Pace and Resolve Needed to Help Reach Sustainability Goals

Being a logistics operations professional, I am always concerned about “slipping backwards.” It’s not an unreasonable concern. Managers involved with process control often worry about the same thing. Many people after all are not excited about changes; they actually see change as a threat.

So when it comes to the logistics industry, will companies and managers forget about climate change and carbon reduction targets in favor of making short-term profits?

After reading and studying a handful of sustainability reports, I am happy to say that I believe we are still moving toward a more sustainable future. However, I do have a real concern about the pace and the resolve.

According to CNBC, the largest carbon reduction achieved over this past year came from the decline in personal vehicle and commercial air traffic. Basically it’s because individuals drove and flew less to go to school, work, shop, and play. The global carbon emission level will surely go up again as the industrial world emerges from the pandemic. The hope is that perhaps it won’t rise at the same pace as before. For example, some companies might continue to allow workers to work from home, which could lead to permanent emission level improvements.

The pandemic also taught companies how to do more with less, which led indirectly to improved sustainability. As air cargo rates begin to come down, will the restocking of goods result in a massive carbon emission increase? No! Restock volumes should be already on the water. Will shareholders be excited to allow companies to go back to the fatter pre-2020 travel expenses? I think not!

The pace needs to quicken

Logistic managers will continue to work toward sustainability, not just because it is good for the planet, but also because the infrastructure of logistics has moved undeniably toward a post-fossil fuel future. General Motors, Volvo, and other carmakers are quickly moving to leave the internal combustion engine out of all future models. Government as well as private sector actions have begun to change the first and last mile logistics toward electrification. Electric technology has matched and will surpass performance of traditional engines. In fact, in many cases, one could say it already has. Power generation conversion needs to keep pace.

On the ocean and in the air, though, the technological victory is far from decided. Here, a few logistics industry leaders are investing and pushing hard for a strategy of using “sustainable fuels” in existing or slightly modified engines. The pace though is frustratingly slow. Here, aspirations are bogged down by an infrastructure of existing expensive fleets seemingly addicted to fossil fuels. There are some promising developments though.

On the ocean, Maersk is rushing ahead to build its very own methanol-fuelled 2,000-TEU feeder vessel for service in 2023. The company also announced that all new ships built in the future will have dual-fuel technology so that carbon can be cut out quicker. Electrification of Ship engines is happenning for some feeder and smaller vessels as well.

In the air, DeutschePostDHL and DB Schencker have begun to use tiny amounts of sustainable air fuels. While these fuels can be used in the current fleets of jet aircraft, the downside is not nearly enough of the fuel can be produced nor can it be produced at the cost of fossil fuel.

More resolve for change is needed

Even though sustainability is much talked about and often used as a marketing tool, a zero carbon footprint is far from being a universal goal. In a recent report published by the Kuehne Logistics University in Hamburg, Germany, 90 senior executives were asked how their businesses were working to improve the environment by cutting carbon emissions. A shocking 30 percent of these businesses reported they had not even set carbon reduction targets! Another third was working on it but without firm strategies to really make it happen!

Many companies may not have the resolve because they are on the fence — they figure they have the luxury to react to slow societal changes toward cleaner logistics. After all, there is no carbon tax — YET! But, I would strongly advise the fence sitters to join industry leaders who are driving changes. When regulation and societal attitude changes arrive, those who are prepared will have the advantage of speedy and flexibility.

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A Green Resolution

Here are some things your company can do now to keep up and be in position for the post-fossil fuel future:

· Electrify your land transport as much as possible

· Use technology and quality management to reduce waste in your processes

· Advocate your governments for affordable sustainable ocean and air fuels.

· Adopt a carbon mitigation strategy

Gemba Your Way to Green!

Replace florescent lights with LEDs! Forgo disposable plastic utensils! Reuse all boxes for export packaging! Compelling staff to think twice before printing out hard copies of any document!

These are just some of the actions that move organizations toward sustainability. By recommending easily actionable solutions and motivating your employees and team members to adopt them are a great way to make them feel they play a part in your company’s overall sustainability journey.

When I was Head of Go Green at DHL eCommerce APAC, customizing green solutions for the company was one aspect of my job I truly enjoyed. It gave me the opportunity to explore new solutions and it showed me just how creative people can be when they are challenged to do so.

Many companies train their staff to identify and address areas of waste. When you combine this with a focus to reduce greenhouse gases, not only do you get closer to being sustainable, you can also save money.

Sustainable companies know that in order to reduce their carbon footprints, the same techniques used to improve operational efficiency can be employed. After all, identifying “waste” in office and manufacturing/service processes is often directly related to cutting down carbon emissions.

One of the easiest ways to make positive changes fast is to do a green workplace audit. At DHL eCommerce, I created a checklist of sustainable best practices, with which I then made an audit form for our staff to use. Following the initial check, annual audits should also be done because changes in the environment, such as equipment and work space changes, would require action adjustments.

