Using primary data in scope 3 emissions reporting

Measuring and sharing of primary data

The second Carbon Intelligence Mastermind Community Meetup looked at a sensitive subject area that needs to be tackled head-on if the transportation industry is to meet ambitious carbon reduction goals: the measuring and sharing of primary data.

Jakob Muus, Director of our Sustainability Tribe and Anna Reuttner, Sustainability Domain Expert, were joined by community members from all over the world for an engaging hour of debate and information-gathering.

The second meetup was another opportunity for the fast-growing community to get to know each other, to share their challenges and frustrations about their carbon accounting efforts, and to kick-start ideas and initiatives for feedback.

This stuff really matters: the transport sector is the only sector in the EU that has seen rising emissions since 2019 and estimates show that at the current rate the transport sector will double its emissions by 2050. 10% of global emissions come from transportation already, so avoiding or circumventing the issue is not an option. 

Data quality and reliability

Data quality is the number one prerequisite to scale up decarbonisation. In order to make good and effective decisions regarding freight decarbonisation, you need to understand where your emissions come from, and the processes involved. And primary data is the golden goose.  

We started the session with a snap poll to the community:

It’s clear that efforts have kicked off around the industry in this vital area, but with mixed results. Key issues were thrown into focus by the crucial difference in the second poll question asked to the community: 

To this, a huge majority answered in the negative, while those who had tried to share primary data had struggled to access the right, appropriate data. 

This contrast neatly illustrates a key theme and concern. While both buyers and sellers of transportation agree that there are real gains to be made from securing credible data numbers and allocating emissions accordingly, it remains very hard to harvest CO2 at a granular shipment level based on real figures from a transport carrier or 3PL. It therefore means relying on imperfect default and modelled data, which by their very nature cannot be 100% accurate. 

Experiences shared by community members backed up this view. “It’s hard to know if you’re getting reliable data,” said one shipper. “We were given emissions figures by LSPs, which they allocated to us themselves, but we have no way of knowing how accurately they were accounted.” 

Others expanded on this view. One LSP pointed out that his/her company had noted differing approaches to carbon accounting across various fleet providers, but that in most cases such numbers were based on modelled data. “A very professional approach containing all variables is still very much the exception.” 

Anna and Jakob then asked the community to outline some of the key challenges companies face in obtaining and sharing data. 

Top of the list was reliability of data – not because there was any desire on the part of suppliers to be inaccurate, but simply because they work in time-intensive complex networks with many moving parts. “It’s very difficult to get accurate data from owner-operated small sub-contractors who are already working hard on core priorities in other areas of their business, and that’s understandable,” pointed out one contributor. 

Time-intensive priorities are clearly a big obstacle. “We have a huge network – Asia, Europe, North America, across all modes, rail, road, ocean,” explained another community member. “We have many small transport providers and it is just too hard to get information from everyone. We simply don’t have the resource to contact each one individually.”  

For this reason, it’s more common for carbon to be accounted in averages rather than per shipment, for the simple reason that it’s easier and faster for all concerned in the absence of anything better.  

Further complications arise in trying to allocate the correct numbers to different customers. Routing structures are complex, backloads need to be factored in – journeys are not a simple matter of ‘straight out and back’ so emissions accounting must factor this in. 

Anna agreed and pointed out that it’s a stage-by-stage effort – just to be trying is a great start in itself and that absorbing this pain now will help ensure that calculation methods improve and become more congruent across the board. 

Calculating and measuring emissions 

This moved the group to begin sharing best practice into emissions calculation methods and, more specifically, what is needed to accelerate accurate use of primary consumption data in Scope 3 emissions management. 

One shipper member made the strong point that we need to find ways to help every carrier to reach the same level of data sharing availability, because without it, 100% coverage will not be possible. 

Jakob pointed out how far we’ve come in the five years he has been working in this field – from a frank lack of interest among many stakeholders to a much more engaged position, looking for ways they can both help and be assisted themselves to achieve goals. For obvious commercial privacy reasons, carriers remain nervous about sharing fuel consumption figures, but there is clear engagement in looking at ways to count carbon at a granular, shipment level. 

As ever, complexity is an obstacle – producing reports is one thing, but who precisely should they be sent to, and when, and with what criteria? 

A community member suggested that he/she is yet to see a best practice that fully accounts for every possible variable, and wondered if that might lead to carbon accounting measuring being manipulated to suit the priorities of the measurer, whether shipper or carrier. In short, while the framework is right and proper, the refereeing and policing of it might be tricky. 

Anna and Jakob stressed that agreed standards are coming. Thanks to the GLEC framework and the work of the Smart Freight Centre, we are seeing a pathway to a shared future via Scope 1, Scope 2 and Scope 3 emission measuring and counting. Jakob suggested that the next stage is to secure the buy-in of the big accountancy companies, so that carbon is measured and counted via a method as universally accepted as that of financial accounting. As the community already knows, you can’t manage what you can’t measure – in financial accounting, you can show every cent; with carbon, you can’t yet do so. Measuring via default factors or via modelling is a start, but the criteria are far from perfect because you need 100% accurate figures to make the right decisions for your business. Jakob is positive, though: “We are still very much at the beginning with this, having come a long way already.” 

Insetting 

The concept of insetting also raised some comment. To explain, it’s different to the more familiar offsetting, whereby a company invests in products outside its own stable to offset against its carbon footprint; the downside of this is that the company is not actually reducing its own emissions with such a strategy, and reduction is something it will undoubtedly need to do.  

Insetting offers more positive opportunities and is seen by many experts as a good path forward. When insetting, the company does so using its own products or resources. In transportation, a good example might be the production or use of biofuels in one area to set against the use of a fossil fuel in another. Insetting offers a way to decarbonise and can bring some strong solutions to the industry; credible and full transparency will be key to its further expansion and wider success. 

This was a great session on what is still a thorny area in the early stages of a clear solution. The positive debate and search for clarity now continue in earnest.

Meanwhile, we’ll see you for the next event for the community - Masterclass on May 16 at 14:00 CEST, in which we’ll talk about profit and sustainability at the individual company level.