Leading global logistics providers are continuing to announce additional new ‘green’ initiatives designed to further improve the environmental performance of their activities in Asia and worldwide.
One prominent example this year involved Deutsche Post DHL Group publishing a commitment to reduce all its logistics-related emissions, including those of its transport sub-contractors, to net zero by 2050.
A second saw Kuehne + Nagel announce it had just become the first logistics provider to disclose CO2 emissions on sea freight invoices, so helping shippers to identify their carbon footprint from transport operations.
However, two recently published pieces of research suggest that generally, much more work is still required to ramp up sustainability across overall supply chain operations worldwide and that the main reasons for companies implementing such measures continue to be predominantly government regulation and pressure from customers. The studies also appear to show some apparently contradictory trends in play.
The still patchy progress towards improving the sustainability of overall supply chains was highlighted in a report, The Missing link: Harnessing the power of purchasing for a sustainable future, published earlier this year by CDP (formerly the Carbon Disclosure Project), which runs a global disclosure system designed to enable companies, cities, states and regions to measure and manage their environmental impacts.
Written in partnership with BSR (a global organization with offices in Asia, Europe and North America which focuses on developing sustainable business strategies and solutions) and the Carbon Trust (an independent body whose worldwide activities include measuring and certifying the environmental footprint of organizations, supply chains and products), the report was based on data collected in 2016 from more than 4,300 suppliers to 89 major purchasing organization members of CDP around the world.
The report suggested while there was now a broad recognition among large public and private sector organizations that “within their vast, complex and sometimes opaque supply chains there are a number of sustainability challenges, resource risks and efficiency opportunities,” most had not been taking sufficient action to address them.
That situation was starting to change, though, continued the report, with a growing number of leading organizations developing an emerging body of knowledge and best practice on how to increase visibility and have a positive impact on their supply chain.
“Sharing these effective strategies as widely as possible could be the missing link in creating a sustainable, low carbon economy. Sustainability needs to move beyond organizational boundaries into the supply chain,” it stated.
However, warned the report, supplier efforts were still insufficient to tackle the scale of the challenge of climate change. “Indeed, only 34% of suppliers report an overall year-on-year decrease in their operational emissions, with a further 36% having insufficient data to track progress.”
It went on to state that only 22% of supplier respondents were engaging with their own suppliers to reduce carbon emissions and just 4% had put supply chain carbon emissions targets in place. “This is a challenge because – although it varies significantly across sectors – on average an organization’s supply chain emissions are four times greater than those from direct operations.”
The report concluded: “The overall picture that emerges is that the sustainability commitments and practices of leading organizations are not being replicated at scale downwards through the supply chain – and even among leading organizations, there is a comparative immaturity in strategies to address supply chain impacts when compared with their action on direct impacts.”
The still insufficient – and in some cases even an apparently reduced – focus by many companies on improving their supply chain environment performance was also highlighted in a white paper, Sustainable Supply Chains, published earlier this year by Transport Intelligence, a UK-based global logistics industry research and analysis company, as a follow-up to a similar report on the same issue in 2008.
This year’s paper, which was based on the results of a survey in 2016 covering over 100 logistics and supply chain executives located in Asia (including India, China and Singapore), Australia, North America, Europe and Africa, suggested the current main reasons for companies adopting sustainable policies across supply chain operations still tended to be government regulation and pressure from customers, rather than internal, commercially led initiatives or a desire to protect the environment.
“It is also of concern that the ‘headline’ importance of the environment has diminished over the years. This may be due to the difficult economic climate and the operational challenges which many in the industry face.”
In fact, stated the report, the percentage of respondents who described the environment as ‘important’ or ‘highly important’ to their companies’ strategies dropped from 87% in 2008 to 79% in 2016 “which is perhaps surprising as it might have been expected that more companies would regard sustainability as a fundamental consideration in their business models.”
Confusingly, though, the 2016 research did find an increase in the number of respondents who considered the environment to be ‘highly important,’ but also even more significant growth in the category of respondents who regarded the environment as ‘neither important nor unimportant.’
Expanding on those points, the paper stated: “The environment, as a business issue, has slightly lessened in perceived importance to logistics and supply chain managers over the past eight years. However, the number of companies which have participated in sustainable initiatives without direct benefit has increased.
“In the event of another economic slowdown, most logistics and supply chain managers would continue to invest in green initiatives due to the operational cost savings they are expected to bring.”
Asked to clarify some of the apparent contradictions in those findings, John Manners-Bell, Transport Intelligence’s chief executive, suggested to Asia Cargo News that one reason why the environment, as a business issue, had slightly lessened in perceived importance to logistics and supply chain managers over the past eight years was that it had become what management consultants used to call ‘hygiene’ for all companies. “That is, it has become engrained in the business thinking, operations and strategies of many companies and is no longer seen so much as being of headline importance.”
In that context, he drew a comparison with the advance of technology in the 1990s. “To begin with there was a step change as companies moved from paper and spreadsheets but gradually the competitive advantage diminished as all companies, even very small ones, had cheap access to technology systems.
“I think the same may be said for the environment. Whereas in the first survey (in 2008) environmental initiatives and systems were seen as novel, more companies now accept that they are fundamental to doing business, for whatever reason. So the number of companies involved in sustainable initiatives has increased but headline importance has decreased,” he said.
By Phil Hastings
Europe Correspondent | London
