Photo: Klaveness

Klaveness Digital urges cargo owners to focus on Scope 3 emissions

Klaveness Digital, part of the Norwegian shipowner Torvald Klaveness Group, has challenged industry players to act on Scope 3 emissions now or risk increasing costs and losing competitive advantage, in a recent webinar discussing the opportunities of digitalization and decarbonization.

Scope 3 emissions are “the result of activities from assets not owned or controlled by the reporting organization, but that the organization indirectly impacts in its value chain”, according to a definition provided by the US Environmental Protection Agency (US EPA)

“Scope 3 is often the biggest chunk of supply chain emissions, but very few companies know the full picture. Companies will be asked to disclose emissions by clients and eventually by legislation. You should do your utmost to get a full picture of the situation,” Ingrid Kylstad, Sustainability Lead at ZeroLab by Klaveness, pointed out.

Aleksander Stensby, Managing Director of Klaveness Digital, called Scope 3, “the bastard child of the emissions hierarchy, it’s been on the radar, but it’s mostly toe dipping, it’s not moving forward.”

Klaveness
Aleksander Stensby, Managing Director at Klaveness Digital. Photo: Klaveness

Stensby added that “we need to stop allowing stupidity. We are incentivizing stupid behavior through the supply chain” and gave the example of vessels “racing to wait” in port because of first-come, first-served models.

Lasse Kristoffersen, Chief Executive at Torvald Klaveness, noted that fuel bills could eventually make up 70% or 80% of freight costs — up from 50% today.

Kristoffersen explained technology has not yet solved the problem for shipping, where zero-emissions fuels are more expensive than carbon-based ones and added that “carbon would win” if market forces alone decided which fuel owners would use.

Stensby further said that “we can sit around and wait, or start now and be ahead of the curve,” and emphasized the importance of starting with visibility, then advance to collaboration. He suggested choosing partners who are acting themselves, as well as switching to just-in-time arrivals.

With very few industrial companies looking at this in detail, Kylstad said that there are benefits to being a first mover and “it’s the lowest hanging fruit that will be taken first.”

Stensby concluded that cargo owners should get started now and not be paralyzed by the uncertainty

“Most companies are scared, don’t know how to approach this. There is this sense that Scope 3 is out of their control, but it can be done,” Stensby stressed.

With eight of the world’s industrial supply chains accounting for more than 50% of global emissions and Scope 3 often representing the lion’s share contribution, there is a massive potential for customer-facing sectors to multiply their climate impact in the race to net zero, according to Klaveness.