The European Parliament and Council recently adopted instruments that expand the public accountability of companies, requiring them to report on a broad range of ESG (environmental, social and governance) factors.
Is your company subject to new sustainability reporting requirements?
New European Sustainability Reporting Standards (ESRS) apply if your company is already subject to the Non-Financial Reporting Directive (NFRD) or meets 2 out of 3 of these criteria:
- Over 250 employees
- Net turnover above EUR 40 million
- Assets exceeding EUR 20 million
Some 38,300 EU businesses must start collecting the required data from January 2025 and report it from 2026. Smaller companies and third-country enterprises have longer grace periods. Large public-interest companies (with over 500 employees and already subject to NFRD) need to start a year earlier.
What data will you need for the CSR report?
ESRS includes far-ranging reporting requirements on all aspects of ESG.
If you manage transportation processes, you will need to report on emissions data from all your company’s transportation and distribution activities.
This includes emissions generated by your suppliers and partners who deliver your goods and materials, known as Scope 3 emissions as defined by the Greenhouse Gas Protocol and specified in ESRS E1 - Climate Change (and compliant with the GLEC Framework). Emissions from transportation and distribution also fall under these requirements.
If that sounds extremely broad in scope (and an area where you have limited visibility today), you are probably right – and you are also not alone. Few companies currently have access to emissions data from their upstream or downstream business activities, and fewer still include it in their sustainability reports.
At the same time, the need to report on these emissions is clear: the majority of emissions for most companies results from the supply chain.
How will you acquire the data for the new European Sustainability Reporting Standards?
Alpega TMS customers include pioneers who are already collecting emissions data from their carriers. They have shared the following best practices with us on their journey towards carbon visibility and avoidance.
Engage with suppliers
Companies need to collaborate closely with all partners in their supply chain and engage with them on ESG topics. The best practice is to include environmental standards and reporting requirements at the start of the tendering process.
Automate transportation processes
Dealing with suppliers at scale has been a cumbersome process in the past. Moving away from manual processes can be a huge benefit, helping you focus on the tactical challenge of reducing emissions. An automated process using an API to retrieve emissions data from carriers greatly reduces the effort.
Identify hot spots
You will need detailed, granular emissions data to find and target emissions-intensive parts of your transportation processes. Your transportation management system should be able to calculate emissions at the load level and generate reports that let you compare emissions across different carriers and legs.
We have tools and experts to help you with each of these challenges: the Alpega TMS portfolio has the solutions you will need to meet the new reporting standards.
What comes next?
Get started now! Working with your supply chain and setting up robust reporting takes time. And the next challenge is already lurking around the corner: the EU is working on additional sector-specific ESG disclosure requirements that will be discussed in late 2023.
The good news is that you can make this a win-win situation: the right TMS tools will increase your operational efficiency and help you comply with the reporting standards. Not to mention that using the features in our TMS will help you avoid carbon emissions across your whole logistics process – but that’s a topic for a different article.