By now, most companies large and small have gotten on the green bandwagon in some capacity. A few are industry leaders in greening their operations, while others are at least remembering to turn out the lights in the warehouse at the end of the day.

And though there’s a consensus on the myriad benefits of sustainable supply chains, the tools and methodologies to accurately measure a supply chain’s carbon footprint have been slower to materialize.

That’s all starting to change, however.

Some of the most important research in the area of measuring a supply chain’s carbon footprint is being conducted at Massachusetts Institute of Technology’s Center for Logistics & Transportation (CTL). Tony Craig, a Ph.D. candidate at CTL’s Engineering Systems Division, is concentrating on these measurement issues. “How do we measure the carbon in the supply chain? How do we do it from an environmental/science perspective? And, how can we make it work for businesses?” asks Craig. “These are the issues I’m working on.”

Obviously, many of the companies that the CTL works with are in the transportation business, but even for compani

Setting a Standard

According to Craig, two of the most useful and widely used resources for analyzing a company’s carbon footprint are the Greenhouse Gas Protocol (www.ghgprotocol.org) and the Carbon Trust (www.carbontrust.co.uk).

“What they’re doing is fundamentally different,” explains Craig. “The GHG Protocol is an accounting standard that helps a company define their corporate boundary, set a baseline standard, and measure it.” Defining the corporate boundary is itself a new and emerging area. While financial reporting standards are pretty clearcut, when it comes to GHG reporting, sometimes a company is measuring emissions that it neither has legal liability for or direct control over. The process of defining the environmental limits of an organization is called “boundary setting.”

The GHG Protocol also makes sure that companies are measuring the same thing year after year and that a reduction is being achieved, Craig adds. “Typically, what you’re measuring is direct emissions, for instance, emissions that are burned from a gallon of diesel. The GHG Protocol doesn’t attempt to go beyond that—like the production of the oil, transportation of the oil, refining it, and so on—but the Carbon Trust does measure those things. The Carbon Trust’s idea of carbon footprinting involves the full lifecycle—everything it took to produce that product.”

Specifically, the GHG Protocol promotes itself as an internationally accepted management tool to help businesses compete in the global marketplace and governments to make informed decisions about climate change. The organization’s outreach focuses on harmonizing greenhouse gas markets by encouraging participants, especially those in developing countries, to follow agreed-upon standards for accounting and reporting GHG emissions and removals.

There are a number of benefits to adopting the GHG Protocol Accounting Framework as a common standard. For starters, it simplifies measurement and reporting; harmonizes across international borders and different initiatives; improves comparability and credibility; minimizes the cost of developing a GHG inventory; and establishes a common foundation for GHG markets.

A real tool or just a toy?

In recent months, carbon calculators have proliferated on the Web. To their credit, a few are robust enough to provide useful information, but frankly, many are not that valuable.

“My impression is that, in general, online tools are good but they’re not great,” says Craig. “The issue with most of these calculators is, number one, getting the data, the widespread collection, is very hard to do. This is particularly true when you look at things like transportation, because it’s not just the miles per gallon that matter, for example, but how much stuff you’re fitting into the truck, the efficiency. That kind of information can be difficult to get, and what we’ve found was that the people that know that information are often times in different companies. So, while the carrier may know about the fuel efficiency, if they’re a truckload carrier, they may not pay much attention to how much was contained in the shipment, that would be the shipper’s decision.”

Most of the calculation tools provide an average, says Craig, “and they can give you a pretty good indication, but obviously there’s a lot of variability depending upon your individual operations.” When the tools are used to help you make a decision between road and rail, for instance, they work quite well as opposed to helping you determine the exact carbon emissions for a particular shipment, he says.

Craig does see some progress, though. “Companies like Maersk Logistics and other third-party logistics providers have access to a lot of the information that’s necessary to arrive at the carbon emissions numbers because they manage it.”

In late 2007, Maersk Logistics released their SupplyChain CarbonCheck™environmental service offering, aimed at identifying carbon emissions reduction potentials in clients’ supply chains while simultaneously lowering total supply chain costs.

“This makes it a true win-win situation for our clients and the environment,” says Brian Nemeth, General Manager for Supply Chain Development, Maersk Logistics. “The service includes the quantification of a client’s current carbon footprint from supply chain related activities, which is enabled by the Maersk Carbon Footprint Calculator.”

According to Nemeth, the entire supply chain can be analyzed with SupplyChain CarbonCheck™. “In principal, all legs of an international supply chain can hold CO2 reduction potentials. A broad range of possible solutions will be looked into, depending on the complexity of the client’s supply chain. Production, customer energy consumption (use of the product), and disposal will not be considered.”

The first step in Maersk Logistics’ SupplyChain CarbonCheck™ begins with a client workshop designed to analyze the client’s supply chain and map the current product flows in terms of carbon emissions. “This mapping provides an estimate of the current carbon footprint, broken down into the different legs of the supply chain. Using simulation techniques, Maersk Logistics estimates carbon emissions for alternate configurations of the supply chain and compares the results with the current footprint. This comparison reveals carbon emissions reduction potentials as well as cost saving opportunities, which are evaluated in terms of impact and ease of implementation. Maersk Logistics can assist the client in implementing the agreed solutions,” says Nemeth.

A full day is devoted to the client workshop, he notes. “Since the calculation of the carbon footprint is based on existing client data, there is a need to pull the data and get it signed off by the client. If needed, plausibility checks and data cleansing will require the client’s attention. The client also needs to sign-off on the result of the current carbon footprint calculation. Once the client has agreed to implement one ore more of the recommended solutions, appropriate resources have to be provided for the implementation phase. As solutions may vary greatly from client to client, it is difficult to predict how much time will have to be set aside by the client for the implementation phase.”

