Introduction
Scope 3.4 emissions, also known as "upstream transportation and distribution" emissions, are associated with the transportation of goods from your suppliers to your organisation. Calculating these emissions accurately can be a bit tricky, especially if you have different transportation modes (e.g., ships, trucks, planes) or if your goods share transport space with others. This guide will walk you through how to account for these emissions in a straightforward way.
What Counts as Scope 3.4 Upstream Distribution?
Scope 3.4 covers the emissions generated during the transportation and distribution of products or materials that your organisation purchases. This includes emissions from:
Transporting goods from your suppliers to your organisation (e.g., from a manufacturing site to your warehouse).
Inbound logistics, such as shipping raw materials or components used in your products.
Third-party transportation providers, where the goods are transported by external logistics companies.
Examples of When to Include Scope 3.4 Emissions:
You purchase goods from a supplier in another country: For instance, your organisation imports raw materials from a supplier in Germany, and they are transported by sea to your facility in the UK. The emissions from this sea transportation are part of Scope 3.4.
You source components that are transported by truck: If you source components from a supplier within your country and they are delivered by truck to your facility, the emissions from this road transportation count as Scope 3.4.
A third-party courier delivers your materials: If your materials are delivered by a third-party courier (e.g., a logistics company), the emissions from their transport activities are also part of Scope 3.4.
Consolidated shipments: If your goods share space with other products in a shipment, you still need to account for the portion of emissions corresponding to your goods based on weight or volume.
Key Considerations:
Identify the Transportation Method: Are your goods transported by ship, truck, rail, or air? Each mode has a different emission factor, which is essential for accurate calculations.
Distance Travelled: Determine the distance travelled from your supplier to your organisation. This is typically measured in kilometres (km) and is crucial for understanding the emissions generated during transportation.
Weight of Your Goods: Understand the weight of your goods being transported. If your goods are sharing transport space, you will need to calculate the emissions based on the proportion of weight your goods occupy.
Methods for Calculating Emissions:
1. Fuel-based Method
When to use: If you have data on the type and amount of fuel consumed during transportation.
How it works: Multiply the fuel consumption by the emission factor for that type of fuel. This method provides a precise calculation if fuel data is available.
2. Distance-based Method
When to use: If you know the distance travelled and the weight of your goods but don't have fuel data.
How it works: Use the formula:
Emissions = Distance (km)× Weight (tonnes)× Emission Factor (kg CO₂e per tonne-km)
Example: If your goods weigh 10 tonnes and travel 500 km by truck, you would multiply 10 by 500 and then by the truck’s emission factor (e.g., 0.1 kg CO₂e/tonne-km).
3. Supplier-specific Method
When to use: If your supplier provides an emission factor specific to their transportation process.
How it works: Input the emission factor given by your supplier. This is useful if they have calculated emissions for the transport of your goods.
4. Direct Entry Method
When to use: If you have the total emissions calculated for your upstream transportation in kg CO₂-eq.
How it works: Enter the emissions data directly into your accounting system.
Prioritising the Most Material Emissions Sources:
If your organisation has multiple different upstream distribution streams, tracking every single transportation movement in your value chain can be time-consuming, especially if you have limited resources. At KEY ESG, we recommend prioritising the transportation streams that are most material – those that contribute the most to your overall Scope 3 emissions or have the greatest impact on your carbon footprint.
For example, focus on shipments with the highest frequency, the longest distances travelled, or the heaviest goods, as these are likely to be the largest contributors to your Scope 3.4 emissions. This approach ensures that even if you can’t capture every single data point, you’re still accounting for the emissions that matter the most.
While it’s always best to collect as much data as possible to accurately capture your upstream emissions, we understand that this may be challenging for smaller organisations with fewer resources. Therefore, prioritising the most significant contributors will help you manage your time and resources more effectively.
Handling a High Volume of Shipments
If your organisation deals with a high volume of shipments each year, tracking emissions for every single shipment can be time-consuming. In such cases, you can make the process more efficient by using the following strategies:
Focus on the most significant shipments: Prioritise the largest shipments or those that travel the longest distances, as they will have the most impact on your overall emissions.
Make approximations: For smaller or less significant shipments, use average distances, weights, and transportation modes to make reasonable projections. This will help you capture a general estimate without tracking every detail.
Group similar shipments: If you have many shipments with similar characteristics, group them together and calculate an average emission factor. This approach will save time while still providing a representative picture of your emissions.
By applying these strategies, you can efficiently manage the calculation of your Scope 3.4 emissions without getting overwhelmed by the details.
Worked Example:
Suppose your organisation receives goods from a supplier in Germany, and they’re transported by ship to the UK. The ship travels 2,000 km, and your goods make up 25% of the ship’s total cargo weight.
Calculate the total weight of goods on the ship (e.g., 200 tonnes total).
Find your portion: 25% of 200 tonnes = 50 tonnes.
Use the distance travelled: 2,000 km.
Apply the emission factor for shipping (e.g., 0.02 kg CO₂e per tonne-km) - you can do this by selecting the approprirate size ship from the dropdown menu under 'Vehicle type"
Calculation:
2,000km × 50 tonnes × 0.02kg CO₂e/tonne-km = 2,000kg CO₂e
So, your organisation would report 2,000 kg CO₂e for this portion of upstream transportation.
Conclusion:
Accurately calculating Scope 3.4 upstream distribution emissions is crucial for a complete view of your organisation's carbon footprint. By using the methods outlined above and prioritising the most material sources of emissions, you can ensure your reporting is as accurate and efficient as possible. If you need any help or have questions about using these methods in the KEY ESG platform, please reach out to us via in-platform chat or email at support@keyesg.com.