Towards a net-zero logistics sector
Moving cargo around the world is a carbon-intensive business, and new guidance launched at Davos will go a long way to getting freight back on track.
The World Economic Forum’s Annual Meeting held in January 2023 saw the launch of new guidance to support the logistics industry on its journey to net-zero emissions. Davos attendees got a first glimpse into how companies can better understand and track their logistics emissions. Released by Smart Freight Centre and the World Business Council for Sustainable Development, the guidance sets out to help businesses in the implementation of their decarbonization strategies.
This new publication highlights the usefulness and benefits of ISO 14083, a much-anticipated International Standard offering the first universal method for logistics emissions accounting. A game changer for climate action, the forthcoming standard is expected to support the industry globally in its carbon reduction efforts.
The logistics and transport sector contributes just over a third of global carbon dioxide (CO2) emissions, making it the largest-emitting sector in numerous developed countries. And that share keeps growing. In 2021, the transport sector accounted for 7.7 gigatonnes (Gt) of CO2 – an increase of 8 % since pandemic measures were lifted. Today, the world’s total annual CO2 emissions are around 35 Gt.
A sector that makes such a significant contribution to global emissions can play a critical role in the transition to a decarbonized future, as well as adapting to the impacts of climate change. To meet the world’s net-zero targets, transport needs to reduce its emissions by around 20 %, to less than 6 Gt by 2030, in anticipation of the projected growth in demand for global trade.
It’s clear that the transport industry is intent on taking a leading role in the just, healthy and resilient transition to a zero-carbon world. The opportunity to break the deadlock is evident and there is little time to lose if we are to meet our climate ambitions. Momentum is building with the publication of End-to-End GHG Reporting of Logistics Operations, and there is a sense of optimism that it can be done.
Freight transportation plays an important role in our global economy.
Bridging the gaps in decarbonization
Freight transportation, in particular, plays an important role in our global economy. Billions of tonnes of cargo are transported around the world each year by trucks, planes, ships and trains. According to researchers from the Massachusetts Institute of Technology Supply Chains Initiative, freight transportation contributes approximately 8 % of global greenhouse gas emissions. Add warehousing operations and this figure inflates to 11 %.
Carrying billions of tonnes of freight annually needs masses of energy, and a lot of CO2 emissions. A “business as usual” approach would see CO2 emissions from freight grow, yet this scenario is unlikely to happen. And here’s why. The sector is already tackling head on its carbon footprint, with standards playing a key part in the process. Recent data reveals several countries are reducing their carbon emissions. In fact, many freight forwarders and transport companies are targeting net zero by 2050, or even earlier.
Keeping track of the carbon emitted during the production and trade of goods and services, and taking stock of progress made in reducing these emissions, will be key. With this in mind, different approaches have already been developed to quantify the amount of CO2 emissions in products and economic activities.
Understanding where emissions come from is the first step in managing them.
So how is the freight sector keeping up? And what is the role for International Standards? It all begins with efficiency and a desire to reduce environmental impacts. As with all things, understanding where emissions come from, and establishing a detailed baseline of CO2 emissions, is the first step in managing them.
Supply-chain-focused coalitions – covering multiple transport modes – are reducing complexity by enabling shippers to participate in decarbonization efforts. Examples of such collaborative effort already exist. Take, for instance, Smart Freight Centre (SFC). To help multinationals monitor, report and eventually reduce their CO2 emissions, the SFC created the Global Logistics Emissions Council (GLEC) Framework. More than a hundred multinationals use our GLEC Framework to disclose their logistics emissions, and it is one of the primary inputs for a new ISO standard.
Bold steps are needed to further reduce trade-related emissions.
For Sophie Punte, Founder of Smart Freight Centre, developing an ISO standard is an essential step to building the credibility of the GLEC methodology and promote its global acceptance and consistent application by government, investors and multinationals. “The GLEC Framework – and soon the ISO 14083 standard – allow for consistent calculation and reporting of global logistics emissions. If coupled with blockchain technology, the sector could deliver a transparency revolution,” she says.
ISO 14083 will scale up the collective efforts. It will provide a unique tool for these players to drive climate action, create policies and roadmaps to reduce emissions and track progress. Developed through a multi-stakeholder process, the ISO standard is expected to garner greater support from governments worldwide, which in turn will enhance alignment between corporate and government accounting and reporting of logistics emissions.
And there’s more good news. ISO 14083 covers both passenger and freight transport. This will ensure a common industry guideline for calculating and reporting emissions from freight transportation and logistics. The annex will provide sector-specific guidelines on issues such as vessel categories, default emission intensity values and worked calculation examples for inland waterway transport, that supplement the provisions of the main standard.
This is seen as an important opportunity for the sector to ensure alignment between existing sector practice and an International Standard that is expected to play a significant role in the fight to cap future GHG emissions from transport.
Bold steps are needed to further reduce trade-related emissions. Ultimately, providing reliable benchmarked calculations with sufficient geographic coverage should help businesses move goods in the cleanest, most effective way possible, selecting fuel-efficient carriers and modes, reporting emissions and identifying the most viable technologies and strategies for emissions reductions. And while we wait for that to happen, let’s spare a thought for the carbon emissions impact of what it took to package and transport them all the way to our front door.