Consultant’s Insight: Mandating emissions measurements

Sustainability practices are increasingly important for shippers, carriers and logistics providers, but a uniform way to measure such practices is often lacking. The European Union’s Corporate Sustainability Reporting Directive looks to standardize greenhouse gas emissions reporting. [caption id="attachment_76185" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo Next columnist[/caption] CSRD is an EU environmental, social and governance standard passed by the European Union Council in November 2022 that is designed to make corporate sustainability reporting more common, consistent and standardized. CSRD will apply to: Private companies with more than 250 employees; Private companies with more than 40 million euros in annual revenue; Private companies with m ore than 20 million euros in total assets; Publicly listed companies that have more than 10 employees or 20 million euros in revenue; and International and non-EU companies that have more than 150 million euros in annual revenue within the EU, and at least one subsidiary or branch in the EU exceeding certain thresholds. Beginning on June 30, 2024, CSRD sustainability reporting standards for non-EU companies will go into effect. The directive requires businesses to disclose climate change-related risks and the impacts that such risks have on society and climate. It also requires collecting sustainability information across a company’s value or supply chains. Several supply chain carriers and providers are introducing services to assist EU customers and those with operations in the EU to comply with CSRD. FedEx recently introduced FedEx Sustainability Insights. The online tool provides a historical view of shippers’ estimated emissions, domestic and global, by FedEx Express , FedEx Ground and FedEx Freight shipments. DHL offers several options, including a carbon dashboard identifying carbon and cost optimization opportunities and a reporting and analysis tool for transport emissions. Kuehne+Nagel offers a calculator for ocean freight shipments. The Global Sea Logistics Carbon Calculator calculates the CO2 emission for the door-to-door transport of full containers and part loads. The calculations include current emission data by EcoTransit reported by individual carriers. Clean Cargo , the neutral industry body, verifies the calculation methodology and emissions factor. The CSRD is not the only governmental mandate to standardize carbon emissions and other sustainability practices. In March 2022, the United States Securities and Exchange Commission issued a proposed rule on climate-related disclosures. The rule would require public companies to provide certain climate-related information in their registration statements and annual reports. Among other things, companies would be required to disclose the greenhouse gas emissions caused by their operations through direct combustion (Scope 1 emissions) and purchased power or heat (Scope 2 emissions), as well as emissions caused by their supply chain and use of their products (Scope 3 emissions). About 1,020 companies in the U.S. voluntarily disclosed their Scope 3 emissions in 2021, according to CDP , a nonprofit that operates a database of corporate emissions data. Even if the SEC abandons its proposed Scope 3 disclosure requirements, this trend toward voluntary reporting will grow, given investor demand for supply chain transparency and corporate preferences for standardization.

Consultant’s Insight: Mandating emissions measurements

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