Improving data quality in carbon accounting: solutions for logistics and manufacturing

Accurate and comprehensive data is the foundation of all carbon accounting. Without having an accurate corporate carbon footprint, it’s difficult to assess risk properly, make effective decarbonization decisions, measure progress, and keep stakeholders engaged throughout the long journey of decarbonization.  

This is why, for enterprise carbon accounting, the goal is often to obtain granular, real-time data across the entire value chain. The problem? It’s a challenge for any company, especially for industries with complex supply chains, like logistics and manufacturing. 

Multiple factors contribute to data quality challenges for these industries, from a higher percentage of Scope 3 emissions to inconsistent calculation methodologies to complexities managing emissions data across many locations and sources. 

To support emissions reporting and decarbonization efforts in these industries, we need to tackle data availability and quality. In this piece, we’ll outline the major challenges of this task and present industry-specific solutions. 

‍

What are the main challenges for companies with complex supply chains?

‍

At Cozero, several significant data quality challenges have become apparent from years of working with logistics and manufacturing enterprises. Five of the biggest challenges are:

‍

• Challenge 1: Inconsistencies in data format and quality. Generic data, inconsistent formatting, and other data organization issues contribute to low-quality and patchy data. This results in an inability to make reliable and comparable emissions calculations.  
  ‍
• Challenge 2: Lack of automated sustainability data collection systems. While logistics and manufacturing companies often have robust data systems and processes in place, this often doesn’t extend to sustainability teams. Teams spend large amounts of time manually requesting data from many different systems, making supply chain data collection slow and cumbersome.
  ‍
• Challenge 3: Complexity of calculating emissions in a standardized way. In logistics and manufacturing, the methods for emission calculation vary heavily from one mode of transport or product to another. If suppliers use different methods to calculate emissions, the result is a lack of comparable data.
  ‍
• Challenge 4: Difficulty in engaging stakeholders. Engaging external stakeholders adds complexity to carbon accounting. The Smart Freight Center highlights that for freight transport companies in particular, a lack of emissions transparency from suppliers is making it difficult to decarbonize. 
  ‍
• Challenge 5: Lack of knowledge and expertise or resources: Companies and suppliers with little experience often don’t know which data they need to collect, how to get this data, or how to calculate the associated emissions.

Cozero Climate Lead Anya Chodosh summed up the challenges for logistics in a recent webinar: “Many companies are still really missing good quality data for effective measurement and decision making,” she says. “Calculation methods are quite complex and nuanced, and there's also variability per transport mode.” 

While we don’t want to get discouraged by these challenges, it’s important to take the implications of bad data seriously. 

One 2023 paper in the Journal of Climate Finance found that unreliable data “undermines the effectiveness of climate risk assessment,” making it difficult to make appropriate investment and decarbonization decisions.    

At Cozero, we’ve seen additional impacts ranging from reputation management issues, delays in implementing emissions reduction, and general frustration in internal stakeholder management.

So, how can logistics and manufacturing companies begin to solve these issues? 

‍

Solutions to improving data quality

While there’s no overnight fix, logistics, and manufacturing companies can see real progress in data visibility and quality when they embrace best practices and industry-specific solutions.

‍

For comparable data types and emission calculations, align with industry standards

‍

The first solution is to adopt international standards to tackle data comparability. More than 9 out of 10 Fortune 500 companies reporting to CDP use the GHG Protocol, so as a foundation, align your emissions inventory with the Greenhouse Gas (GHG) Protocol’s “Corporate Standard.” 

For better standardization of data and emissions calculation across your industry, adopt industry-specific standards, like ISO 14083 for transport chains. 

ISO 14083 is based on principles of the GLEC Framework and the previous European Norm. While it’s an optional standard, supplier adoption will ensure everyone uses the same methodology to calculate emissions across passenger and freight transport.

‍

_‍

Knowing which frameworks to use when is not always straightforward. To make the right decisions and significantly speed up your implementation timeline, we recommend partnering with a team that understands the best calculation methodologies for your industry. 

An experienced consultant or robust carbon management platform like Cozero’s Climate Action Platform will accelerate this alignment process.

‍

Use tools to help fill data gaps
‍

Aside from standardizing data formats and calculation methodologies, automated tools can play a major role in filling gaps in the data and keeping emission factors up-to-date in three main ways: 

‍

• Prioritizing primary data: For granular emissions calculations, it’s important to strive for the ideal of data direct from suppliers. This isn’t easy to achieve, but standardizing reporting formats and automating aspects of supplier engagement can streamline this process.  
  ‍
• Finding the right industry averages: When primary data isn’t possible, industry averages are typically the go-to secondary source. However, it’s important to use the most relevant and specialized sources of data, taking into account industry, location, and product categories. It’s also key to use reputable sources of industry information like the EPA, Ecoinvent, and DEFRA. Cozero offers access to these and others as part of its emission factors database. 
  ‍
• Keeping up to date with emission factors: Emission factors and calculations change as the climate changes. Instead of trying to keep up with these changes manually, tools like Cozero’s Climate Action Platform allow companies to keep up with the latest emission factors and any methodology changes. 

High-quality automation and specialized tools can go a long way toward solving the patchy data issues that logistics and manufacturing companies often face. 

‍

Implement data collection systems to streamline data quality improvement
‍

When starting your carbon accounting journey, it’s normal to lack sophisticated data collection processes and systems. However, developing more robust systems over time is crucial for better data quality. When setting up your data collection systems, there are a few key points to consider:

‍

• Find the right stakeholders to manage emission hotspots: When collecting data, make sure you’re prioritizing emission hotspots and connecting with the most important stakeholders for these areas of your supply chain. Cozero customer and MOSOLF head of sustainability Lutz Fricke gives the example of prioritizing engagement with fleet managers to measure transport emissions over cafeteria staff to measure food emissions.    

