What is carbon accounting and how can the logistics and transportation industry quickly gain a competitive advantage with labeling solutions?

With the recent publication of ISO 14083:2023, carbon accounting is becoming a new term in the business lexicon. Supply chain, transportation and logistics players need full confidence in their labeling systems as part of their solution.

What is Carbon Accounting?

Think of carbon accounting the same way you think of financial accounting: the accurate, auditable record of every transaction in every aspect of a business, clearly identifying the sources of profit and loss in a widely understood and accepted format. It’s not about money, but about CO2 emissions.

Your “profit” and “loss” (emissions) report shows how sustainable your business really is – to customers, suppliers, consumers, regulators and internal auditors who closely monitor the results. This once again underlines the importance of correct, reliable and legible labels on shipments, pallets and packages. Lost miles due to poorly labeled shipments negatively impact your bottom line.

Customers, suppliers and consumers increasingly want to know more about carbon emissions, which parts of the supply chain are responsible, and what steps an organization is taking to reduce emissions (as opposed to offsetting a significant change). Carbon accounting is therefore not only important for your stakeholders. In addition, international and local regulations are established.

Customers, suppliers and consumers increasingly want to know more about CO2 emissions.

Frank Deneweth, Managing Director at Brother Belgium

The EU Corporate Sustainability Reporting Directive (CSRD), introduced at the end of 2022, requires large companies (including more than 250 employees or a turnover of more than 40 million euros per year) to publish the figures for 2024 early (from the beginning of 2025). begin. At the same time, common standards are becoming more concrete in the area of ​​quantifying and reporting greenhouse gases from activities in the transport chain. ISO 14083:2023 establishes a framework for future guidance for supply chain organizations.

Carbon accounting to achieve climate goals

Unless companies start finding ways to manage and subsequently reduce their carbon emissions, they will have a backlog in the second half of this decade. It is no longer enough to compensate. CO2 reduction is the be-all and end-all. In short: If you want to achieve climate goals accurately, comply with current and future laws and at the same time protect your brand, you must take emissions into account in accordance with the agreed standards.

Emissions play a larger role in the logistics sector than in most other industries. In the United States, transportation (including domestic automobile use) is the largest contributor, accounting for 29% of all emissions¹. In the EU, transport was responsible for 25% of all emissions in 2020 and has taken a leading role in tackling CO2 reduction. This is done through a proposed regulation as part of the “Fit for 55” initiative.². The goal is to reduce net greenhouse gas (GHG) emissions by 55% by 2030 in order to achieve climate neutrality by 2050. This is an ambitious, if not controversial, plan, in which a modal shift or change of transport mode forms the cornerstone of represents the goal.

The plan requires large companies to submit emissions data as part of their ESG (environmental, social and governance) reporting. This currently only applies to large companies. However, SMEs should not assume that they will be exempt from this. Because competitive advantage is critical, the ability to leverage this data can only contribute to this goal.

Issue declaration

Most observers know that emissions generally fall into two categories: direct emissions, which are caused by your company itself, and indirect emissions, which are caused elsewhere. Your company needs them to function.

For calculation and reporting purposes, greenhouse gas emissions are divided into three more precise categories.

Scope 1 – Emissions caused by your own business and assets – buildings, vehicles and equipment.

Scope 2 – Electricity, light and heat that are not produced directly by your company but are required for efficient operation.

Scope 3 – the most complex as it brings together all relevant emissions that arise in your supply chain but for which your company is not directly responsible – purchase, use and disposal of products or services from suppliers. Business trips and employee trips also fall into this category.

Measuring carbon emissions is therefore complicated, but the EU is moving quickly to harmonize standards, driven by the GLEC (Global Logistics and Emissions Council) framework, launched in 2014 to set guidelines for the industry. The recently adopted ISO 14083 standard now enables uniform calculation and reporting of greenhouse gas emissions in global logistics, particularly with regard to Scope 3 support.

Measuring CO2 emissions is complicated, but the EU is moving quickly to harmonize standards.

Frank Deneweth, Managing Director at Brother Belgium

It is clear that the early adopters of ISO 14083 will be more interesting than their competitors. By obtaining ISO 14083 certification early, you demonstrate a significant commitment to sustainability and net zero goals. Shifting to sustainable production and storage is inevitable for all companies, but the former will instill trust among their customers and shareholders while creating long-term goodwill for their company’s reputation.

More transparency reduces risks. Of course, to report and reduce emissions from your supply chain, you need complete transparency to accurately capture data. This monitoring offers other benefits in addition to reporting and reducing CO2 emissions. It also helps you identify risk areas or obstacles among your suppliers.

As the old saying goes, you can’t manage what you can’t measure. A good understanding of your company and supply chain’s emissions performance, supported by evidence, shows what you can change – switch to a different mode of transport, assess processes with a supplier, assess your sites and buildings, review contracts with new criteria.

Take advantage of the long-awaited opportunity to manage your company’s emissions cost-effectively. Don’t forget the importance of correct, reliable, legible and reproducible labeling. A misread or misdirected package due to illegible labeling can suddenly derail your carefully crafted carbon reduction plans by adding unnecessary miles to your carbon footprint.

This is a post by Frank Deneweth, Managing Director at Brother Belgium. Discover how printing high-quality labels can increase label success in your warehouse and supply chain.