Streamline & Sustain: How to Calculate Carbon Emissions in Your Supply Chain

Calculating carbon emissions in supply chains has become a critical task for businesses worldwide. As environmental concerns grow and sustainable practices become imperative, companies must accurately measure and manage their carbon footprint. 

Trax Technologies, a leader in Transportation Spend Management (TSM), has developed a Carbon Emissions Tracker that provides detailed, real-time emissions data for all shipments across various modes and geographies. 

This article will guide you through the process of calculating carbon emissions in your supply chain, utilizing Trax's advanced solutions.

Ready to take control of your supply chain's carbon footprint? Discover how Trax's Carbon Emissions Manager is a platform for tracking and benchmarking actual carbon emissions across transportation networks — all modes, vehicles, and regions — while integrating with broader Environmental, Social, and Governance (ESG) reporting.

The Importance of Calculating Carbon Emissions in Your Supply Chain

Understanding and managing carbon emissions is crucial for several reasons:

• Regulatory Compliance: Governments worldwide are implementing increasingly stringent regulations on carbon emissions. Trax's solution assists companies in meeting these evolving energy efficiency standards. For instance, the European Union's Emissions Trading System (EU ETS) and the United States' proposed SEC climate disclosure rules are examples of regulations that companies must navigate.
• Stakeholder Expectations: Customers, investors, and other stakeholders are demanding greater transparency and sustainability in business operations. Accurate carbon emission data helps meet these expectations. A 2021 study by PwC found that 76% of consumers would discontinue their relationships with companies that treat employees, communities, and the environment poorly.
• Cost Savings and Efficiency: Identifying and reducing carbon emissions often leads to significant cost savings and operational efficiencies. It's an opportunity to optimize your supply chain while reducing environmental impact. For example, optimizing transportation routes can reduce both fuel consumption and emissions.
• Triple Bottom Line Reporting: CEOs and CFOs are integrating environmental, social, and financial performance into their public commitments. Carbon emission data is a key component of this comprehensive reporting approach. The Global Reporting Initiative (GRI) Standards provide a framework for such reporting.
• Competitive Advantage: Companies that effectively manage their carbon emissions can gain a competitive edge in the market. They may attract environmentally conscious customers and investors, and potentially benefit from government incentives for sustainable practices.

Steps to Calculate Carbon Emissions in Your Supply Chain

Calculating carbon emissions in your supply chain involves a systematic approach that ensures accuracy and comprehensiveness. By following these steps, you can develop a robust framework for measuring and managing your carbon footprint.

1. Define the Scope of Your Calculation

The first step in calculating carbon emissions is to clearly define the scope:

• Supply Chain Tiers: Determine which parts of your supply chain to include, such as transportation, manufacturing, and warehousing. Consider both upstream (suppliers) and downstream (distribution and end-use) activities.
• Emission Sources: Identify all relevant emission sources, including various modes of transportation, vehicles, and regions. Trax's solution provides comprehensive coverage across these aspects. This may include:
  • Direct emissions from company-owned or controlled sources (Scope 1)
  • Indirect emissions from purchased electricity, steam, heating, and cooling (Scope 2)
  • All other indirect emissions that occur in the company's value chain (Scope 3)

2. Gather Accurate Data

Reliable carbon emission calculations depend on accurate data collection:

• Types of Data: Collect detailed information on fuel consumption, distance traveled, and shipment weights. Also, consider energy usage in facilities, waste generation, and employee travel.
• Data Collection Methods: Implement automated systems and collaborate with suppliers to gather necessary data efficiently. This may involve:
  • Installing IoT devices for real-time data collection
  • Utilizing existing ERP and transportation management systems
  • Conducting surveys with suppliers and partners
• Data Quality: Ensure data accuracy and timeliness. Trax utilizes real-world data from transportation networks, integrating it with freight audit and payment processes for detailed emissions information. Implement data validation processes to identify and correct any inconsistencies or errors.

