UK SDS: An opportunity for freight forwarders

Businesses around the world are grappling with the need to accurately report their carbon emissions due to new regulations. In the UK, the government is planning to introduce the UK Sustainability Disclosure Standards (SDS) to foster transparency and accountability in reporting sustainability-related risks and opportunities for businesses. For freight forwarders, it is essential to understand how the UK SDS will impact their customers and how to prepare for its implications.

In this blog post, we will explore the UK Sustainability Disclosure Standards and explain what it means for freight forwarders and how you can prepare for the changes it will bring to the logistics industry. 

What are the UK Sustainability Disclosure Standards?

The UK SDS is a set of corporate sustainability standards for UK businesses that’s due to be published by the UK Department for Business and Trade in July 2024. Not to be confused with the UK Sustainability Disclosure Regulations, the UK SDS will serve as the foundation for potential future mandates in UK sustainability-related legislation and regulations. This encompasses risks and opportunities linked to sustainability matters, including those stemming from climate change.

Significantly, these standards will be underpinned by the International Sustainability Standards Board (ISSB), which seeks to align sustainability reporting across various global jurisdictions. Supported by the UK government, the ISSB endorses the International Financial Reporting Standard (IFRS) S1 and IFRS S2, including the incorporation of scope 3 emissions reporting. This means it is highly likely that scope 3 reporting, including emissions resulting from supply chain activities, will be a requirement for businesses to meet UK Sustainability Disclosure Standards once introduced.

As the UK SDS will be sector-agnostic, it will comprise all businesses reliant on the movement of goods. For many of these businesses, scope 3 emissions make up over 60% of their total carbon footprint. The first phase of reporting will impact large businesses that have more capacity to incorporate sustainability reporting at short notice, with sustainability reporting for SMEs likely to be phased in over 2 to 4 years, depending on company size and sector-specific needs. This phased approach, similar to the Corporate Sustainability Reporting Directive (CSRD), underscores the increasing demand for visibility of scope 3 supply chain emissions from all sectors reliant on the movement of goods. 

The role of freight forwarders in scope 3 carbon reporting

Freight forwarders will play a pivotal role in providing the data shippers need to meet their scope 3 reporting requirements. By facilitating the movement of freight in the supply chain, you have access to the end-to-end shipment data that is essential for accurately calculating and reporting your customers’ scope 3 emissions. This means it’ll fall on you to calculate and report your customers' shipment carbon emissions as it becomes a standard requirement.

How can freight forwarders add value through scope 3 carbon reporting?

The UK SDS means shippers will increasingly seek out freight forwarders who are equipped to provide scope 3 carbon reporting as an integral part of their service. This new requirement presents a golden opportunity for you to add an additional layer of value to your forwarding business, getting ahead of the competition and increasing revenue. Conversely, not meeting this new requirement will impact your ability to stay competitive during the tender process.

The good news is that you still have the chance to take early action and benefit from integrating carbon reporting capabilities into your TMS or customer portal to gain a distinct advantage. By proactively providing scope 3 carbon reporting as standard, you’ll differentiate your business in the market, attract environmentally conscious customers and foster long-term partnerships.

How can freight forwarders prepare for UK SDS?

The best way to proactively prepare you customers for the UK SDS is to embed scope 3 carbon reporting capabilities into your TMS or customer portal now. By doing so at this early stage, you’ll not only add value to your forwarding service but also have time to refine data processes to enable you to improve the quality of your carbon reporting, retaining your competitive edge once it becomes a standard service within the industry.

If you'd like to demonstrate your commitment to helping shippers without integrating carbon reporting into your systems, there are also options out there. At Pledge, we've created a simple solution that enables you to meet your customers' scope 3 carbon reporting requirements without needing to integrate, saving you time and resources. You just simply drag and drop a CSV file with your customers' shipment data into the Pledge platform, and then you can view their emissions and download the reports they need. This is one way we're making providing shippers with scope 3 carbon reporting support more accessible for freight forwarders.

Help shippers meet carbon reporting requirements with Pledge

The UK Sustainability Disclosure Standards present you with a unique chance to contribute to the global sustainability agenda while adding significant value to your services. By showing shippers that you're already prepared to help them meet their SDS reporting obligations, you’ll position your business as a trusted partner and gain a competitive edge in the evolving marketplace — ultimately leading to increased revenue and improved customer loyalty. 

At Pledge, we’ve built a platform designed to make it easy for freight forwarders like you to add scope 3 carbon reporting to your services — whether by direct API or AWS S3 integration or via the drag and drop function. Simply sign up for your 14-day free trial to experience firsthand how we can enhance your forwarding service and support your shippers' carbon reporting needs.