There's a cheat code out there to help businesses cut supply-chain emissions — but hardly anyone uses it

Picture this: Two teddy bears are on their way to Los Angeles from Shanghai. They were made at the same factory from the same materials by the same workers, but they're loaded onto different ships at the port because they're headed to different toy stores.

Even though they're the same, by the time these hypothetical bears get to LA, they'll have different carbon footprints. That's because they'll travel on different models of ships and likely at different speeds — maybe even with different fuel.

Whether it's for European regulators or promises made to shareholders and customers, major companies that produce everything from aluminum sheeting to zippers have pledged some kind of emissions-reduction target. The toy giant Hasbro, for example, has pledged to reach net-zero emissions by 2050 — with a 40% reduction by 2030.

They all start with their own emissions, from buildings they own and the energy they buy. Eventually, they'll have to wade into their supply chains — where 90% of most companies' emissions come from — and transportation is a key element.

There's a growing chorus of experts who say the key to reducing emissions in the supply chain is taking a more granular look at what's happening out there on the ocean, rails, and highways. When companies look closer, they often find they're producing fewer emissions than they think, and identifying places to reduce gets even easier.

On the water and on the road, real emissions numbers are better

Most companies that are trying to reduce emissions choose the path of least resistance, Pierre Garreau, the founder and CEO of the climate-tech startup Searoutes, told Insider. They look at the point of origin and the destination for their cargo, and they use widely available multipliers to come up with emissions estimates. Then they buy offsets.

"There are a whole bunch of people that just want to check the box," Garreau said. "They want to do CO2 reporting, and then they want to go buy carbon-removal tickets to feel better about themselves."

Searoutes is one startup trying to convince companies that it's worth taking a closer look. Sometimes, Garreau and his team are looking at the precise travel speed of an ocean liner. Other times, they're identifying what he calls "absurd stuff" — where logistics firms zigzag around the globe for no discernible reason, he said.

The startup finds opportunities for companies to save on emissions by choosing different origin and destination ports or simply picking a different ocean line. This work often leads companies to a choice between two carriers offering the same service for the same price with different CO2 burdens‚ an easy switch. And sometimes, the cheaper services are better for the climate.

"We're able to tell them, 'Look guys, you are 40% away from optimal execution,'" Garreau said. "And if you work with us, we'll tell you how to pocket a 12% reduction or a 15% reduction."

Searoutes has roughly 75 clients — all companies that have a lot of cargo to move around the world, such as Ikea, SharkNinja, and BASF.

Companies whose amount of cargo for ships is constantly increasing, such as Ikea, have to look at logistics as a whole, Garreau said. They have to work on where their warehouses are, which port they use, which vessels they load in, and more.

It's not just ocean freight that could benefit from more granular carbon calculations

After clients' formal requests for proposals started to include emissions information, the trucking giant Redwood Logistics beefed up its emissions-measuring service.

"We firmly believe that as a transportation partner, providing you the emissions for the freight we move for you should be table stakes," said Nate Greensphan, a senior product manager at Redwood Logistics overseeing Hyperion, a digital sustainability tool Redwood launched in March.

It's starting by capturing cargo weight, practical miles based on the exact route the cargo takes, and the model of vehicle transporting it. Vehicle-service info and the age of trucks could add even more granularity down the line.

Hyperion is available to all customers on Redwood's freight platform, but it takes extra work from the client to be fully effective — updating internal data to make sure the system knows how heavy products are and how much space they take up, for instance.

"I think the biggest thing that we're trying to educate our customers on — and everyone knows it — but lean is green. Saving money equals reduction," Eric Rempel, the chief innovation officer of Redwood Logistics, said.

The eureka moment

Making supply-chain changes for the sole purpose of lowering emissions is still a fairly novel concept. And getting companies to sign up, and even pay, to find out their exact emissions is still a tough sell.

But one good enticement is that most companies probably have lower carbon emissions than they think, Julie Gerdeman, the CEO of Everstream Analytics, a supply-chain-intelligence platform, said.

Everstream's platform recommends how cargo should travel, the vehicle it should travel on, and the route it should take to optimize efficiency and emissions. And with a recent acquisition, it's added ocean-shipping data.

Gerdeman said companies were generally overestimating within their emissions data — and when they find that out, that's what she called a eureka moment.

"When you have the granularity, you have the accuracy, and then you're not overestimating," she said.

Companies using climate tech from the likes of Searoutes, Redwood Hyperion, and Everstream are still in the minority. But demand for these tools is growing and worth investment, the people developing this tech said — especially from companies with operations in Europe, where regulations are coming into force.

"We're moving into this regulatory environment where, ultimately, many countries are going to have to start reporting it," Gerdeman said. "And if you're not already, you better start to get your arms around it."

Though it may not be the line he uses in the boardroom to sell to clients, Garreau said, he sees a future where investing in real emissions data is more than just a compliance issue.

"Imagine in 30 or 50 years," Garreau said. "The planet is really warm, and we can't add any more CO2. I feel like people will point fingers to the past, and they're going to want to know the firms that didn't do their job. I feel like this could get very ugly."

This article is part of "The Great Transition," a series covering the big changes across industries that are leading to a more sustainable future. For more climate-action news, visit Insider's One Planet hub.