The world endured the hottest week ever recorded between 3-10th of July this year. Now, more than ever, it has become crucial for all industries to intensify their focus on climate change, address greenhouse gas (GHG) emissions sources, and explore potential strategies to reduce them. Here’s a few facts to get you started.
Transport and distribution make up 34% of UK emissions
That’s according to the Department for Energy Security & Net Zero. As e-commerce and global supply chains continue to rapidly expand, it’s important for organisations within the warehousing sector to prioritise the reduction of their carbon footprints, not only to help in the fight against climate change, but to stay ahead of shifting regulations and future-proof their businesses.
Scope 3 reporting puts warehousing emissions in the spotlight
Scope 3 emissions are the GHGs from up and down a company’s value chain. One category of these, upstream transport and distribution, includes emissions from warehousing. This means that, increasingly, warehousing businesses will be asked to provide information on their own carbon accounting and share it with clients.
Regulations on carbon reporting are on the rise
In the UK, the Task Force on Climate-related Disclosures (TCFD), mandates large UK companies to report on climate-related risks and management, which includes Scope 3. All large enterprises that carry out business in the EU, including those based outside of the EU, will need to disclose their carbon footprint starting in 2024, covering Scope 3, as per the Corporate Sustainability Reporting Directive (CSRD).
Both of these extend beyond UK’s Streamlined Energy and Carbon Reporting (SECR) policy, which already requires certain organisations to share energy use and Scope 1 & 2 carbon emissions information in their annual reports – if you’re nearing 250 employees you should check if you need to be reporting.
Your biggest sources of carbon are often your biggest sources of cost
The first step for a company to take control of their footprint is to identify the relevant sources of emissions. For warehousing businesses, these are likely to be:
Powering, heating and cooling buildings
Warehousing involves substantial energy demands to run buildings, whether that be for temperature control or lighting. Refrigeration units and HVAC systems are major energy consumers, and when leaky or inefficient they release refrigerant gases with higher global warming potentials than carbon dioxide.
Material handling equipment
Machinery, such as forklifts, reach trucks and conveyors, are often powered by fuel-burning engines. Add on inefficient usage, inadequate maintenance and outdated equipment, these pieces of equipment make up a substantial portion of a warehouse’s carbon emissions.
Transportation and logistics
The transportation of goods to and from warehouses, as well as their distribution to end consumers, is a significant emissions source as fuel consumption by trucks, planes, ships and other vehicles – whether directly or through a warehousers’ partners.
Packaging materials and waste
The movement and storage of goods requires packaging, such as cardboard, plastics and foam. But the production and disposal of these materials contribute to carbon emissions throughout their lifecycle, from their raw material extraction, to manufacturing, to transportation, and finally waste management.
Of course, every warehousing business will have different sources of GHG emissions due to its operational choices. To get a detailed handle on emissions hotspots, carbon accounting is used to quantify the climate impact of a company’s activities.
Saving carbon often saves you money
Running more efficient buildings and vehicles, wasting less and re-using more, and working with partners who do the same – these can all be cost-saving activities that reduce a business’s carbon footprint while reaping financial benefits.
Others require an upfront cost, like onsite energy generation and storage – but could increase business resilience in an uncertain energy environment.
In the end, taking action is not only good for the planet, it makes business sense, as not only regulatory but also customer scrutiny increases. As data transparency improves, businesses will more easily be able to look for the most efficient and effective partners to work with.