Using Invoice Data for Carbon Emissions Reductions

The latest International Energy Agency (IEA) analysis recently revealed that current governmental policies are not strict enough and will result in global temperatures rising by 2.5C and dangerous climate impacts.

More company CEOs are getting serious about establishing environmental goals and more international organizations are realizing the importance of stepping up their sustainability requirements for companies. The U.S. Securities and Exchange Commission’s upcoming change to standards in annual reporting for public companies in the U.S. requires those companies to disclose climate-related risks such as scope 3 emissions that result from transportation in 2025. Now the International Sustainability Standards Board (ISSB) has decided to include Scope 3 greenhouse gas (GHG) emissions in its first global sustainability-related disclosure standards.

Supply chains account for more than 90% of a company’s emissions, according to the Environmental Protection Agency (EPA), so it is essential that companies’ pledges to clean up their scope 3 emissions become fully-developed and implemented plans. Many companies within the transportation and logistics industry are developing programs to lower carbon emissions and reduce their carbon footprint. This planning potentially helps not only shippers and carriers, but the whole supply chain.

"With the continuing threats to our global environment, an increasing number of CEOs and CFOs are making triple bottom line reporting a vital part of their public commitments. Until now, these leaders have only had access to rough estimates of carbon emissions from transportation without the insights that would help them make decisions that improve the environment,” said Josh Bouk, president, Trax. “Environmental sustainability starts with data and how you can get visibility into the data. In this case, if you don’t have data or if your transportation data is flawed or incomplete, you can’t begin planning to improve and reduce carbon emissions.”

Bouk, whose company tracks all scope 3 emissions based on invoice data, is informing enterprise companies that in order to ensure the best data during the transportation spend and audit process, all service charges and accessorials must be imported into a system from a carrier, leaving no charges as “miscellaneous” or empty.

In an effort to provide shippers with actionable insights from which to develop baselines for reducing their carbon footprint with a focus on GHG emissions, Trax ultimately provides shippers with the ability to track GHG with freight audit and payment (FAP) to elevate decision making around cost, performance and sustainability within transportation.

Trax is a quality and data-driven company that audits $22B in transportation spend invoices yearly for cost-cutting and is now using this verified data to show every node and vendor of a company’s supply chain. Knowing that 43 percent of transportation emissions are attributed to the transportation of goods, Trax’s goal is to help shippers establish legitimate baselines from which to build their ESG goals. Trax’s Carbon Emissions Tracker empowers enterprise companies by measuring and managing data quality by service code for all modes, lanes, vehicles and regions, and it provides visibility of needed data quality metrics.

“With Trax's Carbon Emissions Manager, transportation business leaders can see the detailed actual emissions coming from each shipment, based on vehicle, lane and mode," said Josh Bouk, president, Trax. "The ability to track actual carbon emissions across a client's transportation network is phenomenal because it creates a benchmark from which clients can set clean air goals, track progress against their goals, while continuing to optimize the cost of their transportation network via our freight audit and payment suite."

Carbon emissions are broken down to three levels - production (Scope 1), electricity used for operations (Scope 2), and all other uses (Scope 3). The tracking and reporting of these emissions will be a challenge for many enterprises.

Scope 3 contains all transportation, logistics and other supply chain emissions, accounting for 27 percent of the world’s total emissions. By the time companies need to publish their 2025 annual SEC reports, they will have to report full emissions data from all three scopes for the full year of 2024. That may sound like it offers some lead time, but it really doesn’t. In order to collect the data throughout 2024, companies will need systems that can track the data in 2023.

Therefore, it is imperative that supply chain leaders start now in the pursuit of a method for tracking and reporting emissions. Trax is spreading the word about this need and also providing a needed solution that helps company leaders improve the environment and their bottom line.