12 ‘No Excuses’ For Decarbonizing Logistics In The Chemical Industry

The topic of Scope 3 was a recurring theme at the recent LogiChem EU 2024 event in Rotterdam. At their annual logistics conference, Europe’s top chemical companies gathered to discuss how to foster end to end supply chain connectivity while decarbonizing operations.

Repeated many times in discussions at the conference, the concept that if suppliers and logistics providers reduce their Scope 1 and 2 emissions, that would help manufacturers accelerate their Scope 3 emission reduction. Sounds simple, doesn’t it? The reality is more complex.

Twelve No Excuses

Scope 3 emissions are those that are embedded across the value chain, not just upstream with suppliers, when purchasing goods and services, but also downstream with customers and the use of sold products. With the advent of directives such as EU Corporate Sustainability Reporting Directive (CSRD) and the new IFRS S2 Climate-related Disclosures standards from the International Sustainability Standards Board (ISBB), companies are now expected to account for their Scope 3 emissions.

According to Eric Enselme, Executive Fellow, World Economic Forum Centre for Advanced Manufacturing and Supply Chains, Scope 3 emissions have remained largely unaddressed, although they represent more than 70% of industry greenhouse gas (GHG) emissions – and over 80% in the chemical industry.

While many companies have set targets to reduce their direct emissions (Scope 1) and emissions from purchased energy (Scope 2), they are struggling to navigate the complexities of Scope 3 emissions reduction, because that requires profound changes in products and business models, the use of new technologies and new partnerships.

That is one of the reasons why the “No-Excuse” Framework to Accelerate the Path to Net-Zero Manufacturing and Value Chains was developed in 2022, when the Forum launched the Industry Net Zero Accelerator Initiative, in collaboration with Capgemini, Cambridge Industrial Innovation Policy (Institute for Manufacturing, University of Cambridge), Rockwell Automation, and Siemens. The initiative is also supported by a diverse group of organizations ranging from chemical companies like BASF to technology providers such as SAP.

“This initiative aims to help companies accelerate the path to net-zero manufacturing and value chains” said the supply chain expert, explaining that the community expanded on the overarching ‘No-Excuse’ framework to develop a practical roadmap for businesses to navigate the intricate terrain of Scope 3 decarbonization, comprising of 12 ‘No-Excuse’ opportunities illustrated with real-world case studies.

The twelve opportunities are grouped into four action levels, which serve as a guide to inform strategic decisions and forge decarbonization partnerships.

Breaking down silos to decarbonize

At LogiChem, Enselme moderated a discussion with 3 leading companies, all committed to the Science Based Targets Initiative, to learn how they are breaking down silos within their supply chain to tackle emissions together with their partners and stakeholders. In summary:

• One company dedicated to developing innovative materials and recycling technologies to drive a more circular business reported on its Scope 3 from the upstream perspective, taking a hard look at its feedstock and raw materials procurement activities and partnering with suppliers to reduce carbon footprint. Downstream, it partners with the Smart Freight Center and Sea Cargo Charter to mitigate its emissions in freight transportation, which in turn impacts the Scope 3 emissions of customers. This company is also in partnerships to develop shallow water, hybrid fuel barges to continue meeting customer commitments in the face of climate impact on river transportation.
• A materials company that supplies a diverse range of industries from automotive to healthcare, tackles the issue from two major areas: raw materials and logistics. Whereas this company previously sourced benzine derived from fossil fuels, it is now collaborating with its suppliers to produce this material from renewable sources such as lignin, a waste from lignocellulosic biomass industry. This collaboration requires research and investments over time, but all parties benefit in the long run. In the area of logistics, the company, is implementing electric shuttles to move people and goods from ports to warehouses and around container terminals.
• The group agreed that the greatest impact still occurs through reducing waste. While air freight might make up only 0.2 percent of a company’s shipment volume, for example, it might generate 26 percent of its carbon footprint. Although some products may need speed shipping due to issues like temperature control, something as simple as reducing shipment frequency goes beyond technology and requires only an increased focus on reduction.

As Enselme concluded at the end of the discussion, the urgent need to accelerate the path to net zero cannot be achieved without step-changing Scope 3 emissions reduction – hence the call for companies to take responsibility for their Scope 3 emissions with a “no excuses” mindset, and harness collaboration across their entire value chain.

As chemical companies begin increasing their collaboration with their suppliers, customers, and logistics providers, they will find ways to reduce emissions at the right pace and scale. No matter where your company is on its journey to reduce carbon emissions, the No Excuse Opportunities to tackle Scope 3 emissions can help you take action and drive results.

It starts within the company by automating data or designing more eco-friendly products. The next step is to empower your supply chain by fostering a partnership mindset, providing transparency, and sharing expertise, and the third is to leverage the ecosystem and jointly develop standards and data exchange capabilities. And, last but not least, everyone can help drive the shift towards a more sustainable society by rethinking consumption and providing more eco-friendly choices for consumers.

As a result, it will no longer be my Scope 3 or yours, but ours.