Millions of metric tons of CO2 are emitted daily due to coal, oil, and natural gas usage. While the climate crisis is a complex issue, the good news is more companies are prioritizing ESG goals, where there is the potential to have a positive impact. The biggest contributor to greenhouse gas emissions for companies to examine is the supply chain. Through increased supply chain visibility, companies can better hit their ESG goals. In this article, we’re looking at how visibility data, like container tracking and emissions data, help contribute to the bigger goal of sustainability.
Why Companies are Looking at the Supply Chain to Hit ESG Goals
Today's corporate leadership places more emphasis on ESG (environmental, social, and governance) goals as these issues become more critical to stakeholders, including investors, suppliers, employees, and customers. This trend can be traced back to 2006 when the United Nations announced six principles for responsible investing (UNPRI), which helped develop the idea of ESG investing. Since then, ESG factors have become an essential consideration for investors, as it has even been shown that ESG funds outperform the wider market.
The Sources of GHG Emissions and the Need for Emissions Reporting
An estimated 90% of a company’s greenhouse gas emissions come from the supply chain. Furthermore, the majority are attributed to Scope 3 emissions, defined emissions from assets not owned by the organization. In some cases, 95% of a company’s total GHG emissions may fall into this category.
Scope 2 emissions result from purchased electricity, steam, heat, or cooling. Scope 1 emissions come directly from company-owned assets. Scope 2 and Scope 3 emissions are the challenge to report, being indirect sources for the reporting company. Essentially, this means for a company to have a thorough understanding of these emissions and how to reduce them, they must have visibility.
For companies to develop an effective plan for reducing CO2 emissions, they must know their current emissions and be able to measure emissions against this baseline as action is taken to reduce their carbon footprint. With the support of this data, companies can continue to make better-informed sustainability decisions.
Types of Visibility to Help Measure Emissions
There are more than a few types of visibility data that apply to supply chain management, but the two that contribute to reducing CO2 are emissions data and container tracking data.
Emissions visibility data providers handle the challenges of reporting on Scope 3 emissions data, the biggest challenges deriving from the fact that it is currently only possible to get measured or primary data specific to every shipment, from the ocean vessel to truck routes. Many organizations make the mistake of using default data, only getting rough estimations that do not provide enough precision to monitor their progress. In response, emissions visibility provider Searoutes uses a combination of measured plus modeled data to achieve both accuracy and precision.
Container Tracking Data
Ocean container visibility gives companies real-time container tracking and insight into capacity, demand, delays, and disruptions across the entire industry. This tracking data enables a more proactive supply chain and one that can better manage their ESG goals. Organizations can understand the movement of their containers and where problems and inefficiencies occur, which ultimately informs their action plan for reducing their carbon footprint.
With More Visibility, Companies Can Route Plan to Reduce Emissions
One of the biggest applications of visibility data toward ESG goals is the ability to plan and optimize routes used in transportation. Whether for an ocean vessel or truck, the exact routes taken significantly impact the supply chain's carbon emissions. Organizations may choose to ship containers on a slower but more energy-efficient ocean route. Companies with container and emissions data know exactly how each route decision affects the larger sustainability goals. It also helps companies make further decisions down the line when there are different factors at work, for example, when there is a time-sensitive shipment.
With visibility data, stakeholders can see the progress made toward ESG goals, and this data can also inform supply chain partners that affect a company’s Scope 2 and 3 emissions.
Adopt an API-First Approach for More Complete Visibility
With any visibility solution, the implementation approach has a hand in affecting the solution's usability. An API-first approach, as with VIZION, offers quality data, flexibility, and adaptability for a range of solution demands for a more complete visibility solution. VIZION provides real-time container data that offers a range of benefits, including support for organizations to reach their ESG goals. To learn more about VIZION and visibility as the foundation for reducing carbon emissions, reach out to us today.