The distance-based method for Scope 3 transport, worked lane by lane for an illustrative portfolio company, with the two levers that cut a quarter of it.
Freight emissions are tonnes × kilometres × an emission factor per tonne-km, calculated leg by leg and mode by mode. An illustrative industrial portfolio company moving goods on five lanes logs 88.19 million tonne-km and 2,934 tonnes of CO2e. Sixty tonnes of air freight, 0.37 per cent of what it ships, produce 594 tonnes of that, 20.2 per cent.
Worked in full in The ESG Manager in Private Equity by Julian R. Sterling, with every figure reproduced in a free workbook.See the book on Amazon →
Most portfolio companies start Scope 3 transport on spend, which is quick and coarse; the method is in how to calculate Scope 3 emissions with the spend-based method. The distance-based method needs shipment data, weight and distance by mode, which the logistics team or the freight forwarders usually hold. It is worth the effort for one reason: it is the only method in which a change of mode or routing shows up in the number.
Emission factors per tonne-km, well-to-wheel, are illustrative orders of magnitude. For reporting, take the current published factors (national government conversion factors or the GLEC framework) and keep the year and source in the file.
| Mode | Factor |
|---|---|
| Container ship, deep sea | 0.016 |
| Rail freight | 0.028 |
| Articulated truck | 0.105 |
| Air freight, long haul | 1.10 |
=Tonnes*Km.=Tonnes*Km*Factor/1000.| Lane | Tonnes | Km | Tonne-km (m) | tCO2e | Share |
|---|---|---|---|---|---|
| Asia components, container ship | 4,000 | 18,500 | 74.00 | 1,184.0 | 40.4% |
| Port to plant, truck | 4,000 | 600 | 2.40 | 252.0 | 8.6% |
| Outbound Europe, truck | 9,000 | 850 | 7.65 | 803.2 | 27.4% |
| Outbound by rail | 3,000 | 1,200 | 3.60 | 100.8 | 3.4% |
| Expedited parts, air | 60 | 9,000 | 0.54 | 594.0 | 20.2% |
| Total | 88.19 | 2,934.1 | 100% |
The company ships 16,060 tonnes a year, counting each consignment once, and emits 182.7 kg of CO2e per tonne shipped. The sea lane carries 83.9 per cent of the tonne-km and 40.4 per cent of the emissions. The air lane carries 0.6 per cent of the tonne-km and 20.2 per cent of the emissions. Per tonne shipped, the flown parts emit 9.9 tonnes of CO2e, the shipped components 0.296: about 33 times as much, even though the flight is half the distance.
The pattern is common: a footprint dominated by tonnage in the volume lanes and by a handful of urgent air shipments that nobody counts as a policy. The air lane is a procurement and planning question, not a logistics one.
| Measure | Saving (tCO2e) | Share of total |
|---|---|---|
| Expedited parts by sea instead of air (17.8 t instead of 594.0) | 576.2 | 19.6% |
| One third of outbound truck tonne-km to rail (2,550,000 tkm) | 196.3 | 6.7% |
| Both | 772.6 | 26.3% |
Removing the air freight requires holding more safety stock, which has a cost in working capital; the rail shift requires a terminal within reach and longer lead times. Each lever's euro cost divided by its tonnes saved gives the figure that ranks it, as in how to calculate abatement cost per tonne.
The factors matter less than the mode mix. Moving the truck factor 20 per cent either way, from 0.084 to 0.126, moves the total only between 2,723.0 and 3,145.1 tonnes. Changing the mode of 60 tonnes moves it by 576.2.
Counting only the main leg. The ocean voyage is the visible part of an import; the truck from the port is easily forgotten. Here it is 252.0 tonnes, 8.6 per cent of the total, missing from a main-leg-only inventory.
Putting all freight in one category. Transport the company pays for, inbound and outbound, is Scope 3 category 4. Outbound delivery paid by the customer is category 9. If the outbound trucks were on the customers' account, category 4 would be 2,130.8 tonnes and category 9 803.2. The total is unchanged; the boundary and the reduction target are not.
Mixing tonnes and consignments. Tonnes on each leg are the weight carried on that leg. The 4,000 tonnes from Asia appear on two legs and in the tonne-km twice, correctly, but only once in the tonnes shipped used for an intensity ratio.
How the book turns an ESG programme into a number an investment committee accepts, equity value and IRR rather than enterprise value, is worked in the free workbook for this case.
One tonne of goods moved one kilometre. It is the activity unit for freight emissions: 4,000 tonnes shipped 18,500 km is 74,000,000 tonne-km. Multiply by the mode's factor, here an illustrative 0.016 kg CO2e per tonne-km for a container ship, and divide by 1,000 for tonnes: 1,184 tCO2e.
It depends on who pays. Transport the company buys, inbound or outbound, is category 4, upstream transportation. Outbound transport paid by customers is category 9, downstream. In the illustrative case, if customers paid for the outbound trucks, 803.2 tonnes would move from category 4, leaving 2,130.8, to category 9.
Per tonne-km, roughly 69 times on the illustrative factors of 1.10 and 0.016 kg. Per tonne shipped the gap depends on routing: 60 tonnes flown 9,000 km emit 9.9 tonnes of CO2e per tonne, against 0.296 for components shipped 18,500 km by sea, about 33 times more. Small air volumes routinely dominate a freight footprint.
This article is one calculation from The ESG Manager in Private Equity. The book takes the same case from first principles to the decision, chapter by chapter, and every figure it prints is a live formula in the free companion workbooks.
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