What is Scope 3 Category 4: Upstream transportation and distribution?

Within Scope 3, Category 4 focuses on upstream transportation and distribution and encompasses the emissions resulting from:

• Transportation of goods purchased by your company, including raw materials and inventory.
• Distribution of those goods to your facilities or customers before they are sold or used.

This category captures the environmental impact of moving products before they reach your organisation or are handed over to your customers.

Why are Scope 3, Category 4 emissions important?

Understanding and managing Scope 3, Category 4 emissions is vital because:

• Comprehensive Measurement: They help organizations account for a significant portion of their carbon footprint often overlooked in Scope 1 and Scope 2 measurements.
• Customer and Investor Expectations: Transparency in emissions reporting aligns with stakeholder demands for sustainable practices.
• Regulatory Compliance: Many jurisdictions are introducing mandatory reporting requirements for Scope 3 emissions.
• Opportunity Identification: Reducing emissions in this category can lead to cost savings and operational efficiencies, such as optimizing shipping methods.

How are Scope 3, Category 4 emissions calculated?

Calculating Scope 3, Category 4 emissions involves several steps:

1. Identify Transport and Distribution Activities: List all transportation and distribution activities within the upstream supply chain.
2. Collect Data: Gather data on the modes of transportation (e.g., air, sea, rail, road), distances traveled, fuel usage, and emission factors for each method.
3. Use Emission Factors: Apply emission factors from recognized databases (such as DEFRA or EPA) to convert activity data into carbon dioxide equivalent (CO₂e) emissions.
4. Calculate Total Emissions: Sum up emissions across all transportation and distribution activities.

What are some examples of Scope 3, Category 4: Upstream distribution emissions?

Here are some practical examples:

• A clothing retailer’s emissions from shipping fabrics from a textile supplier in another country.
• A manufacturer’s emissions from trucking raw materials to their production facility.
• The CO₂e generated by shipping a product from a warehouse to a retailer’s storefront.

How can companies reduce their Scope 3, Category 4 emissions?

Reducing these emissions requires strategic changes, such as:

• Choosing Transport Options: Partner with logistics providers that use low-emission vehicles or biofuels.
• Optimizing Routes: Use technology to design efficient shipping routes that minimize distance and fuel consumption.
• Consolidating Shipments: Combine shipments to reduce the frequency of transportation.
• Collaborating with Suppliers: Encourage suppliers to adopt sustainable practices, such as using electric vehicles (EVs) or cleaner fuels.
• Investing in Carbon Offsets: As a last resort, invest in credible carbon offset programs to balance out unavoidable emissions.