Maximizing Sustainability Reporting Using Transportation Invoice Data

The U.S. Securities and Exchange Commission will soon vote on the implementation of new standards in annual reporting. If adopted, the update will require public companies to disclose information on climate-related risks and emissions.

Carbon emissions are broken down to three levels – production (Scope 1), electricity used for operations (Scope 2), and all other uses (Scope 3). The tracking and reporting of these emissions will be a challenge for many enterprises.

Scope 3 contains all transportation, logistics and other supply chain emissions, accounting for 27 percent of the world’s total emissions. By the time companies need to publish their 2025 annual reports, they will have to report full emissions data from all three scopes for the full year of 2024. That may sound like it offers some lead time, but it really doesn’t. In order to collect the data throughout 2024, companies will need systems that can track the data in 2023.

It is imperative that supply chain leaders start now in the pursuit of a method for tracking and reporting emissions. Tracking emissions from Scope 1 (production) and Scope 2 (electricity used in day-to-day operations) is relatively simple because the information is reflected in internal power usage records.

Scope 3, however, is much more complicated because of all the different variables involved, and perhaps the most complicated part involves supply chain activity. The company neither controls these emissions nor has easy access to data about them. Trying to gather all that data from outside vendors is a nearly impossible task.

Technology should provide some powerful assistance. Many software platforms have advanced to the point where they can help companies mine this data from their existing records, so it shouldn’t be necessary to try to collect all of this information manually. Much of the same software that’s used to track cost-efficiency and other operational details can likely be adapted to track emissions.

Although many companies probably don’t welcome the challenge of seeking a method to track their emissions, there is much to be gained by embracing it. Knowing your level of emissions, and being able to break it down to see where it’s being generated and how, will represent a powerful new level of insight into any company’s operations. This is why, for companies already committed to environmental excellence, the SEC’s new rule could prove to be a welcome incentive. The ability to measure these emissions means more than mere regulatory compliance. It can also serve to provide benchmarks for improvement.

Supply chain leaders should look for carbon emissions tracking platforms that dig deep into the data to see exactly what is generating the bulk of the emissions, and why. Company leaders will be empowered for the first time to make focused decisions that will truly improve the emissions footprint of the organization. They won’t have to guess. They’ll know.

Demand for corporate social responsibility is already strong and it’s growing. Companies that can show progress toward sustainability in their supply chain operations will have a competitive advantage in the broader market. Anyone can say they’re committed to sustainability. Those who can demonstrate that their efforts are measurable, defined and scalable will have proven the case.

The transportation and logistics industry is already working hard to adopt sustainable supply chain practices. It’s a priority because it impacts the health of the planet, and also because markets are demanding it.

We know that carbon and greenhouse gas emissions have increased by an astonishing 16,300 percent in the past 170 years. And we know transportation accounts for a substantial portion of that. The Industry deserves a way to demonstrate its improvement on this front. The SEC is getting ready to demand it, but good business and good stewardship of the planet already do.

 

Author Bio: Josh Bouk is the President at Trax Technologies, the global leader in Transportation Spend Management (TSM) solutions. Trax elevates traditional Freight Audit and Payment (FAP) with a combination of industry-leading cloud-based technology solutions and expert services to help enterprises with the world’s more complex supply chains better manage and control their global transportation costs and drive enterprise-wide efficiency and value. For more information, visit www.traxtech.com.