How to navigate the evolving emissions landscape

As global concerns about climate change intensify, businesses are facing more pressure to address their environmental impact. While many companies have already taken steps to reduce their direct emissions (Scope 1) and indirect emissions from purchased energy (Scope 2), incoming regulations are putting the onus on reducing Scope 3 emissions. 

Scope 3 emissions encompass all indirect emissions that occur in a company's value chain, from the sourcing of raw materials to the disposal of products at the end of their life cycle. These emissions often represent the largest share of a company's carbon footprint, making them an important focus area for sustainability efforts.

As regulations tighten and stakeholder expectations evolve, managing Scope 3 emissions is becoming not just an environmental imperative but a business necessity. 

The Evolving Regulatory Landscape

The regulatory environment surrounding Scope 3 emissions is rapidly changing, with new mandates emerging from key regional and global bodies. One significant development is the Corporate Sustainability Reporting Directive (CSRD) in the European Union. This directive will introduce extensive sustainability reporting requirements, bringing them on par with financial reporting.

Under the CSRD, affected companies will need to start recording their Scope 1, Scope 2, and Scope 3 greenhouse gas (GHG) emissions in compliance with the European Sustainability Reporting Standards (ESRS). Reporting on these emissions will begin in 2025, giving companies a limited timeframe to prepare.

Other regulatory changes are also reshaping the logistics landscape. The European Union's Carbon Border Adjustment Mechanism (CBAM) aims to prevent carbon leakage by imposing a carbon price on imports of certain goods from outside the EU. Meanwhile, in the United States, California's At-Berth Rule requires ocean-going vessels to reduce emissions while docked at the state's busiest ports.

These regulations, coupled with increasing consumer preference for environmentally conscious businesses, are driving a fundamental shift in how companies approach their supply chains and logistics operations.

The Challenges of Managing Scope 3 Emissions

Ongoing geopolitical tensions, such as those in the Red Sea, have forced companies to adjust their supply chains, often leading to longer shipping routes, increased use of air freight, and improvised solutions. While these adaptations have been necessary for business continuity, they come at the cost of increased emissions - a trade-off that will become increasingly unsustainable as regulations tighten.

One of the primary challenges in managing Scope 3 emissions is the lack of comprehensive data and visibility across the entire value chain. In order for companies to plan for and track emissions not just from their own operations but from those of their suppliers, logistics partners, and even their customers' use of their products, a higher level of data, tracking and analysis is required that many businesses are not yet equipped to handle.

Moreover, the complexity of global supply chains means that emissions vary significantly depending on the specific routes, modes of transport, vessels and carriers are used. Making informed decisions that balance operational needs with environmental impact requires access to detailed, accurate and centralised       information about different routing options.

How Fluent Cargo Can Help

The aim of the regulations is to reduce carbon emissions. Fluent Cargo's innovative platform attacks this problem head on by providing a comprehensive view of emissions by different route options. Similar to how Google Maps works for personal travel - Fluent Cargo empowers shippers to make informed decisions that consider both operational efficiency and environmental impact before the shipments are booked.

The platform's ability to display multiple route options, including single or multiple combinations of transport modes, along with transit times, carrier information, and detailed specifics, allows businesses to optimise their logistics operations with Scope 3 emissions in mind. For instance, a company might choose a slightly longer sea route over air freight to significantly reduce their carbon footprint.

By offering visibility into the type of plane or ship used and the historical performance of various service providers, the platform enables companies to plan for their Scope 3 emissions more accurately and proactively.

Strategic shipping optimisations can lead to significant reductions in carbon emissions while maintaining competitive pricing and efficiency. Fluent Cargo's platform facilitates such optimisations, allowing businesses to achieve similar results.

As the world moves towards a more sustainable future, managing Scope 3 emissions will become increasingly crucial for businesses across all sectors. The evolving regulatory landscape, coupled with changing consumer preferences, makes this not just an environmental imperative but a business necessity.