By Salil Chari
Sustainability has become a strategic priority for businesses of all sizes, driven by increasing consumer demand, regulatory pressures, and the urgent need to address climate change. A significant portion of a company’s carbon footprint often lies in its value chain, known as Scope 3 emissions. These indirect emissions, which occur upstream and downstream, can account for up to 70% of a company’s total emissions. Tackling Scope 3 emissions is crucial for achieving meaningful emissions reductions, but it requires collaboration with suppliers, distributors, and customers.
For small and medium enterprises (SMEs) operating across international borders, measuring the carbon impact of logistics operations has posed significant challenges. The complexity of global supply chains, fragmented data sources, and lack of standardized emissions reporting frameworks have made it difficult for SMEs to gain visibility into their transport-related emissions.
Without accurate data on emissions from shipping, air freight, and other modes of transportation, SMEs have been hindered in their ability to optimize supply chains for sustainability. They have lacked the insights necessary to identify inefficiencies, compare the environmental impact of different shipping options, and make informed decisions that could help reduce their carbon footprint.
Furthermore, this lack of visibility has impeded SMEs’ efforts to implement effective decarbonization strategies and set meaningful emissions reduction targets for their logistics operations. Without a clear baseline and ongoing monitoring, it becomes nearly impossible to measure progress, identify areas for improvement, and drive meaningful change towards more sustainable practices.
Data challenge
The absence of granular emissions data has also made it challenging for SMEs to meet the increasing demands for transparency and comprehensive reporting on their environmental, social, and governance (ESG) performance. As stakeholders, investors, and regulators place greater emphasis on sustainability, SMEs have struggled to provide accurate and verifiable information on their Scope 3 emissions from transportation and distribution activities.
For companies in the consumer goods industry, such as retailers, apparel manufacturers, and food processors, a significant portion of their overall carbon emissions comes from their supply chains or value chains. Specifically, the emissions associated with the goods and services they purchase, known as Scope 3 emissions, can be the largest contributor.
These Scope 3 emissions account for a staggering 70 to 75 percent of the total carbon footprint for these companies. The primary driver of these emissions is the purchased materials, including raw materials, ingredients, and packaging, that are sourced from upstream suppliers and used in the production of their products.
To effectively reduce their environmental impact, it is crucial for these consumer goods companies, along with companies in most industries, to focus their decarbonization efforts on their supply chains. By working closely with their suppliers and implementing sustainable sourcing practices, they can work to lower the carbon emissions associated with the materials and services they procure.
Supporting SMEs’ Sustainability Efforts and Emissions Reporting
FedEx is enabling SMEs in Asia Pacific to measure and use data to help them manage their carbon footprint and Scope 3 emissions through its innovative FedEx® Sustainability Insights tool. This self-serve emissions reporting dashboard provides data on the estimated environmental impact of eligible shipments within the FedEx network, enabling businesses to make more informed and sustainable supply chain decisions.
This cloud-based tool, developed by FedEx Dataworks, uses network and package scan data to estimate CO2e emissions for eligible FedEx shipments, following the World Resources Institute (WRI) Greenhouse Gas (GHG) Protocol and the Global Logistics Emissions Council (GLEC) Framework.
SMEs can access emissions data for individual tracking numbers and aggregate historical data for their accounts. The tool displays information such as mode of transport, service type, and country or territory for all eligible FedEx shipments. With this level of transparency, businesses can identify opportunities to streamline shipping routes, consolidate cargo, and make more shipping choices that reduce their Scope 3 emissions.
As companies face increasing demands for ESG reporting, tools like FedEx Sustainability Insights can help SMEs improve transparency and drive their sustainability efforts. With visibility into transport-related emissions, SMEs can leverage these insights to help them optimize operations, set reduction targets, and transparently report progress.
Prioritizing sustainability is a business priority
Today, businesses and consumers alike are increasingly focused on environmental stewardship and sustainability. In our recent SME survey, 84% of Asia Pacific’s SMEs say they’ve already integrated sustainability into their business strategy or are doing so now. But far fewer can cite measurable results. Only 29% said they’re reducing the environmental impact of their operations and only 17% are using sustainable practices when sourcing. Companies today are expected to prioritize transparent sustainability reporting and take proactive measures to reduce their environmental impact. This shift towards eco-consciousness is no longer just a niche concern but a universal business imperative.
Simultaneously, consumers are also factoring sustainability into their decision-making process when it comes to e-commerce purchases. They want to support companies that align with their values and are actively working towards a future with lower emissions.
By leveraging technology, SMEs can gain insights into their carbon footprint and take actionable steps to drive their sustainability initiatives forward. This transparency not only helps businesses align with consumer preferences but can also help them to contribute emissions reduction efforts.
Salil Chari is senior vice president, marketing and customer experience, Asia Pacific, FedEx
