Ethical logistics

Ultra-competitiveness within the logistics industry has so far tended to absorb imposed environmental costs to protect its customer base, and the buyers of logistics services have often focused on cost and service to the detriment of any sustainability in their own end-to-end supply chain. 

SUSTAINABILITY IN THE SPOTLIGHT

During the past decade, however, concerns over global weather changes, declining natural resources, congestion and increases in transport-related environmental damage have put unsustainable logistics practices firmly in the spotlight. Supply chain CO2 emissions are now subject to increasingly severe international legislation as the developed world heads towards various zero emission targets. In the UK, already committed to achieving net zero emissions by 2050, the Prime Minister recently announced that the sale of new petrol and diesel cars will be banned by 2035, five years earlier than previously planned.

According to Starting at the source: Sustainability in supply chains, a 2016 study by McKinsey, a typical company’s supply chain creates far greater social and environmental costs than its own operations, accounting for more than 80 per cent of greenhouse gas emissions and more than 90 per cent of the impact on air, land, water, biodiversity and geological resources. Therefore, international trading companies can reduce those costs significantly by focusing on their supply chains.

Increasing transparency within supply chains will give visibility to a company’s entire environmental, social and economic impact and this, in turn, is leading to changes in consumer buying habits and brand reputations.

CREATING AN ETHICAL SUPPLY CHAIN

With environmental concerns fast approaching the top of both the public’s and the media’s agendas, sustainable supply chains are rapidly becoming an integral part of businesses’ wider corporate strategies.

Aligning company goals with global initiatives allows businesses to react to changing environmental legislation from a position of strength. Failure to do so is already proving costly to corporate image amongst a more socially conscious consumer base. Ensuring that a company’s products are not made or transported in ways that unduly impact on the environment; that does not deplete natural resources; that does not contribute to climate change and that does not contribute to social inequalities or injustice is essential.

Whilst the ethical business values of sustainability are clearly strong, the value to business can go beyond improving its ‘green’ reputation. Sustainable logistics has the potential to create value across the entire supply chain, both directly and indirectly, in terms of customer and employee loyalty, supplier continuity, cost reductions and additional revenues.

DIGITISING DOCUMENTATION

Areas of sustainability that may at first sight seem to offer only marginal savings on emissions can often deliver bigger results than expected. For example, the digitalisation of freight documents has already begun, with traditional paper CMR international consignment notes being replaced with e-CMRs. This is estimated to save some 166,000 trees being cut down each year. Digitalisation also reduces the need to store paper documents for years, which in turn saves administration and indirect warehousing costs. Technological and political developments such as Brexit will accelerate the transition to paperless supply chains.

TURNING SUSTAINABILITY INTO PROFIT

Strong sustainable engagement adds value to a compa-ny beyond mere costs savings, however. According to The Comprehensive Business Case for Sustainability, published in the Harvard Business Review in 2016, 80% of customers in emerging markets and 40% in developed markets: “have a responsibility to purchase products that are good for the environment and society.”

Brands with strong sustainability strategies not only command stronger customer loyalty, they are more attractive to prospective employees too. Strong sustainable and ethical credentials can act as a powerful recruitment tool, creating stronger talent pools for employers. Corporate finance institutions favour companies with sustainable and transparent supply chains as this enables investors to see responsible business practice. This can have a positive impact on credit ratings and thereby greater access to money in financial markets.

Looking ahead to the 2020s, with the focus on sustainability more urgent than ever, now is the perfect time to review the potential value in your supply chain and look to create a more sustainable future for your business and future generations.

FTA is campaigning on a number of fronts to help businesses decarbonise. These range from modal shift to rail and inland waterways, to alternative fuels. For more information, please visit: ★www.fta.co.uk/campaigns/reducing-logistics-impact

Published On: 02/03/2020 11:13:52

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