Cargotec needs to use natural resources to run its business, and CO2 emissions are generated in almost all parts of our value chain. We see these challenges as an opportunity to improve our own business and our entire industry - while capturing profitable growth.
Cargotec’s biggest environmental impacts are related to climate change and circularity. We also monitor, address and report on other environmental impacts and emissions.
Cargotec is committed to doing its share to limit global warming to 1.5°C. We will do this by capturing profitable growth from the business opportunities that climate action brings.
Cargotec has signed the United Nations Global Compact’s Business Ambition for 1.5°C, where leading companies promise to pursue science-based measures to limit global temperature rise to 1.5°C. Our science-based target for greenhouse gas emission reduction, which has been validated by the Science Based Targets initiative (SBTi), is in line with this ambition.
The use phase of Cargotec products by customers is where the large majority of our greenhouse gas emissions (73% in 2022) are generated, mostly due to emissions from diesel-powered machinery. Similarly, CO2 emissions from our supply chain, specifically from the extraction and manufacturing of our raw materials and components (mostly steel) are significant (26%). And while emissions from our own operations represent only a very small share of our total emissions (1%), they do have an impact on the climate.
* In accordance with our science-based target, only direct sourcing is included in the carbon footprint. With this omission, the scope 3 emissions included in the target boundary cover more then 90% of Cargotec's total scope 3 emissions.
Cargotec impacts the climate but climate change also impacts Cargotec. We have tested the resilience of our climate strategy in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) for disclosing climate-related risks and opportunities. More information about this analysis can be found here and in the Board of Directors' report in our Annual report.
Our targets and progress
To tackle our greenhouse gas emissions, we have chosen to set challenging climate targets for ourselves. Cargotec’s science-based climate target, validated by the SBTi, is to reduce absolute scope 1, 2 and 3 greenhouse gas emissions by 50% by 2030, compared to a 2019 baseline. With an absolute reduction target, we need to be able to reduce our emissions even with increasing sales volumes. The target boundary includes biogenic emissions and removals from bioenergy feedstocks. We do not count offsets as emission reductions towards our target.
In 2022, we published new strategic performance targets for our core businesses which, for the first time, also include sustainability-related targets. The targets are to reduce our emissions by at least 50% by 2030 and by 25% by 2025, which is in line with our science-based climate target, as well as to double the sales growth of our eco portfolio compared to traditional products.
In our own operations, we aim to go beyond our science-based target and be carbon neutral by 2030.
In 2022, our total emissions increased by 5% compared to 2019. While emission intensity improved, it was not enough to compensate for the increase in emissions.
How we will get there: Mission Climate
Cargotec’s strategic climate initiative, Mission Climate, guides us in achieving our science-based target and future-proofing our business through, for example, electrification. Mission Climate has three priority areas: 1) decarbonising the supply chain, 2) decarbonising our own operations and 3) boosting our sustainable offering.
26 percent of our value chain emissions were generated in our supply chain in 2022. To tackle these emissions, we must find better alternatives to the components we buy and work closely with our suppliers. We have, for example, partnered with the steel manufacturer SSAB to introduce fossil-free steel to the cargo and load handling industry in Cargotec’s equipment. In 2022, Hiab introduced the world’s first load handling equipment made with SSAB’s fossil-free steel. We are also exploring other alternatives to traditional steel, the biggest contributor to our supply chain emissions. In Hiab’s case, for example, just increasing the amount of recycled steel could reduce supply chain emissions from steel by 50 percent. For more information, read this article about steel and how to "fix" it.
While only 1 percent of our emissions come from our own operations, they do have an impact on the climate. To reach carbon neutrality by 2030, we focus on electricity use and fuel usage by our service fleet. In 2022, Hiab’s innovation centre in Hudiksvall, Sweden, achieved net-zero CO2-equivalent emissions and is the first carbon neutral Cargotec site. Overall, we achieved a 28 percent emission reduction across Cargotec in 2022 compared to 2019.
As 73% of our footprint comes from the use-phase of our products, it is crucial that we develop low and zero-emission products and services that our customers are willing to buy. Our eco portfolio is our most important tool in this work.
For more details on our progress in Mission Climate’s work streams, see our Annual Report 2022.
How we calculate our scope 3 emissions
We improved the calculation and collection methodology of our scope 3 emissions in 2022. Despite their minor share under scope 3, we report emissions related to transportation and distribution, business travel, and fuel- and energy-related activities.
For purchased goods and services, we apply separate calculation methodologies for direct and indirect purchases. For direct purchases, we apply a 'hybrid' approach where a mixture of methodologies are used depending on data availability (when supplier-specific data or weight data of the sourced materials are not available, we depend on the spend-based approach to calculate emissions). For indirect purchases (which account for a minor share of all purchases), we apply spend data and calculate it with the Scope 3 Evaluator tool (GHG Protocol/Quantis).
For the use of sold products, we use product-specific information and emission factors for diesel and electricity (location-based). We account for scope 1 and 2 emissions (i.e. from use of fuels and electricity) over the products' expected lifetime.
For transportation and distribution, we apply spend data and calculate it with the Scope 3 Evaluator tool (GHG Protocol/Quantis).
Business travel data originates from our travel agency. Fuel and energy related activities cover the upstream emissions for fuel, electricity and heating, and for transmission & distribution losses for electricity and heating - DEFRA emission factors are used to calculate the relevant emissions in this category.