As one of the biggest industries to influence global warming, retailers have a critical part to play in limiting their carbon emissions. In July, the Australian Government will enforce new regulations whereby thousands of businesses in hundreds of industries will have to report their Scope 3 emissions. With expansive supply chains – from suppliers upstream to consumers downstream – the retail sector is one of the main targets.

Achieving the 2050 net zero target is undeniably a positive step for Australia, however it presents a substantial hurdle for retailers; a considerable number are unprepared. Not only does inaction risk the wrong attention from policymakers, it could also see retailers lose loyalty from contemporary consumers, many of whom judge brands based on it. Getting ahead of the curve is important, and needn’t be as daunting as it sounds.

At Shippit, our north star is to power 200 million deliveries without waste by 2025. We work with thousands of retailers – big and small – not just to deliver parcels, but to help them optimise their commerce delivery supply chain, whether for efficiency, reliability or sustainability. We have spent the last six months in close partnership with TEM and Pangolin Associates to develop a market leading methodology to decarbonise the last mile. So what are scope 3 emissions and how can retailers take action?

What are Scope 3 emissions?

Scope 1 emissions are created by sources owned or controlled by a retailer such as to power equipment. Scope 2 emissions are indirect emissions resulting from, for example, the electricity or heat they purchase.

Scope 3, meanwhile, are indirect emission from sources they don’t own or control. This includes, for example, supply chains and product use. Scope 3 emissions are often the largest and most challenging to manage because they’re complex, indirect and involve external stakeholders. How, then, can retailers exert more control over them?

Route optimisation

Route optimisation is the process through which retailers tap into their data to make their fleets more efficient and effective. That isn’t isolated to simply the speed and reliability of a delivery, but how much carbon it omits too. This makes it very effective in the context of tackling Scope 3 emissions.

Rather than simply loading up a delivery van as orders are fulfilled, route optimisation enables a retailer to optimise the route the van takes based on factors like proximity, capacity and traffic conditions. Today, 15% of deliveries originate within 15km, from sender to recipient. However, the average parcel travels approximately 722kms. Through Shippit we can use data to guide retailers’ understandings of their operations, and help them reduce emissions per KM on the road and overall KMs on the road too.

Sustainable vehicles

Electric vehicles are becoming more and more common on our roads. As the technology becomes more available and the government continues to incentivise its use, it will become easier and more appealing for retailers to adopt.

Australia Post, ANC, TGE and Bonds are already using EVs for their last-mile, while Woolworths recently announced plans to make its home delivery trucks 100% electric by 2030. Retailers will significantly reduce the environmental impact of their delivery by using these carriers. Similarly, bike fleets are an effective and emission-neutral way to power the last-mile, especially in inner-city areas, for smaller items or on-demand delivery options.

Partner wisely

Partnering with technology companies is a simple – often overlooked – step towards a more efficient, streamlined and sustainable delivery process. The best delivery platforms don’t just fulfil orders, they provide access to the data and carrier networks retailers need to take control over their entire supply chain, from supplier to shopper.

Calculating carbon emissions in the last-mile is difficult, but technology platforms can make fleets more efficient and less carbon intensive – without compromising speed and reliability of delivery. Partnering with the right technology providers – those for whom sustainability is a key focus, rather than a peripheral add-on – is essential.

The new regulations will push the strugglers and stragglers. The businesses that are already taking action, are going to get better at it and get better at it quickly, because they’ve already got a head start. However, the retailers that aren’t thinking about that today are going to be in trouble when it comes to FY25.

There will be a year of leeway, but the Government has made it very clear that there will be repercussions should businesses fail to adopt, and think about their emissions reporting. By taking action now, it not only contributes to a healthier planet, but also positions retailers as leaders in a more sustainable future, boosting their bottom-line in the long run.

Rob Hango-Zada is co-founder and co-CEO of Shippit.