Shipping emissions reporting and reduction: Balancing sustainability and business benefits

Around 11% of global greenhouse gas emissions come from freight transportation and warehousing. Reducing those emissions is a priority as companies work to meet their sustainability goals, adapt to increasing regulation and reduce costs by improving operational efficiency. In recognition of this fact, Celonis kicked off its 2024 Sustainability Transformation Week webinar series with an examination of how businesses can measure, manage, and optimize their shipping emissions.

Historically, organizations looking to enact these types of sustainability initiatives have often lacked tools, the frameworks or the data to deliver them successfully. Now, with the partnership between Celonis and carbon intelligence provider Climatiq, a solution is available— the Shipping Emissions App. But before we explore the app , let’s set a little context around the commercial importance and legacy challenges to addressing shipping emissions.

Climate change is a business challenge

The global economy relies on billions of tons of cargo shipped around the world by road, rail, air and sea. But growing awareness of logistics emissions’ contribution to climate change means sustainability initiatives in this area are moving up the commercial agenda. Because climate change is a business challenge as well as environmental one, for three core reasons:

1. Regulations: Increasingly businesses are being compelled by regulatory bodies to act on sustainability. From the Corporate Sustainability Reporting Directive(CSRD) in Europe to the Climate Corporate Data Accountability Act (CCDAA) and Climate-Related Financial Risk Act (CRFRA) in the US, the number of regulations governing business’ sustainability reporting (and beyond) are increasing steadily. In fact the International Financial Reporting Standards (IFRS) has said that over half of the global economy is moving towards coverage by the International Sustainability Standards Board’s (ISSB) Sustainability Reporting Standards. 

2. Investor demand: Investors see sustainability from two sides. First, they want to ensure that companies they invest in are regulatorily compliant. But also they see an opportunity for positive differentiation in the market through forward leaning efforts on sustainability.

3. Customer preference: The interconnectedness of global supply chains and growing requirement to report on Scope 3 emissions (those stemming from an organization’s value chain) mean that B2B organizations will increasingly want to partner with other firms that are taking sustainability seriously. Similarly, B2C businesses with a strong sustainability stance can leverage it as a key selling point and differentiator in the market.

Legacy obstacles to reducing shipping emissions

A big carbon reduction opportunity lies in transportation and, as we’ve seen, there’s a clear commercial as well as environmental rationale for doing so. But even businesses keen to address the carbon footprint of their logistics operations, have often struggled with sustainability transformation.

This is because, historically, producing transportation and logistics emissions measurements took a lot of manual, time consuming work. Emissions data is often siloed, requiring separate sustainability teams to manually reach out to all business units to gather the information, run analysis, and generate company-wide buy-in. This last item can be particularly tricky as insights have been limited, unconnected with other business KPIs, retrospective (often gathered only on an annual basis) and not really actionable.

But that was before the Celonis Shipping Emissions App.

The Celonis Sustainability Layer and Shipping Emissions App

The Shipping Emissions App is a key component of Celonis’ broader Sustainability Layer. Created using Process Intelligence, this layer connects business systems and process data – including siloed sustainability data – providing users with an AI-driven platform to continuously monitor, measure, and optimize shipping emissions levels.

Connecting Climatiq’s carbon calculation engine with data from ERP or TMS systems within Celonis’ Process Intelligence Graph, the Shipping Emissions App integrates tracking business KPIs together with emissions KPIs. Importantly it reveals data-driven opportunities and offers suggestions for possible actions to reduce shipping emissions.

The Shipping Emissions App helps helps sustainability-minded companies across three core areas:

1. Measurement & Reporting

During Celonis’ shipping emissions webinar, 58% of attendees indicated that they had never measured their shipping emissions. This is unsurprising, not just because of the manual nature of the process discussed above, but also because for many businesses it can be difficult to determine how or where to start.

Emission Deep Dive - Analyze emission KPIs for deeper insights

The app makes it easy, generating accurate emissions calculations with only minimal data requirements (such as the departure address, arrival address, the shipping type and the shipping weight). Its granular point-to-point calculations are based on the industry-standard Global Logistics Emissions Council (GLEC) framework and cover all logistical operations and intermodal scenarios from long haul airfreight to last mile road delivery. Results are also compliant with the new ISO 14083 standard, which is important when businesses are having their sustainability credentials audited.

What’s more, users have the opportunity to break down the emissions data across a range of  different dimensions and on different levels, including:

• Shipments

• Sales orders and purchase orders

• Materials

• Customers

For every dimension, the Celonis system allows the user to interrogate and validate the emissions data calculations. The intuitive interface lets them visualize and cross-reference the steps involved, distances, and modes of transport applied, along with the ports, airports, warehousing hubs, and specific journey routing. It’s a simple, scalable, and intuitive means to deliver accurate emissions reporting.

2. Adoption & Target Setting

Another key business benefit of the Shipping Emissions App is its ability to connect every transportation data point to business-wide emissions reduction targets. The app enables companies to set and track performance against such targets over time, while viewing predicted future outcomes based on current shipping methodologies.

Emission Reduction Opportunities - Identify and quantify emission reduction opportunities

But it also allows them to dig into the factors driving their shipping emissions performance. The app can attribute emissions performance across multiple dimensions such as customer, business unit, transport mode, or sales organization. This means businesses can pinpoint which aspects of their operation are tracking on or above emissions targets and those lagging behind. It also has the functionality to assign internal accountability for investigating those areas that are dragging down emissions performance.

One of the biggest obstacles to realizing sustainability ambitions is getting business buy-in. The Shipping Emissions App helps address this by tracking the tangible business benefits its users generate from productivity gains (due to automated and granular calculations compared with manual approach), measurement accuracy benefits, as well as customer target setting and accountability.

3. Reduction & Improvement

There’s insight, and then there’s actionable insight. The app’s final key deliverable is to show businesses how they can practically reduce their shipping emissions. It allows users to compare actual total emissions with simulated emissions from the most viable sustainable alternative.

Emission Target Tracking - Track emission targets and progress

Again, the system goes to a granular level for comparisons and value assessments, deploying users’ historical shipping data as the basis for calculating potential emissions reductions. For example, they can analyze the likely improvements available based on swapping from air freight to sea freight on a specific regular route. The app lets users simulate multiple scenarios for planned shipping routes, comparing different modalities for their emissions levels. It allows them to explore different waypoints, airports, warehouses, or seaports to identify the optimum routes for productivity, cost and, of course, sustainability.

Next steps

The first steps towards optimizing your shipping emissions don’t have to be daunting. In fact we recommend businesses start small with a few key data points regarding outbound shipping. Because companies have greater control over what they ship than what they receive, they also typically have higher quality data for outbound transportation. With the Celonis and Climatiq system in place, emissions reporting can be underway in a matter of days. Then it’s simply a case of scaling-up with experience, buy-in, and business benefits.

For more information on the Shipping Emissions app, including our many customer success stories, make sure you check out the on-demand webinar.

Bill Detwiler

Senior Communications Strategist and Editor Celonis Blog

Bill Detwiler is Senior Communications Strategist and Editor of the Celonis blog. He is the former Editor in Chief of TechRepublic, where he hosted the Dynamic Developer podcast and Cracking Open, CNET’s popular online show. Bill is an award-winning journalist, who’s covered the tech industry for more than two decades. Prior to his career in the software industry and tech media, he was an IT professional in the social research and energy industries.