand? At the end of the day, your 3PL partner should be just that – a partner who shares your focus on sustainability and is as committed to reducing the supply chain carbon footprint as you are.
In our efforts for continuous improvement, we recently partnered with veritree to sequester our emissions from non-EV first-party deliveries. Through this partnership, we will support verified nature restoration projects to sequester these emissions.
It takes a village to shrink the supply chain carbon footprint
There’s still much work to do when it comes to shrinking the supply chain carbon footprint. Less than one in five Fortune 500 companies has a climate goal that covers Scope 3 emissions. Many have concerns about how to tackle these indirect emissions when they lack expertise on how to collect, analyze, and report on data from a pool of third-party partners.
The good news is awareness of the impact of greenhouse gas emissions on the environment is increasing. Progressive companies won’t ignore climate risks in the value chain and they know stakeholders and customers are paying close attention to their actions. When it comes to managing Scope 3 emissions related to your logistics, partnering with a 3PL that takes a comprehensive and transparent approach to sustainability will go a long way toward helping you better understand and manage your Scope 3 emissions.
If you’re interested in learning more about sustainable logistics and how protecting the planet is built into our DNA at GoBolt, reach out to us today.