The Role of Carbon Regulations in the Logistics Industry
As climate change becomes an increasingly urgent issue, governments and organisations worldwide are adopting policies and targets to cut carbon emissions. The transport and logistics sector, responsible for over a third of global CO2 emissions, is at the forefront of these efforts. By implementing carbon reduction strategies, supply chain stakeholders can significantly contribute to achieving global sustainability goals.
What Are Carbon Regulations?
Carbon regulations are legal frameworks designed to reduce emissions and tackle climate change. Although approaches vary globally, many countries, including the UK, EU, and the US, have set ambitious net-zero targets for 2050. These measures range from mandatory emissions reporting to carbon taxes on imports, all aimed at reducing environmental impacts.
In Europe, the European Union (EU) has introduced a series of policies under its “Fit for 55” strategy. These include the Carbon Border Adjustment Mechanism (CBAM), which places a levy on the carbon footprint of imported goods to minimise emissions leakage. The initial implementation phase of CBAM, starting in October 2023, covers materials such as steel, aluminium, and fertilisers.
How Logistics is Affected by Carbon Policies
The logistics sector faces increasing regulatory requirements, including mandatory emissions reporting. For instance:
European Union (EU): Companies falling under the Corporate Sustainability Reporting Directive (CSRD) must disclose environmental data, including Scope 1 and 2 emissions, if they meet specific criteria (e.g., turnover above €40 million or more than 250 employees).
United Kingdom (UK): The Streamlined Energy and Carbon Reporting (SECR) policy requires large businesses to disclose carbon emissions, energy use, and related measures.
United States (US): Proposed SEC rules may soon mandate climate impact disclosures, including emissions data, for publicly listed firms.
The GLEC Framework: Measuring Emissions in Logistics
The Global Logistics Emissions Council (GLEC) Framework provides a standardised approach to calculating and reporting greenhouse gas emissions in the logistics sector. Covering multiple transport modes such as road, sea, and air, it allows businesses to measure and track emissions, enabling informed decision-making and progress toward sustainability.
Supporting Sustainability Goals
Accurate emissions reporting is essential for developing effective strategies. Businesses should conduct materiality assessments to identify key areas of impact and opportunities for improvement. Advanced technology and third-party auditors can help organisations address challenges such as Scope 3 emissions reporting.
By aligning with carbon reduction policies and frameworks, the logistics sector can play a critical role in creating a more sustainable future.
What is climate change?
Climate change is the greatest environmental challenge facing the world today. Rising global temperatures are bringing changes in weather patterns, rising sea levels and increased frequency and intensity of extreme weather. The effects are being felt in the UK. Internationally there are severe problems for people in regions that are particularly vulnerable. Climate change is caused by the release of greenhouse gases into the atmosphere.
What are greenhouse gas emissions? The key greenhouse gas emissions are carbon dioxide, methane and nitrous oxide hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride. Each gas has a different capacity to cause global warming. Carbon dioxide is expected to be responsible for about two thirds of the anticipated future warming.
What causes greenhouse gas emissions? Human activities release greenhouse gas emissions into the atmosphere – using electricity generated from fossil fuel power stations, burning gas for heating or driving a car. Within the UK it is estimated that business activities account for about half of all emissions.
Why are Westbound measuring our business’s greenhouse gas emissions?
Cost Savings
We see carbon footprint calculations as a sensible form of risk management for any future legislation changes, supply chain disruption and increases in the price of carbon. Even with the price of carbon changing, calculating our carbon footprint and reducing it can lead to cost savings for our business which we can pass onto our clients so that everybody benefits.
To do our bit – Most importantly we understand the contribution our business is making to climate change and want to do our bit to help reduce it.
To Generate new business opportunities
If we reduce our incoming costs we can apply those savings to other areas of our business and become more agile to increase our competitiveness in the market and offer greater service value to our customers.
