How sustainability affects the logistics and transportation industry

Updated on
July 12, 2024

A carbon-neutral European Union by 2050: this is the goal of the European Green Deal. To achieve this target, all industry and service sectors must be decarbonized.

One of these sectors, Logistics and Transportation, is responsible for generating nearly a quarter of greenhouse gas emissions in Europe. Furthermore, this sector has found the decarbonization process challenging and has not achieved the same reductions in emissions compared to other sectors of the economy.

In this article, we outline the main challenges faced by the sector and offer practical, technology-driven solutions to support transport and logistics companies on their path towards decarbonization. Ready to learn more?

Sustainability challenges faced by the sector

The logistics and transportation industry faces significant challenges in its transition towards a decarbonized economy. Four main challenges arise along this journey:

  1. Understanding and applying regulatory frameworks: Companies face uncertainties regarding local, national and European regulations, which can compromise the accuracy of carbon reporting and expose them to legal risks.
  2. Effective data management: The complexity of emission calculations, along with the lack of reliable data and limited digitalization, results in inefficiencies in the supply chain.
  3. Adapting to constant changes: Environmental regulations are continuously evolving, requiring constant updates to calculation methods to meet international standards.
  4. Setting reduction targets: The lack of reliable data makes it difficult to define realistic emission reduction targets and identify priority areas for intervention.

Overcoming these challenges requires a deep understanding of the processes that contribute to emissions, as well as collaboration across the value chain to effectively implement sustainable solutions.

Which sustainability legislation affects the logistics and transportation sectors?

At the European level, two key directives for sustainability are the CSRD and the CBAM.

The Corporate Sustainability Reporting Directive (CSRD) is a European Union initiative aimed at increasing transparency in business activities related to sustainability. It seeks to improve transparency in business activities related to sustainability by addressing environmental, social, and governance aspects.

Affected companies include large enterprises, listed companies (including SMEs), financial institutions, and non-European companies with subsidiaries in the EU.

To better understand what the CSRD is, we suggest you read the article Get ahead of regulations by effectively preparing for the CSRD.

On the other hand, the EU Carbon Border Adjustment Mechanism (CBAM) focuses on imports and requires importers to comply with emission regulations.

The initial affected sectors include cement, iron and steel, aluminum, fertilizers, hydrogen, and electricity. Companies importing into the EU must obtain certificates that reflect the carbon emissions of their imported products to prevent "carbon leakage."

Take a look at all the important features of the CBAM by reading the article CBAM: The key to balancing international trade with a fair carbon price.

Which carbon footprint measurement methodology should the sector follow?

The measurement of carbon footprint in the Logistics and Transportation sector relies on two key methodologies: the GLEC Framework and the ISO 14083 standard.

The GLEC Framework establishes a standardized methodology for calculating greenhouse gas emissions in logistics companies, based on the renowned Greenhouse Gas (GHG) Protocol.

Developed in 2014, this framework standardizes emission calculations across various modes of transport, consolidating existing methods and filling important gaps in measurement.

By using this framework, companies can make decisions about sustainable freight transport and optimize the supply chain, positioning themselves as leaders in sustainability.

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On the other hand, the ISO 14083 standard provides detailed guidelines for the quantification and reporting of logistics emissions, considering factors such as distance, fuel type, and energy efficiency. This standard facilitates transparent and consistent reporting, allowing for effective comparability and communication both internally and externally.

Both approaches complement each other: the GLEC Framework incorporates the ISO 14083 methodology, offering logistics companies a comprehensive tool to implement sustainable practices and meet environmental emission standards.

Next steps and how to get started

Now that we know that sustainability reports can generate significant economic benefits for Logistics and Transportation companies by improving operational efficiency and market reputation, is your company ready to start?

If you still feel confused about the existing methodologies, regulations, and ways to calculate your footprint, at Dcycle, we can help.

At Dcycle, we help companies transform sustainability into a competitive advantage through our all-in-one Environmental Management software, where companies can measure, reduce, offset, and communicate their environmental impact.

Through an automated data collection process, we incorporate the main measurement methodologies for the Logistics and Transportation sector (GLEC 3.0) so you can have confidence in your company's sustainability results.

If you need to measure the carbon footprint of your Logistics or Transportation company, contact one of our experts and get a clear roadmap to achieve it.

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