As more and more companies focus on being sustainable, it’s important to think about emissions beyond their direct control. These are called Scope 3 emissions and can happen upstream and downstream of a company’s operations, like when goods are transported and distributed. For businesses with big supply chains, the transportation and distribution of products can create a lot of Scope 3 emissions. This article talks about why it’s important to manage these emissions and how it helps create sustainable business practices.
What are Downstream Transportation and Distribution Emissions?
When a company’s value chain produces emissions indirectly, they’re considered Scope 3 emissions. This includes emissions from suppliers, transportation, distribution, product use, and disposal. Downstream transport and distribution emissions fall under Category 11 of the GHG Protocol Scope 3 emissions categories, which covers the “use of sold products” and includes emissions related to transportation and distribution of products to customers.
Managing Downstream Transportation and Distribution Emissions
Managing downstream transportation and distribution emissions can be tough because they often involve lots of different people and types of transportation. Companies need to think about emissions associated with both inbound and outbound transportation, as well as emissions generated by third-party logistics providers.
Why is Managing These Emissions Important?
Reducing downstream transportation and distribution emissions is important for creating sustainable business practices. Here are some of the main reasons why:
Meet stakeholder expectations: Nowadays, customers, investors, and regulators are increasingly interested in sustainability. By managing downstream transportation and distribution emissions, companies can meet their expectations and maintain a good reputation.
Cost savings: By reducing emissions related to transportation and distribution, companies can save money on fuel and make their supply chains more efficient. This can lead to cost savings over time.
Risk management: Managing downstream transportation and distribution emissions can also help companies reduce the risks associated with supply chain disruptions and changes to regulations.
Innovation and differentiation: By prioritizing sustainability, companies can stand out from the competition by being innovative and different. By making sure their downstream transportation and distribution practices are sustainable, companies can appeal to customers who care about sustainability.
Steps for Managing Downstream Transportation and Distribution Emissions
To manage downstream transportation and distribution emissions, businesses can take these steps:
Assess emissions impact: Companies need to understand the impact of downstream transportation and distribution on emissions so they can set reduction targets and identify opportunities for improvement. This means measuring emissions related to inbound and outbound transportation, working with logistics providers to collect data, and using tools such as carbon calculators.
Work with logistics providers: Logistics providers are important for managing downstream transportation and distribution emissions. Companies should work with them to understand their impact on emissions and find ways to collaborate and improve.
Optimize transportation and distribution: Companies can reduce downstream transportation and distribution emissions by optimizing transportation routes and modes, reducing packaging and waste, and using more fuel-efficient vehicles.
Implement sustainable practices: Companies can implement sustainable practices such as using renewable energy sources, electric vehicles, and alternative fuels.
Communicate progress: Communication is essential for managing emissions in downstream transportation and distribution. Companies should communicate their progress to stakeholders, including customers and investors, through sustainability reports, social media, and other channels.
Managing downstream transportation and distribution emissions is important for creating sustainable business practices. By understanding emissions related to their supply chain and making sure they’re sustainable, companies can reduce their environmental impact and gain a competitive advantage. They can also meet stakeholder expectations, save costs, manage risks, and be innovative.
Author: Shernaz Jaehnel, Attorney at Law, CDPO/CIPP/CIPM, Compliance, ESG & Risk Manager
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