“For any company involved in global sourcing, significant potentials for reducing CO2 emissions can be found in the global supply chain. A prerequisite for reducing a carbon footprint is the ability to quantify, i.e. measure it. The results of a SupplyChain CarbonCheck™point to ‘carbon hotspots’ in a client’s supply chain and offer solutions for reducing the carbon footprint. The results of a SupplyChain CarbonCheck™—reduced carbon emissions—can be cited in the annual or environmental report, and hence contribute to a better corporate image. In some countries, legislation regulating/limiting corporate carbon emissions is expected to be expanded to emissions from transportation activities in the near future.”

In fact, the UK’s Climate Change Bill, which became a law last year, commits to reduce carbon emissions by 60 percent by 2050. The legislation includes power to enforce emissions trading schemes, including the Carbon Reduction Commitment (CRC), which comes into force in 2010 and could require companies to include carbon emission information in their financial reports.

As for the methodology, “The Maersk Carbon Footprint Calculator is based on the Greenhouse Gas Protocol distance-based methodology for calculating CO2 emissions, which calculates CO2 emissions as the product of cargo volume, distance, and emissions factors,” says Nemeth. “The emission factors from ocean transport used in the model have been calculated from Maersk Line and other carriers’ vessel data using the method developed by the Business for Social Responsibility (www.bsr.org). Emission factors for other modes of transportation are from the environmental transportation consortium. As such, the results of a carbon footprint calculation are reliable and well defendable and can also be used for statutory reporting.” wt

Sidebar: FAQs About the GHG Protocol

Q: What are the calculation tools? Is it mandatory to use them?

A: The calculations tools are electronic Excel spreadsheets with accompanying step-by-step guidance documents. A guidance document includes:

•    An overview of the protocol with information on the sector, sources, and process(es) that it covers;

•    One or more approaches for determining CO2 and other GHG emissions, e.g., direct measurement, mass balance, etc.;

•    Guidance on collecting activity data and selecting appropriate emission factors;

•    Likely emissions sources and the scopes they fall under (specific to a particular sector);

•    Additional information, such as quality control practices and program specific information.

The spreadsheets help carry out any necessary emissions calculations.

These tools were developed in partnership with industry experts and represent best practice quantification methodologies. The calculation tools are available on the GHG Protocol Web site and are meant to complement the Protocol and make calculations easier, but their use is not mandatory.

Q: What is the difference between direct and indirect emissions?

A: The GHG Protocol defines direct and indirect emissions as follows:

•    Direct GHG emissions are emissions from sources that are owned or controlled by the reporting entity.

•    Indirect GHG emissions are emissions that are a consequence of the activities of the reporting entity, but occur at sources owned or controlled by another entity.

The GHG Protocol further categorizes these direct and indirect emissions into three broad scopes:

•    Scope 1: All direct GHG emissions.

•    Scope 2: Indirect GHG emissions from consumption of purchased electricity, heat or steam.

•    Scope 3: Other indirect emissions, such as the extraction and production of purchased materials and fuels, transport-related activities in vehicles not owned or controlled by the reporting entity, electricity-related activities (e.g. T&D losses) not covered in Scope 2, outsourced activities, waste disposal, etc.

Q: What emissions factors do the GHG Protocol calculation tools use?

A: Each tool generally involves the use of ‘emission factors,’ which relate to the amounts of greenhouse gases emitted by a business to a set amount of activity performed by that business. Default values are always provided for the emission factors in case businesses cannot develop custom values. So, in many cases companies need only activity data, such as the amount of distance traveled or fuel combusted, to calculate their emissions.

The default emission factors are averages based on the most extensive data sets available and they are largely identical to those used by the Intergovernmental Panel on Climate Change (IPCC), the premier authority on accounting practices at the national level. However, the GHG Protocol recommends that businesses use custom values whenever possible. This is because the industrial processes or the composition of fuels used by businesses may differ with time and by region.

TransGroup Gets Greener with Asset Recovery Service

When Seattle-based TransGroup introduced their TransNuetral service, it marked the freight forwarding industry’s first greenhouse gas-neutral shipping solution. Recently, the company has been expanding its environmental efforts with its Asset Recovery and Reverse Logistics service too.

According to Michael Blackburn, Director of Sales, the green aspects of the service evolved with the company’s financial and banking clients, who were paying scrap companies to dispose of computer and electronics equipment, that due to the sensitive nature of the data involved, was not able to be resold. Moreover, traditional scrapping services overlooked the value in extracting precious metals inside the equipment, such as gold, copper, and aluminum, which could be reused in other products.

Blackburn saw a business opportunity in not only being able to transport, track, and provide a certificate of destruction for the used equipment, but in also being able to provide a ‘greener’ solution for its disposal.

“While there are a number of asset recovery companies that specialize in the resale of used equipment, I don’t know of any other company who is providing this service combined with the logistics part,” adds Blackburn. “We’ve created a niche for ourselves, especially in the financial market.”

TransGroup is also developing a security component to the asset recovery service in the form of a mobile shredding truck, which will be used for certain computer equipment, like hard drives, that require extreme security measures. The trucks are similar to those in use by Shred-Tech, another mobile shredding company.

“With our mobile shredder, we’ll be able to shred the equipment and provide a certificate of destruction on-site, which will eliminate the need for expensive handling and transportation services, such as Brinks,” explains Blackburn.