Summary: This is an extract from Chapter 5.
Category 4: Upstream transportation and distribution
This category includes emissions from the transportation and distribution of products (excluding fuel and energy products) purchased or acquired by the reporting company in the reporting year in vehicles and facilities not owned or operated by the reporting company, as well as other transportation and distribution services purchased by the reporting company in the reporting year (including both inbound and outbound logistics).
Specifically, this category includes:
- Transportation and distribution of products purchased by the reporting company in the reporting year, between a company’s tier 1 suppliers6 and its own operations (including multi-modal shipping where multiple carriers are involved in the delivery of a product)
- Third-party transportation and distribution services purchased by the reporting company in the reporting year (either directly or through an intermediary), including inbound logistics, outbound logistics (e.g., of sold products), and third-party transportation and distribution between a company’s own facilities
Emissions may arise from the following transportation and distribution activities throughout the value chain:
- Air transport
- Rail transport
- Road transport
- Marine transport
- Storage of purchased products in warehouses, distribution centers, and retail facilities
Outbound logistics services purchased by the reporting company are categorized as upstream because they are a purchased service. Emissions from transportation
and distribution of purchased products upstream of the reporting company’s tier 1 suppliers (e.g., transportation between a company’s tier 2 and tier 1 suppliers) are accounted for in scope 3, category 1 (Purchased goods and services). Table 5.7 explains the scope and scope 3 category where each type of transportation and distribution activity should be accounted for.
A reporting company’s scope 3 emissions from upstream transportation and distribution include the scope 1 and scope 2 emissions of third-party transportation companies.
Table 5.7
| Transportation and Distribution Activity in the Value Chain | Scope and Scope 3 Category |
|---|---|
| Transportation and distribution in vehicles and facilities owned or controlled by the reporting company | Scope 1 (for fuel use) or Scope 2 (for electricity use) |
| Transportation and distribution in vehicles and facilities leased by and operated by the reporting company (and not already included in scope 1 or scope 2) | Scope 3, Category 8 (Upstream leased assets) |
| Transportation and distribution of purchased products, upstream of the reporting company’s tier 1 suppliers (e.g., transportation between a company’s tier 2 and tier 1 suppliers) | Scope 3, Category 1 (Purchased goods and services), since emissions from transportation are already included in the cradle-to-gate emissions of purchased products. These emissions are not required to be reported separately from Category 1. |
| Production of vehicles (e.g., ships, trucks, planes) purchased or acquired by the reporting company | Account for the upstream (i.e., cradle-to-gate) emissions associated with manufacturing vehicles in Scope 3, Category 2 (Capital goods) |
| Transportation of fuels and energy consumed by the reporting company | Scope 3, Category 3 (Fuel- and energy-related emissions not included in scope 1 or scope 2) |
| Transportation and distribution of products purchased by the reporting company, between a company’s tier 1 suppliers and its own operations (in vehicles and facilities not owned or controlled by the reporting company) | Scope 3, Category 4 (Upstream transportation and distribution) |
| Transportation and distribution services purchased by the reporting company in the reporting year (either directly or through an intermediary), including inbound logistics, outbound logistics (e.g., of sold products), and transportation and distribution between a company’s own facilities (in vehicles and facilities not owned or controlled by the reporting company) | Scope 3, Category 4 (Upstream transportation and distribution) |
| Transportation and distribution of products sold by the reporting company between the reporting company’s operations and the end consumer (if not paid for by the reporting company), including retail and storage (in vehicles and facilities not owned or controlled by the reporting company) | Scope 3, Category 9 (Downstream transportation and distribution) |