The U.S. Securities and Exchange Commission will soon vote on implementing new standards in annual reporting. The update will require public companies to disclose information on climate-related risks and emissions if adopted.
Carbon emissions are broken down into three levels – production (Scope 1), electricity used for operations (Scope 2), and all other uses (Scope 3). As a result, tracking and reporting these emissions will be challenging for many enterprises.
Scope 3 contains all transportation, logistics, and other supply chain emissions, accounting for 27 percent of the world’s total. Therefore, when companies publish their 2025 annual reports, they will have to report full emissions data from all three scopes for the entire year of 2024. That may sound like it offers some lead time, but to collect the data throughout 2024, companies need systems to track the data in 2023.
Bottom line? If you’re not tracking and measuring carbon emissions – you’re behind. That’s why it’s imperative that supply chain leaders start now to pursue a method for monitoring 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 the different variables involved – perhaps the most complicated part involves supply chain activity. The company neither controls these emissions nor has easy access to the data. 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 collect it all manually. Moreover, much of the same software used to track cost efficiency and other operational details can likely be adapted to track emissions.
Many companies don’t welcome tracking their emissions, but it’s a powerful new level of intelligence in your operations. Knowing your level of emissions and the ability to analyze and distill it will represent a powerful new level of intelligence in your operations. The SEC’s new rule could be a welcome incentive for companies committed to environmental excellence. Measuring emissions means more than mere regulatory compliance; it can serve as benchmarks for improvement.
Supply chain leaders should look for carbon emissions tracking platforms that dig deep into the data to see what generates the bulk of the emissions. Then company leaders will be empowered to make focused decisions that will improve their emissions footprint. They won’t have to guess. They will 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. However, those who 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 planet’s health, and markets demand 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.
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.
