A warehouse employee pulling a trolley of packaged and labelled Brother devices in a warehouse ready for transportation

Carbon Accounting: What is it and why does it matter?

10 liepos 2024
6 Minutes read

Straipsnio autorius

Brother Nordics
Global Technology Solutions and Services Provider
Brother Nordic A/S

10 liepos 2024
6 Minutes read

Brother explains what Carbon Accounting is and why it matters for supply chain, transportation and logistics sectors if they want to quickly secure a competitive advantage in labelling solutions.

With the publication of ISO 14083:2023 hot off the presses, Carbon Accounting is set to become a new term in the business lexicon. Stakeholders in the supply chain, transportation and logistics sector need to familiarise themselves with it quickly if they are to secure competitive advantage. They will need full trust in their labelling systems as part of their solution.

What is Carbon Accounting?

Picture carbon accounting in the same way as financial accounting – the precise, auditable record of every transaction across every facet of a given business, with sources of profit and loss clearly labelled in a commonly understood and accepted format. The difference is that you are not referring to money, but carbon emissions.

Your ‘profit’ and ‘loss’ account (emissions, not money) will reveal how sustainable your business really is – to customers, suppliers, consumers, regulatory bodies and, oddly enough, those ‘other’ accountants in the business, whose job it is to keep a close eye on the overall bottom line. It highlights once again the importance of correct, reliable, legible labelling on shipments, pallets and parcels – wasted mileage from needlessly misdirected consignments caused by poor labelling is going to impact your bottom line in more ways than one.

Carbon accounting matters because customers, suppliers and consumers are increasingly anxious to know more about carbon emissions, which parts of the supply chain are responsible and what steps are being taken to reduce (not offset, an important sea change) those emissions. Your stakeholders are not alone; international and local regulation is coming down the track, too.

Introduced at the end of 2022, the EU’s Corporate Sustainability Reporting Directive (CSRD) requires large businesses (eg., over 250 employees, or generating revenues over €40 million p.a, among other criteria) to start reporting 2024 numbers by early 2025. Meanwhile, common standards are starting to crystallize on the quantification and reporting of greenhouse gases arising from transport chain operations. ISO 14083:2023 sets out a framework of future guidance for supply chain organisations.

Carbon Accounting to Meet Climate Goals

Companies not taking the initiative in exploring ways to first manage, and then cut, their carbon emissions are going to find themselves racing to catch up by the second half of this decade. It’s no longer good enough to offset – carbon cutting is the name of the game. In short, if you wish to meet climate goals accurately, to accord with current and potential future legislation, and to protect your brand at the same time, you need to account for emissions in a way that conforms to agreed standards.

Emissions matter in the logistics sector more than most. In the USA, transportation (including domestic car use) is the largest ‘culprit’ sector, generating 29% of all emissions¹. In the EU, transport was responsible for 25% of all emissions in 2020. The latter has been prominent in tackling the reduction of those numbers via proposed regulation, as part of the bloc’s ‘Fit for 55’ initiative, by which it targets the reduction of net greenhouse gas (GHG) emissions by 55% by 2030, with climate neutrality targeted by 2050. It is an ambitious, not to say controversial, plan in which modal shifts form a cornerstone of the objective.

As part of the plan, large companies are required to submit emissions data as part of their ESG (Environmental, Social and Governance) reporting. While the requirements currently only apply to the big players, small and medium-sized companies should not automatically assume they will always be exempt from such requirements, because, as competitive advantage is always a must-have benefit, the ability to harness such data can only help that ambition.

Emissions Reporting

Most observers are aware that emissions have generally been grouped into two categories – direct emissions (those your business produces by itself) and indirect emissions (those produced elsewhere but which your business requires in order to function).

For calculation and reporting purposes, GHG emissions are now refined into three, more precise categories.

Scope 1 - the emissions produced by your own business and assets – buildings, vehicles and equipment will all come into this category.
Scope 2 - those produced not directly by your business but which it needs to function effectively – electricity, light, and heat are all likely examples.
Scope 3 - the most complex, because it groups all relevant emissions produced upstream and downstream in your supply chain but which your organisation is not directly responsible for. Buying, using and disposing of products or services from suppliers will all feature here; business travel and employee commuting are also factored in this category.

Carbon emissions measurement is therefore complicated, but the EU is moving quickly towards harmonizing standards led by the GLEC (Global Logistics and Emissions Council) Framework, which was established in 2014 to formulate industry guidelines. The very recently agreed ISO 14083 standard now enables the consistent calculation and reporting of GHG emissions in global logistics, with particular reference to assistance on Scope 3.

It seems clear that early adopters of ISO 14083 are going to be at an advantage over their competitors. By obtaining ISO 14083 certification early, you’re demonstrating a significant commitment towards sustainability and net zero goals. Movement towards sustainable manufacturing and warehousing is an inevitability for all businesses, but those that get there first will inspire confidence and trust in their customers and their shareholders, as well as creating long-term goodwill for the reputation of the business.

Increasing transparency reduces risk. Naturally, in order to report on and reduce the emissions from your supply chain, you’ll need complete transparency to accurately collect data. Gaining this oversight will provide additional benefits beyond the reporting and reducing of carbon emissions. It will also help you to spot areas of risk or obstruction with your suppliers.

As the old adage goes, you can’t manage what you can’t measure. Close understanding of your business and supply chain’s emissions performance, backed up by evidence, reveals where you can make changes – switching to another transport mode, reviewing processes with a supplier, looking again at your sites and buildings, exploring contracts with new criteria – the long-overdue opportunity to manage emissions cost effectively for your business may now be here. And, it should not be forgotten, it highlights once again the importance of correct, reliable, legible, repeatable labelling – one misread or misdirected parcel due to illegible labelling can disrupt carefully laid carbon reduction plans at a stroke, as wasted, unnecessary mileage adds up in your carbon accounting debit line.

Or explore how Brother’s passion for quality label printing can ensure labelling success across your warehouse and supply chain.

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