In April 2017, we released our vision for ‘Smart Freight Leadership’. Be a leader, we tell multinationals, by taking ownership of your logistics supply chain’s emissions performance. Even if it’s a largely outsourced service, it makes business sense to do so. But you can’t manage what you don’t measure is an old management saying that also applies here. So here is a solution: SFC worked with the Global Logistics Emissions Council to develop a universal way to calculate emissions consistently and transparently across all modes of transport and transshipment centers. It is called the GLEC Framework for Logistics Emissions Methodologies.
Aren’t multinationals already reporting their logistics emissions, you might wonder? We did some investigating to find out for corporations that sell products to you and I (our analysis of logistics service providers will follow). We selected 100 multinationals with a global logistics supply chain, spanning 12 sectors, including both the largest (revenue) and those demonstrating leadership through existing initiatives relevant to freight, climate and sustainability. Interestingly, 96 of them disclose their corporate greenhouse gas emissions to the Carbon Disclosure Project. However, it is unclear how many include outsourced logistics emissions. So far only 33 report their outsourced logistics emissions in their annual or sustainability reports.
The trouble is, these 33 corporations report their logistics emissions very differently. Some report CO2 while others report on the full range of GHG emissions (in CO2e). More important though is that many don’t report on both upstream emissions (transportation of raw materials or prepared components to production sites) as well as downstream emissions (movement of finished products to distribution platforms all the way to end-consumers). Or they don’t explain clearly what is included. It is quite a challenge to decipher these data, let alone work out how companies compare.
Let’s have a look at some of the reporters that stand out. Japanese companies Sony and Panasonic give an excellent infographic that links inputs (energy, water, materials) to outputs (waste and emissions), separating out the energy used for logistics to the emissions generated.
NIKE and Henkel beautifully visualize their logistics emissions impact alongside raw materials, manufacturing, retail, consumer use and end-of-life. Philips and BMW show the change in emissions from 2012 to 2016, including for logistics. Toyota put logistics emissions into context by listing it alongside other ‘scope 3’ categories recommended by the GHG Protocol’s ‘The Corporate Value Chain (Scope 3) Accounting and Reporting Standard.’ Pepsi Co goes one step further and includes links to reports submitted to CDP.
Richemont gives a transparent visual on how they progressed in quantifying logistics emissions since 2013, now covering all logistics, from Tier 1 to downstream retailers. In Samsung’s report I was a bit puzzled by the breakdown of logistics emissions by mode: shipping 57%, air 42% and road/rail <1%. That didn’t make sense. Then I spotted the footnote: rail/road covers Korea only. Yet, rather than criticize, I applaud these companies for their audacity to have made a start and admitting where gaps still exist. HP Inc gives detailed data for different modes and an overview of efforts and partners to reduce logistics emissions. Procter & Gamble adds a target: reduce truck transportation kilometers by 20% per unit of production by 2020. Heineken presents emissions and reductions achieved over the years in CO2 per hectoliter; IKEA in CO2per cubic meter product transported.
The ‘haute couture’ award for logistics emissions accounting goes to LVMH that now also owns Christian Dior. The company reports its logistics emissions separately for inbound (upstream) and outbound (downstream) logistics across six business groups. But that’s not all, within this they provide a breakdown by mode and show progress over the past four years!
For the sceptics among you who believe that corporations don’t report logistics emissions because it’s not significant compared to their total corporate emissions. Heineken reports a 12% logistics share in its corporate carbon footprint, Pepsi Co 11%, BMW about 8% and NIKE approximately 31% (lot of air transport). Then wouldn’t it be plausible that other similar corporations within their sectors generate significant logistics emissions too?
No excuse! There is a universal methodology out there, and at least 33 examples to learn from. We call on all multinationals to be a leader and adopt the GLEC Framework!
9 October 2017
Sophie Punte, Executive Director SFC
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