However, to get a more detailed understanding of the workplace overall green status and to make more substantial process changes, it is generally necessary to analyze the whole process value chain with sustainability in mind. For this, I recommend doing a “Green” Gemba Walk.

For those not familiar with the method, a Gemba Walk is a concept developed by Taiichi Ohno, a Toyota executive. A Gemba Walk allows management and employees to:

1) take a look at all the processes in a specific value chain (for example, Pick and Pack order processing);

2) step back to observe and question the tasks being done in the existing process;

3) create actions that could eliminate “waste”.

The Gemba process was developed to identify and eliminate seven “wastes” in the production system. Eliminating “waste” directly impacts your costs and, when it is applied with a green focus, it can also reduce emissions and the use of unnecessary disposable items. For the process to work smoothly, it’s also ideal for managers to have some knowledge and training in the Gemba concept by doing an actual “walk” that’s concentrated in energy, fuel, and disposable product consumption.

Are you ready to start your company on a sustainable journey by walking through your business processes to look for waste? You never know what insight you’ll gain.

Counting Carbons !

Do you know how carbon is counted ?

Six years ago when I took on the role as Head of Go Green at DHL eCommerce, the first thing I needed to know was where the company stood in its carbon footprint trail. The first and foremost question was:

“How much carbon was being produced and emitted into the atmosphere by DHL?”

This began for me a quick education in carbon accounting and I want to share what I’ve learned with you – question was how is it done?

This is not a simple question to answer. Whilst people spend years learning the art of counting money, and businesses grapple on how to account for their revenues and expenses, counting carbon is a relatively new concept. The processes and systems for dealing with carbon numbers are relatively new.

Identifying sources of Carbon emissions

The current practice on how to measure greenhouse gases, is to organize things into three buckets. These buckets are referred to as “Scopes” in the trade.

These are classified into sources of emissions as Scope 1, Scope 2 and Scope 3.

Scope 1 emissions - are those directly produced by you, with questions like:

Does your equipment burn fossil fuels?

Does your business activity directly release greenhouse gases into the atmosphere? If you answer “yes” to these questions, then you have to tally these Scope 1 emissions in your carbon calculation.

Scope 2 emissions - are generated by other companies that supply you power.

These are considered “indirect” greenhouse gas sources.

Does your utility company use oil to generate the electricity used to run your office? If so, the greenhouse gases released from burning that oil would be your Scope 2 emissions.

Scope 3 emissions - are the amount of carbon emitted by vendors and suppliers in your value chain (another indirect source).

Do you transport your products to your customers on the other side of the world in a container ship?

Well, how much carbon did the ship emit in the course of the move?

If you purchased trucks for your shipping fleet, how much carbon was emitted in making those vehicles?

Business travel is also in this scope. The carbon footprint for attending a meeting on the other side of the globe would show up here.

All of these emissions would tally int your Scope 3 emissions

Calculating and Reporting Carbon Emissions

- Having identified the scopes, 1,2 & 3 – how is the calculation done ?

At this point, you are basically just adding up the carbon that was emitted in scopes 1, 2 and 3. Generally this is displayed in tons of carbon. Many companies will measure more than just carbon dioxide. They will list the emissions in tons as well and include carbon dioxide, methane, nitrous oxide, and other flourinated gasses. These would be listed as “Green House Gasses” or “GHG” for short. For many industries like farming or mining the GHG is far more relevant than simply counting carbon dioxide.

Reporting your emissions is nearly always done based on whether or not the company is making progress in cutting emissions or not. In order to do that they will always report emissions as a percentage improvement verses a baseline. This is where things get a bit tricky. If you are a growing company getting more and more business every year, then it would be unfair to simply compare one year of emissions verses another year, because even if you made improvements with cutting carbon from your processes you could still emit more based on that fact that you have doubled your business. In the transport industry one would then simply calculate the tons of carbon emitted per kilogram shipped. This is one possibility, but there are others. Companies essentially need to report what is fair and reflective of their processes.

Understanding the Impact

Breaking down the sources of carbon and counting the emissions using these three scopes helps organizations become more aware of the impact of their activities in carbon output. This awareness is crucial to help them focus on areas for corrective actions in a structured and controlled manner and without being overwhelmed.

This is the standard method most companies use today.

Challenges

That said, only some companies are able to calculate their Scope 3 emissions. This is due to a lack of information from logistics service providers, carriers and even vendors.

If companies were bound by a more regulated procedure, that required them to count their emissions, with a degree of accuracy and then share them with their stakeholders, it would be much easier to determine scope 3 emission.

Instead, what often happens today, is for companies to try and calculate their Scope 3 emissions based on what information they have on their vendors’ operations. We did that a lot at DHL.

Despite the hurdle, don’t be hobbled into inaction. You can start by calculating your Scope 1 and Scope 2 emissions, which will already give you a better understanding your carbon footprint and how to adjust and improve. You can’t manage what you can’t measure. So start measuring!