Successful sustainability is a negotiation of options

XPO has one of the largest road fleets in Europe. Where does a company of that magnitude start when it comes to a net zero policy? 

Baselining is the key process. I was brought in in mid-2021 and XPO had completed a spin-off, so the company had to re-baseline the process to understand exactly where we were and what that means. 

At the time, XPO Logistics’ emissions from burning fuel were by far the greatest proportion of our overall carbon footprint. So, XPO set some challenging targets for decarbonisation.  

We want to reduce our emissions by 30% by 2030. Currently, 10% of the fleet is running on alternative fuels, and this will be 15% by the end of the year. However, you can’t afford to invest too extensively in a low-carbon fuel path if it has no long-term future.  

To support this interim approach, we aim to introduce EV rigids to the last mile fleet – as the demo vehicles we’ve seen are quite capable of managing our use cases at 16 or 18 tonnes, and we are beginning to see 26-tonne electric vehicles entering the market and have been testing these with a number of our urban delivery clients. 

How ambitious is your net zero carbon target for 2050 and as a company, how important is it for your company and your customers to make sure it happens? 

It’s extremely ambitious to get to carbon neutral by 2040. But from our customers’ point of view, it’s non-negotiable: they need to know what we’re doing and how we’re helping them on their journeys.  

XPO’s customers sit across many sectors – retail, construction, food and beverage to name a few – and they all have regulatory pressures in their various industries, so we have to give them a realistic assessment of what that means.  

Of course, there’s still an aspirational element that sits in there, but we also have to be realistic with every client: in your operation, these are the things we can do specifically there, you may have to wait a specific amount of time for a new demo to come to market there, but in the interim, this is the kind of solution we can offer, etc. 

Those kinds of conversations are happening all the time as customers are getting pushed hard on their scope 3. 

What plans are in place for you to help reach your objectives going forward? 

We have a long-term roadmap from when we began the project in 2021 with objectives to achieve by 2025 and 2030, and five-yearly milestones up to net zero in 2050. 

As the world and technology change, your targets must change with it. 

Exactly. 

If XPO aligned with Science Based Targets initiatives (SBTi) for example, that may alter the timings and be more focussed on the one-and-a-half degree target. So that could alter what we’ve already got in place.  

It’s important to allow some flexibility to be agile when moving forward and make changes that could speed up the process. 

Who holds you to account for your progress? 

Our clients.  

We go to them saying we’re going to make X amount of progress by point A, so we need to follow up with pretty strong indicators that we’re making the progress we said we would and then report that back. 

If things haven’t gone as planned, we need to have a discussion with them about that and explain why. If things are progressing quicker, they can get more recognition from their customers.  

It’s a two-way dialogue that is happening constantly. 

Introducing new technology at the right price and at the right time must be pivotal to achieving targets and keeping the board happy: that sweet spot between accelerating sustainability and maintaining growth and profitability. 

It’s a fundamental part of the conversation.  

XPO approaches client relationships with innovation at the forefront, meaning we can have a fairly straightforward conversation with them and say: “Look, this is where we see the innovation space, this is what you’re asking us to do, and here’s the connection between the two; and there’s a green premium, or whatever it may be, that sits against those choices.” 

You must have an eye on innovation because the market is turning very quickly. When you’re talking about the EV space and new technology, it can represent a hefty change to a business model.  

You have to keep this in mind when proposing any changes. Which can be an ‘interesting’ conversation, shall we say! 

How important is it for big companies like XPO to set an example when it comes to environmental policy?  

If you speak to our MD, that’s exactly our position: we want to be a leader in the space. And we’re trying to push that all the time.  

There are pragmatic considerations about what you can and cannot do, but we’re always trying to push the envelope because we work with a lot of leaders in a lot of other sectors who also want to set an example. 

XPO has championed some impressive innovations globally, such as the fully electric rig in San Francisco and the electric trucks in France and Spain. What’s been the UK and Ireland’s most impressive change to date do you think? 

Our biggest achievement at this stage, in terms of actual understanding of the impact on emissions, has been employing alternative fuels.  

The one with the most potential for impact is the move across to EVs in specific -use case areas.  

For example, looking at the last mile and urban delivery space, EV solutions can potentially have the biggest impact. It’s almost like we’re queueing up to get to that point.  

However, there is a big disconnect between where that technology is now and when we can start deploying at scale. So, we’re doing a lot of work in the business to understand that. 

Once we can prove use cases then we can very quickly press the investment button to scale. The technology’s not quite there yet though, so that interim space has to expand a bit further. 

In the meantime, alternative fuels have become much more important. But because you’ve got a range of fuels now available on the marketplace, you have to look at testing them all. 

There’s currently an issue with biomethane regarding it under the Green House Gas Protocol. So a lot of companies that invested heavily may be left somewhat exposed. 

This is why you have to be very careful when you’re planning. What you don’t want is changes to what you think is a certain path… and then that rug, from an investment point of view, being pulled out from underneath you.  

So, sometimes being an early adopter can be great from a PR perspective but can have negative ramifications later, when the market settles and more tests and reviews have been carried out? 

Absolutely.  

If you think about LNG: in 2018 it was regarded as a sustainable solution that you could deploy at scale. Then issues around LNG being a by-product of natural gas usage which was impacted by winter supply shocks, as well as the invasion of Ukraine, negatively impacted pricing, undermining the business case for deploying LNG at scale. 

All technologies, including EVs, have challenging stories.  

You have the efficacy and ethical status of HVO: is it coming from crops or is it coming from waste? And can you prove it?  

With EV you have to weigh up the life cycle of the batteries and where you get the materials from. 

There is currently no straightforward sustainable solution. It’s a negotiation of options and you need to use your best judgment at every juncture. 

What do your customers think of your efforts so far?  

We’ve had really good feedback from customers in specific areas.  

Our CO₂ Calculator, which recently won a National Technology Award – and which is currently being externally verified – was built to address a gap in understanding emissions for our clients. 

It was like a light bulb moment: emissions happen in so many parts of our business, it was very important to track them, as sometimes it’s not obvious where they are.  

If you’re moving goods in a shared-user network then it’s got different impacts on an item getting from point A to point B, because it might have to go via C, D, and E. 

So, there’s those kinds of interactions that we’ve been having and then there’s the technology that sits behind it: how easy is it for customers to use, and how easy is it to communicate that back to their clients.  

It also helps our transparency. If we say we saved 5,000 tonnes of CO₂, we can explain exactly how we do it – this is the visibility, this is the methodology – and our clients love that. You can take them on the journey with you. 

Dr Nicholas Head is the Head of Sustainability, UK and Ireland, at XPO Logistics. He has specialised in the environmental sector over the last 12 years, including achieving an MSc and Ph.D. from the University of Northampton, focusing on circular economy and assessing the viability of business models structured around sustainability.  

During his Ph.D. studies, Dr Head lectured on his specialisms of circular economy and systems thinking approaches to environmental issues at the University of Northampton and the Open University, before moving back into the private sector as a consultant and then for various FMCG companies in Head of Sustainability positions over the last four years.  

A member of the CIWM, Dr Head has sat on and contributed to various steering groups over the last five years and has also been an active member of the Schumacher Institute (looking at societal issues from systems thinking perspective); IEMA and the Sustainability Committee for the British Coffee Association.  

Published On: 17/08/2023 13:00:00

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