By monitoring and applying good practice in our own carbon use it will help us meet the information needs of our customers in the future, calculating our carbon footprint helps us to fulfil customer requests for information on our greenhouse gas emissions. This is becoming an increasingly important element of the procurement process. We also considered ways our carbon reduction journey could benefit our clients need for information as well, our business processes facilitate the smooth transit of goods around the globe but we are not directly shipping these goods ourselves, we therefore looked into ways we could provide a way for our clients to calculate the carbon footprint of their own business transactions from the perspective of shipping. That’s why we’ve included a simple carbon calculator on this page where our customers can input shipment details to calculate potential shipment impact and explore ways they can offset their own carbon footprint to support greener activities in their own business’s.
To Do our Bit
Most importantly we recognise and understand the contribution our business is making to climate change and wanted to do our bit to help reduce it.
How do Westbound measure our business’s greenhouse gas emissions?
Our first task was to identify which area’s of Westbound’s business needed to be included to measure potential greenhouse gas emissions. To do this we categorised the different parts of our business and identified the areas we either own or have control over. This means that we are only measuring emissions which relate to our direct business operations. To do this, we needed to set boundaries which ring fenced our business operations and help us identify which greenhouse gases we need to measure.
Once these aspects of our business were identified we then set out our plan to measure areas which may contribute to greenhouse gas emissions, we ascertained the emissions from these parts of our business and measured based on physical locations.
The main activities from our business which release greenhouse gases
- Electricity/gas use
- Waste disposal/recycling
- Business travel
- Owned or controlled vehicles
- Employee business travel
- Staff commuting
Identifying and recording areas where our business could potentially be directly impacting the climate crisis proved to be the easy part, calculating our actual carbon footprint based on the data we collated proved to be more challenging, we discovered that carbon footprint calculating can be considered carbon accounting and similar to creating a balance sheet and similar to accounting practice there are rules which we can follow. In this case the rules are set by the Greenhouse Gas Protocol. The Greenhouse Gas Protocol splits greenhouse gas emissions into three categories: Scope 1, Scope 2, and Scope 3.
Scope 1
Scope 1 are direct emissions caused by any process or activity by the company that causes greenhouse gas emission. Often this is in the form of fuels burnt on-site or by company-owned vehicles. Other forms are leaks of refrigerant gases (for example from refrigerators or air conditioning) or any emissions from industrial processes (for example from making cement).
Scope 2
Scope 2 are indirect emissions caused by a company purchasing energy (from sources you do not own or control). This is usually in the form of electricity, heat, or steam.
Scope 3
Scope 3 emissions are all the indirect emissions that occur because of business activity and are the most challenging to record and calculate,
- waste (decomposing waste emits greenhouse gases)
- emissions related to any goods or services purchased (for example any fuel emitted transporting them)
- employees commuting to and from work
Calculating scope 3 emissions is much more difficult and for this reason is deemed optional by the greenhouse gas protocol. We therefore consider this to be a work in progress with the intention of offsetting certain elements where we can, for example by actively promoting car sharing for employee commuting. In all cases we are committed to identifying as many areas as possible where the business can reduce our carbon footprint.
How we collected data
To calculate the greenhouse gas emissions for our business, we collected data from each relevant emission-releasing activity.
The quality of data we collected was important to ensure that our measurement of our emissions is as accurate as possible. We recorded our data usage into a spreadsheet. This method provides us with a useful means of recording the data as it can be easily updated and can facilitate internal quality checks.
It is normal practice to measure greenhouse gas emissions over a 12-month period it therefore made sense to align the data collection in line with our accounting period.
For our initial year of reporting, we focused on gathering data from electricity use (electricity bills), gas use (gas bills), water use (water bills) etc
Carbon Footprint Calculator – Westbound Clients Can Use This Tool To Measure The Footprint Of Their Shipments
We are including this tool to allow our customers to gain some insight into how their shipment movements can contribute to CO2 emissions. This is for demonstrative purposes at the moment and we be introducing live data tracking from our systems in the near future.