Why shipping emissions?
The transport sector contributes to around a quarter of global greenhouse gas emissions. Freight transport, the transportation of goods and commodities, is the largest contributor. These transport emissions are part of Scope 3 emission which represents a massive chunk of a company's total emissions and is also the most challenging to quantify and reduce.
To achieve net zero and reach the 1.5C Paris climate goals, we need to tackle this problem strategically.
Source: Pexels.com
A recent IBM study found that more than half of Chief Supply Chain Officers would sacrifice profit for sustainability. However, a high-performing company today can no longer simply be efficient - it must also be sustainable. Carbon emissions are becoming an increasingly important metric in this respect.
As a product manager in the sustainability team, I realized that our customers optimizing their order-to-cash-process were asking for solutions to also reduce emissions. They want to go beyond optimizing lead times and delivery costs. And they also get requests from their sustainability teams to help them get the data to calculate shipping emissions.
But it’s challenging. I have spoken to many companies and found that most of them have similar problems, which include:
- Siloed data: It’s hard to collect and integrate data between companies, suppliers, and carriers. It is not a secret that currently most companies are still using Excel and manual calculations to quantify their emissions.
- No single source of truth: Unlike financial data that is widely available in a company ERP, carbon emissions data is not readily available across the business. Let alone in logistics operations.
- Difficulties to create action: Although all companies know that they want to reduce emissions, it is hard to identify the root causes and implement reduction measures in their logistics.
