Companies increasingly are under scrutiny for their environmental impact. And the microscope isn't just focused on company assets. To be truly green, you also are accountable for your supply chain, including the transportation and logistics partners that operate on your behalf.
There's no getting around it: transporting goods and people burns fossil fuels. According to a recent World Economic Forum report, the global transport and logistics industry accounts for 2,800 megatons of greenhouse gases. This impact reverberates up and down the supply chain. In fact, between 5% to 15% of product-lifecycle emissions come from logistics and transportation.
For most companies, transportation and logistics are indirect emissions, called Scope 3 under the Greenhouse Gas (GHG) Protocol. Introduced in 2001 by the World Resources Institute and the World Business Council on Sustainable Development, the GHG Protocol guides companies on how to quantify and measure their output of six kinds of greenhouse gases, including those that encompass a company's direct and indirect carbon-emission contributions.
As defined by the GHG Protocol, Scope 1 emissions are direct emissions from operations or on-site energy production. Scope 2 accounts for electricity that is purchased from an outside provider. Scope 3 is much broader and can include emissions embedded in purchased products or emissions associated with transporting and disposing of the firm's products. Scope 3 carbon accounting obviously is the trickiest, because it requires companies to look beyond their own operations and consider the green worthiness of supply-chain partners.
Since the environmental impact of their operations can have a significant impact on your own company's footprint, the question is: How do you evaluate which potential logistics partners have made the most environmental progress?
When evaluating Scope 3 logistics partners, it's helpful to consider at least four key environmental dimensions:
- Mode flexibility
- Network optimization
- Clean-fuel technologies
- Complete carbon accounting
Let's look a little closer at these four dimensions.
Modal Flexibility: Getting There GreenerThe four different transport modes used in the transportation of packages and freight -- truck, rail, ship and air -- each have very different energy intensity and carbon-emission profiles. Air transport is six to eight times more energy intensive than trucking. Trucking is four times more energy-intensive than rail. Rail is twice as energy intensive as ocean shipping.
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