3. Select an Appropriate Calculation Methodology for Greenhouse Gases

Choosing the right methodology is crucial for accurate calculations:

• Common Methods: Familiarize yourself with various carbon emission calculation methods, such as the Greenhouse Gas (GHG) Protocol. Other methodologies include:
  • ISO 14064 standards for quantifying and reporting greenhouse gas emissions
  • The Intergovernmental Panel on Climate Change (IPCC) Guidelines

• Trax's Methodology: Trax's Carbon Emissions Manager adheres to EU standards, focusing on weight and distance as fundamental components for measuring CO2 emissions. This approach ensures compliance with international reporting standards while providing actionable insights.

4. Utilize Technology for Streamlined Calculations

Leveraging technology enhances the accuracy and efficiency of your calculations:

• Carbon Emission Calculation Software: Employ specialized software to automate and streamline the calculation process. Look for features such as:
  • Automatic data import and integration capabilities
  • Built-in emission factors and calculation methodologies
  • Scenario modeling for emission reduction strategies
• Trax's Carbon Emissions Manager: This platform offers comprehensive carbon emissions analytics, dashboards, sustainability data normalization, and standardization. It integrates seamlessly with broader Environmental, Social, and Governance (ESG) reporting requirements. Key features include:
  • Real-time emissions tracking across all transportation modes
  • Customizable reporting and analytics dashboards
  • Integration with existing transportation management systems

5. Analyze and Interpret Results

Once emissions are calculated, thorough analysis and interpretation of costs are essential:

• Key Metrics: Focus on critical metrics such as total emissions, emissions per shipment, and emissions per mile. Consider developing industry-specific KPIs that align with your business goals.
• Identifying Improvement Areas: Use the data to pinpoint areas with high emissions and potential for improvement. Trax's platform provides granular emissions data for each shipment, enabling precise benchmarking and goal setting. This may involve:
  • Analyzing emissions by transportation mode, route, or carrier
  • Identifying inefficiencies in packaging or load consolidation
  • Assessing the impact of different fuel types or vehicle technologies

Overcoming Challenges in Carbon Emission Calculations

Calculating carbon emissions presents several challenges, but these can be addressed effectively:

• Data Gaps and Uncertainties: Address data gaps through comprehensive collection methods and supplier collaboration. Develop estimation methodologies for missing data based on industry averages or similar operations.
• Supplier Engagement: Actively involve suppliers in the calculation process to ensure consistency and accuracy across the supply chain. Provide training and resources to help suppliers understand the importance of emissions data and how to collect it accurately.
• Standardization: Trax's solution aids in standardizing and normalizing sustainability data, simplifying management and reporting of emissions. This is particularly important when dealing with global supply chains and diverse data sources.

Best Practices for Ongoing Carbon Emission Management

Effective carbon emission management requires continuous effort and strategic planning support:

• Setting Reduction Targets: Establish clear, achievable targets for reducing carbon emissions over time. Consider science-based targets aligned with global climate goals.
• Continuous Monitoring and Reporting: Implement robust systems for ongoing monitoring and regular reporting of emissions data. This may involve:
  • Regular audits of data collection processes
  • Periodic review and updates of calculation methodologies
  • Integration of emissions data into regular business reporting cycles
• Supplier Collaboration: Work closely with suppliers to reduce emissions throughout the supply chain. Trax's platform facilitates setting clean air goals and tracking progress, optimizing transportation networks for both cost and environmental impact. Consider:
  • Implementing supplier scorecards that include emissions performance
  • Collaborating on emission reduction initiatives and sharing best practices
  • Providing incentives for suppliers who meet or exceed emissions reduction targets

Reduce Your Carbon Footprint with Trax

Calculating carbon emissions in your supply chain is essential for regulatory compliance, stakeholder satisfaction, and operational efficiency. 

Trax Technologies offers a comprehensive solution with its Carbon Emissions Manager, providing detailed, real-time emissions data and powerful analytics tools. By following the steps outlined in this article and leveraging Trax's advanced technology, businesses can effectively manage and reduce their carbon footprint, contributing to a more sustainable future.

For more information on how Trax can assist you in calculating and managing your supply chain's carbon emissions, contact our team today.