Scope 3 emissions can be categorised broadly as factors in the supply chain which are beyond the direct control of and scope of the manufacturer
Scope 3 emissions from transportation pertain to the environmental impact of activities like shipping goods in the value chains. These emissions extend beyond a company's immediate operations and play a crucial role in its overall carbon footprint. Managing these emissions is vital for minimising the environmental consequences of industrial goods movement and fostering sustainability.
The scope 3 emission from transportation becomes critical for a country like India where we have low to no control on the transportation being a completely outsourced piece for the manufacturers. Scope 3 emissions potentially increase the footprint to serve a product to its end consumer.
Understanding Scope 3 Emissions
Scope 3 emissions can be categorised broadly as factors in the supply chain which are beyond the direct control of and scope of the manufacturer - some of them includes emissions from the upstream and downstream transportation, packaging material used to store and move goods, business travel etc.
They are extremely important and critical to supply chain sustainability for reasons like - they are one of the largest proportions of the overall organisational emission profile. Unless we effectively abate the scope 3 emissions and have a clear roadmap on the same - the net zero will remain a pipe dream.
Framework for Reshaping Manufacturing Logistics
Transportation upstream and downstream i.e. inbound logistics and outbound logistics significantly contribute to the scope 3 emissions. In India, since we have mostly the outsourced logistics model which is like, a manufacturing organisation enters into a rate contract for movement of goods from place A to B which is fixed and negotiated, now manufacturer have low-to-no control on the type of truck (fuel type, old trucks etc.) which is going to cater to their routine movements. This puts them into a fix while they ascertain the ways and means to effectively abate these emissions.
A clear breakdown to approach this problem like we do is to first have the right measurement as, we cannot improve, if we cannot measure. Measurement and benchmarking becomes the leading points in transportation and must be done at a disaggregated level for each dispatch happening in the network. With the help of measurement, profile the network and key characteristics which are correlated with the relatively higher or lower emissions.
Identify the segment of transportation operations from the lens of feasibility of deploying better trucks, alternate fuel trucks - CNG, CBG, LNG or EVs etc. Collaborate with the supplier ecosystem to share the roadmap and partner for the greener logistics and keep measuring the improvement metric in the real-time.
Overcoming Challenges
Data is one of the major bottlenecks in implementing such frameworks. We need clear, identifiable and disaggregated line item wise dispatch details in order to achieve an in-depth emission profiling of a transportation network.
Aligning for the right data acquisition and making a real-time pipeline is the first obstacle to overcome. The next is the change management on multiple ends - so why and what should we be ready to pay additional to begin with if we are going with the alternate trucking / fuels which may cost higher.
The clarity and strategic road map of execution along with the buy-in from the stakeholders constitutes a critical success factor in the large organisations. Attempting for the independent audit and certifications becomes the next major obstacle to take the initiative to the global reporting levels.
Benefits and Business Impact
There are several ways in which the emission abatement desirably impacts the business and organisations and vice versa too. The sensitivity to the ecosystem and focus on preserving the same, obviously results in flourishing societies which in turn augment the businesses.
Nowadays the organisations are already switching to the internal carbon costing to lower the impact of CO2 from specific projects even before approving the same.
As we march towards a more sustainable future, the significance of Scope 3 emissions, especially in the manufacturing industry, cannot be overstated. This sector holds the key to transforming how goods are produced, transported, and consumed, thereby reshaping our environmental footprint. By embracing innovative technologies, optimising supply chains, and fostering collaboration, the manufacturing industry can lead the charge in curbing Scope 3 emissions.
( Nitish Rai is ceo and co-founder, FreightFox.)