Emission Activity-Based Costing

EABC traces emissions to the specific activities that generate them, not just to departments or products. For example, instead of allocating a warehouse's total electricity emissions evenly across all SKUs, EABC assigns energy consumption to distinct activities like put-away, picking, replenishment, and idle storage based on actual resource usage.

• Cost Driver Analysis: Identifies the root operational cause of emissions, such as forklift hours per pallet moved
• Granularity: Enables per-SKU, per-order, or per-customer carbon costing
• Contrast with Traditional Methods: Avoids the distortion of broad averaging that hides inefficiencies in low-volume, high-complexity processes

This process involves creating a detailed map of how logistics activities consume resources that generate emissions. Resources include fuel, electricity, refrigerants, and packaging materials. The mapping follows a two-stage causal chain:

• Stage 1: Assign resource costs to activities (e.g., diesel consumed by a specific truck route)
• Stage 2: Assign activity costs to cost objects (e.g., the diesel for that route is divided among the shipments on board based on weight, volume, or pallet space)
• Output: A precise emission factor per unit of activity, such as kgCO2e per pallet-kilometer for a specific lane and vehicle type

EABC assigns emissions to final cost objects—the products, customers, orders, or channels that ultimately drive the activity. This reveals unprofitable or carbon-intensive relationships hidden by aggregate data.

• Customer-Level View: A customer requiring frequent, small, expedited shipments may have a disproportionately high emission profile compared to a customer ordering full truckloads
• Channel Analysis: E-commerce orders with high return rates carry a reverse logistics carbon burden not present in wholesale channels
• Product Design Feedback: Heavy or bulky packaging that consumes excess space in a truck is directly linked to higher per-unit transport emissions

EABC provides the granular activity data required as input for standardized reporting under the Global Logistics Emissions Council (GLEC) Framework and ISO 14083. These standards require accurate transport activity data (tonne-kilometers, TEU-kilometers) multiplied by validated emission factors.

• Data Quality: EABC improves the accuracy of primary activity data, moving companies from spend-based estimates to activity-based calculations
• Auditability: The transparent allocation logic of EABC creates a clear audit trail from source data to reported emissions
• Alignment: Supports Scope 3 Category 4 (Upstream Transportation) and Category 9 (Downstream Transportation) reporting with defensible, granular data

By linking emissions directly to their operational drivers, EABC pinpoints the levers for decarbonization. It answers not just how much was emitted, but why.

• Root Cause Examples:
  • High emissions per order traced to low drop density on a delivery route
  • Elevated warehouse emissions linked to excessive travel distances in a poorly slotted pick path
  • Increased transport emissions caused by a shift from rail to road for a specific supplier lane
• Actionable Insight: Enables targeted interventions like slotting optimization, mode shift mandates, or minimum order quantity policies for specific customer segments

EABC enables the calculation of a Carbon-Adjusted TCO by integrating an internal carbon price into traditional logistics cost analysis. The granular emission data from EABC is multiplied by a shadow carbon price to monetize the environmental impact.

• Decision Impact: A low-cost carrier with an aging, inefficient fleet may become more expensive than a premium carrier with a modern, low-emission fleet once the carbon cost is internalized
• Procurement Logic: Feeds directly into a Carbon-Aware Tender Engine to evaluate bids on a combined financial and environmental basis
• Investment Justification: Builds the business case for capital expenditures on electrification or modal shift by quantifying the avoided carbon cost

A software component that automatically selects the most appropriate CO2e conversion factor from a managed database based on transport activity data. It evaluates:

• Mode of transport (air, ocean, road, rail, barge)
• Fuel type and blend (diesel, LNG, SAF, electricity)
• Vehicle specifications (gross weight, engine tier, aerodynamic profile)
• Load factor (actual vs. maximum payload) This engine is the computational backbone that enables EABC to assign precise carbon costs to individual shipments.

A comprehensive life-cycle analysis method that accounts for total energy consumption and greenhouse gas emissions from fuel production (well-to-tank) through to combustion in a vehicle (tank-to-wheel). EABC systems that incorporate WTW boundaries capture upstream emissions from crude oil extraction, refining, and fuel distribution—not just tailpipe outputs. This prevents carbon leakage in accounting and enables accurate comparison between conventional fuels, biofuels, and electrified transport.

A procurement evaluation model that incorporates an internal carbon price into traditional TCO calculations. By assigning a monetary value to each ton of CO2e emitted, the model financially penalizes high-emission carrier bids and incentivizes low-carbon alternatives. EABC provides the granular activity-level emission data that feeds this model, enabling procurement teams to make sourcing decisions that balance cost, service level, and carbon impact in a single objective function.

The computational process of quantifying indirect greenhouse gas emissions occurring in a company's value chain. Category 4 (Upstream Transportation and Distribution) and Category 9 (Downstream Transportation and Distribution) are the primary domains where EABC operates. Unlike spend-based methods that estimate emissions from financial data, EABC uses activity-based methodology—multiplying actual transport activities by supplier-specific emission factors—to produce auditable, granular Scope 3 inventories aligned with the GHG Protocol Corporate Standard.

A cryptographically secured, immutable record of the origin, chain of custody, and transformation history of an emission data point. EABC systems generate thousands of emission calculations daily; provenance ensures each data point can be traced back to its source activity, emission factor version, and calculation methodology. This is critical for:

• Financial-grade audit readiness
• Regulatory compliance with emerging climate disclosure mandates
• Preventing greenwashing by ensuring claims are verifiable