• Develop a supplier onboarding and engagement process: Develop processes for supplier engagement and make it easy for suppliers to share data. CDP has found that tailored messaging, healthy supplier competition and recognition, and supplier-specific webinars can help improve response rates. A user-friendly online tool like Cozero’s Climate Action Platform makes the process intuitive with advanced supplier engagement features. 

• APIs and automation for less time on data collection: Reduce time spent on manual data collection through implementing APIs and automated systems. These systems can pull data from sources like supplier databases and energy usage systems to provide comprehensive emissions data, allowing teams to focus on analysis and decarbonization over data collection.

These are just a few of the important elements to consider when implementing data collection processes and systems. 

After collecting your data, you’ll want to implement a quality assurance process to ensure data quality as well third-party data verification. Cozero supports customers on both these aspects with a Carbon Accounting Quality Report that helps customers identify potential data quality issues, and third-party access for auditors.

The bottom line is that robust and optimized processes are crucial to support complex data collection needs. 

‍

‍

Collaborate with partners to scale up cross-industry data improvement efforts
‍

Collaboration is another solution to improve data quality, especially when it comes to sharing knowledge, resources, and tools. 

Cozero’s customer, the Wilo Group, is now a part of an initiative standardizing emissions calculations for sold products. Since they manufacture over 40,000 different varieties of pumps and have mature carbon accounting processes, the Wilo Group has valuable knowledge to share with other manufacturers in this collaboration.

A similar example is the collaboration between Siemens, Dow, and a number of other companies creating data tools that facilitate the sharing of CO2-equivalent data generated throughout the product life cycle. 

These kinds of data- and knowledge-sharing projects help align partners across industries and can be a major driver of higher data quality. 

These projects also highlight the advantage of working with an industry-specific carbon accounting solution. When selecting a partner to support your carbon accounting efforts, consider partnering with an industry specialist so you can benefit from their customer network.

‍

Don’t let perfection get in the way of decarbonization progress
‍

It’s important to balance ambitious data quality targets with active emissions reduction.

“The idea is to get as close as possible to a direct measurement of what you consume and to get all the real-time supplier emissions data,” Natalia Gemignani, Climate Success Manager at Cozero, says. “Considering that companies might have 20,000 suppliers and the value chain might be extremely long, it’s a difficult task.”

It may not be realistic for every company to have this real-time data from all suppliers. “But we are slowly moving in that direction,” Natalia says.

Regine Castilla, senior Sustainability Success Manager at Cozero, also points out that companies can sometimes get stuck in their calculations.

“Many companies spend a lot of time with the calculations because that's where they feel more secure,” Regine says. “But then they lose the opportunity to think about decarbonization.” 

To achieve net zero by 2050, we need to find a balance between striving for real-time data across the entire value chain and implementing decarbonization reduction as quickly as possible. 

Partners and tools that support end-to-end carbon management can help strike this balance between pursuing high-quality data and reducing emissions.

‍

High-quality data is worth it: Cozero customer success stories
‍

Cozero customers prioritizing data quality are seeing major results from their efforts.

The Wilo Group partnered with Cozero to tackle their challenges with Scope 3 calculations. One of the biggest benefits of this collaboration, according to their team, was using Cozero’s extensive database of emission factors. 

Thanks to their hard work, the Wilo Group has emerged as a clear industry leader, recently named “Europe’s Climate Leader 2024” by Financial Times and Statista.

Another data quality success story is DMG Mori, a worldwide leader in the global machine tool industry. DMG Mori began using Cozero to calculate emissions of Scopes 1 and 2 but has since expanded to full coverage across Scopes 1-3. 

These are just a few of several case studies where Cozero has helped their customers make major improvements to data availability and quality, paving the way for decarbonization progress. 

‍

Get started improving data quality

Improving data quality across all three scopes is no easy feat for sustainability teams working with complex supply chains like logistics, transport, and manufacturing. 

Improvement takes time, experience, and collaboration with many different stakeholders both in and outside the company. 

But as we’ve seen at Cozero, pursuing better data means more effective decarbonization plans, better relationships both in and outside the company, and a competitive advantage in the marketplace.

Cozero is here to help you solve these challenges and accelerate your carbon management journey. For more on this topic, take a look at our recent webinar with EcoTransIT World on improving logistics data and emissions calculations.

‍

‍

References: 

‍

• Bajic, Andrej, Rüdiger Kiesel, and Martin Hellmich. 2023. “Handle with Care: Challenges in Company-Level Emissions Data for Assessing Financial Risks from Climate Change.” Journal of Climate Finance 5 (100017): 100017.
• CDP. 2024a. “SUPPLIER ENGAGEMENT GUIDE.”
• CDP. 2024b. “CDP Technical Note: Relevance of Scope 3 Categories by Sector CDP Climate Change Questionnaire.”
• EcoInvent. n.d. “Home.” Ecoinvent.
• Fricke, Lutz, and Helen Tacke. 2024. “Wer Nicht Anfängt, Kann Nicht Fertig Werden | CO2-Bilanzierung Als Einstieg Ins Thema Nachhaltigkeit.” CNA Magazin H.O.R.I.Z.O.N.T.E., August, 22–23.
• GOV.UK. 2024. “Greenhouse Gas Reporting: Conversion Factors 2024.” GOV.UK. July 8, 2024.
• Smart Freight Centre. 2023. “Smart Freight Centre.” Smartfreightcentre.org. 2023.
• US EPA. 2015. “GHG Emission Factors Hub.” Www.epa.gov. July 27, 2015.
• World Economic Forum. 2022. “Reducing the Carbon Footprint of the Manufacturing Industry through Data Sharing.” World Economic Forum. March 23, 2022.

‍