Moving beyond CSR to decarbonize the logistics sector

This opinion piece appeared in a supplement of the UK Freight Transport Association's Freight Magazine, click here to download.

The logistics sector must do its bit to keep global atmospheric CO2 concentrations below levels that risk a 2oC rise above pre-industrial temperatures. While companies should be commended for their corporate social responsibility (CSR) efforts, these simply won’t suffice anymore. Logistics companies must move beyond CSR and mainstream carbon reduction efforts into their operations.

What does this mean in practice? To start with, top management – CEO, CFO and COO - must show they are serious about decarbonization by setting ambitious emission-reduction targets for a company’s global logistics supply chain. Only when logistics and operations directors are held accountable to achieve these targets will they truly include the carbon footprint in their logistics decisions: selecting subcontractors, modes, routes, locating distribution centers, investing in vehicles and equipment, etc. Second, carbon accounting should be embedded in the corporate financial systems and be subject to third party verification, so that management and investors/stakeholders can trust and act on emissions data. A universal way of carbon accounting – the GLEC Framework for Logistics Emissions Accounting - is in the making, which builds on existing methods and the GHG Protocol.

Third, knowing the numbers, management can identify the most promising solutions covering fuel, vehicles, freight movement, and modal shift. The good news is that reducing carbon, in most cases, is good for business, thus it makes total sense to integrate these actions into normal operations plans and budgets. And finally, given the fragmented nature of the global logistics supply chain, it is a prerequisite that companies work together to achieve double digit reductions. Where companies used to boast 10-20% of emissions reductions through leading by example, we now see partnerships between multiple shippers and their logistics providers and customers to maximize load factors and achieve reductions of 30-60%!

What will you get out of this? Aside from immediate cost savings and improved customer relationships and public image, there is something bigger at stake. Pressure on governments is mounting to deliver on climate promises – the recent court order to the Dutch government to achieve 25% carbon reductions by 2050 is an example of what’s to come. It is a matter of time before national targets are translated to mandatory reduction targets for industry sectors, including logistics. But industry can help ensure that targets are expressed per tonne-km or similar freight activity unit instead of fixed percentage reductions so that leaders who have taken past action are not disadvantaged. Industry can also help unlock public funding where investments are most needed, think of infrastructure for cleaner fuels or intermodal connectivity. Logistics companies that demonstrate climate leadership will earn a seat at the table with governments and thus can help shape policies that work for climate and business.

01 September 2015
Sophie Punte, Executive Director
As a supplement of the UK Freight Transport Association's Freight Magazine 

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