Scope 3.4: Upstream transportation

Learn how the Greenhouse Gas (GHG) Protocol defines Scope 3.4 emissions, how the protocol recommends calculating them and how they are actually calculated in Climate Reporting

How are Scope 3.4 emissions defined in the GHG Protocol?

Scope 3.4 covers emissions from transportation, distribution, warehousing and storage services purchased by the reporting company from third-parties during the reporting year. This includes the movement of purchased goods from suppliers to company operations, outbound delivery of sold products, transportation between company facilities, where the vehicles are not owned or operated by the reporting company. It additionally includes storage of purchased products in warehouses, distribution centers, and retail facilities.

This is in contrast to emissions generated by transportation and distribution services paid for by the customer rather than the reporting company, which are reported under Scope 3.9 (Downstream transportation and distribution). Emissions generated by transportation in vehicles owned or controlled by the reporting company are accounted for under Scope 1 or Scope 2 (in the case of electric vehicles). Emissions from leased vehicles are reported under Scope 3.8 (Upstream leased assets), employee commuting under Scope 3.7 (Employee commuting), and employee business travel using third-party transportation under Scope 3.6 (Business travel).

Refer to the table below to understand how the accounting for emissions from transportation and distribution activities applies across the value chain.

​​How does the GHG Protocol recommend calculating Scope 3.4 emissions?

Companies may use the following methods to calculate Scope 3.4 emissions, listed from highest to lowest accuracy: fuel-based, distance-based or spend-based method. All three methods follow the same basic approach of collecting relevant activity data (such as fuel consumption, distance travelled, or money spent) and applying appropriate emission factors to calculate emissions.

1. Fuel-based method
   • This method involves multiplying physical activity data (fuel use data from transport service providers) with the emission factor of the fuel consumed (represented in grams or kilograms of CO2-equivalent per litre/kg of fuel).
   • This method is the most accurate as emissions are directly related to fuel consumption.
   • Possible activity data includes:
     1. Quantity of different fuels consumed OR
     2. Amount spent on different fuels together with their average prices OR
     3. Distance travelled and the vehicle’s fuel efficiency
     4. Quantities of fugitive emissions (e.g., from air conditioning or refrigeration)
   • Possible data sources can include:
     1. Fuel receipts
     2. Purchase records provided by transportation providers
     3. Internal transport management systems
   • Emission factors needed:
     1. Fuel emission factors, expressed in units of emissions per unit of energy consumed (e.g. kg CO2e/liter).
     2. For electric vehicles, electricity emission factors, expressed in units of emissions per unit of electricity consumed (e.g. kg CO2e/kWh).
     3. Fugitive emission factors, expressed in units of emissions per unit (e.g., kg CO2e/kg refrigerant leakage).
2. Distance-based method
   • This method involves multiplying distance (kilometers travelled by vehicle type) by mass or volume of goods transport and the relevant emission factor (expressed in grams of CO2e/tonne-km).
   • The distance-based method is especially useful for an organization that does not have access to fuel or mileage records from the transport companies, or has shipments smaller than those that would consume an entire vehicle or vessel.
   • Possible activity data includes:
     1. Total distance travelled by each mode of transport
     2. Mass or volume of products
   • Possible data sources can include:
     1. Purchase orders
     2. Internal management systems
     3. Transportation suppliers
     4. Online maps or calculators
     5. Published port-to-port travel distances
   • Emission factors needed:
     1. Emission factor by mode of transport (e.g., rail, air, road) or vehicle types (e.g., articulated lorry, container vessel), expressed in units of kg CO2e per unit of mass or volume travelled (e.g. kg CO2e/tonne/km or kg CO2e/TEU/km).
3. Spend-based method
   • This method involves multiplying the amount spent on transportation by the relevant spend-based emission factor (expressed as grams or kilograms of CO2-equivalent per unit of currency).
   • Possible activity data includes:
     1. Amount spent on transportation by type (rail, road, air) in local currency
   • Possible data sources can include:
     1. Accounting systems, enterprise resource planning systems (ERP)
     2. Bills, invoices
   • Emission factors needed:
     1. Emission factors of the transportation type per unit of economic value (e.g. kg CO2e/NOK)

For emissions from upstream distribution and storage facilities, site-specific and average-data methods are commonly used.

1. Site-specific method
   • This method involves collecting physical activity data (fuel and electricity use data) from the distribution site and multiplying by relevant industry-average emission factors.
   • Possible activity data includes:
     1. Site-specific fuel, electricity use AND
     2. Site-specific refrigerant leakage AND
     3. Average occupancy rate of the storage facility
   • Possible data sources can include:
     1. Utility bills
     2. Purchase records
     3. Meter readings
     4. IT systems
   • Emission factors needed:
     1. Site-specific emission factors for energy sources (electricity and fuel) per unit of consumption (kg CO2e/kWh)
     2. Refrigerant emission factors of fugitive and process emissions (kg HFC/kg of refrigerant leakage)
2. Average-data method
   • This method involves multiplying secondary activity data (based on average statistics such as cubic metres stored per day) by relevant industry-average emission factors.
   • Possible activity data includes:
     1. Volume of purchased goods that are stored (e.g., m2, m3, pallet, or number of pallets needed to store the goods) AND
     2. Average number of days that goods are stored
   • Possible data sources can include:
     1. Supplier records
     2. Internal management systems
   • Emission factors needed:
     1. Emission factor per pallet stored in the facility
     2. Emission factor per m2/m3 in the facility
     3. Emission factor per TEU stored in the facility

How are Scope 3.4 emissions calculated in Climate Reporting?

In Climate Reporting, Scope 3.4 emissions are currently calculated using the spend-based method. Relevant transactions are identified and aggregated, then multiplied by the appropriate spend-based emission factor to determine the resulting CO₂e emissions.

Calculation logic

• The customer’s financial data is made available to Climate Reporting, where relevant information for calculating greenhouse gas emissions is extracted. This includes transactions from relevant accounts, together with the following data fields for each transaction
  • Account ID (as defined in the ERP)
  • SAF-T Account ID and version
  • Amount (in a defined currency)
  • The date the purchase was made
• Climate Reporting maintains a mapping between SAF-T accounts and GHG Scope categories. All financial accounts mapped to Scope 3.4 are identified, and the transactions mapped to these accounts are extracted.
• The net monthly amount is calculated by summing all relevant transactions. The monthly amount is then multiplied by the relevant emission factor to calculate greenhouse gas emissions.

How are Scope 3.4 emissions displayed in Climate Reporting ?

App

In the app, total Scope 3.4 emissions are displayed in the dashboard under the “Emissions by category” card and reported in tonnes CO2e per year. More detailed Scope 3.4 emissions breakdowns are planned for future releases.

Report

In the report, Scope 3.4 emissions are presented as a monthly breakdown in the “Emissions by Scope” tab and reported in tonnes CO2e. Additional detailed Scope 3.4 reporting is currently under development and will be available in an upcoming release.