EDF’s Green Freight initiative helps companies lower their emissions while building a business case for sustainability.EDF’s Green Freight initiative helps companies lower their emissions while building a business case for sustainability.
If it feels like the time for environmental sustainability in the supply chain has passed, there is some harrowing evidence that suggests sustainability is indeed still a low priority for shippers and logistics companies.
In the most recent American Shipper Transportation Procurement Benchmark Study
less than 1 percent of respondents identified sustainability as the most important aspect of their bids from carriers.
If nothing else, it shows sustainability is far from being a deciding factor in how supply chains are constructed, but it doesn’t explain whether it remains a factor at all. Certainly, shippers and logistics companies are more conscious in 2014 of a social mandate to reduce emissions and environmental impacts in general than they would have been even five years ago.
But it has been difficult to get strict environmental standards off the ground. Global supply chains incorporate several transportation modes and touch the jurisdictions of thousands of local and national governments. Who’s ultimately responsible for ensuring that freight movement is sustainable? And are the penalties for not complying with regulations restrictive enough?
The container shipping analyst SeaIntel provided an example of how broad regulations can be ineffective. The firm found penalties for carriers that fail to comply with the International Maritime Organization’s stricter sulfur emissions control regulations in Europe by January 2015 were often less costly than using the more expensive, cleaner fuel. In other words, a well-intentioned rule is toothless if it provides no incentives for adoption.
The Environmental Defense Fund is taking a different tack. The nonprofit advocacy group has established a Green Freight initiative in which it reaches out to individual shippers to help them figure out ways to introduce sustainability into their supply chains without sacrificing profitability.
For Jason Mathers, EDF’s senior manager of supply chain logistics, those two goals are compatible.
“We see great synergies between cost and environmental improvement,” Mathers said. “We’ve worked with Ocean Spray to reduce truck miles, which cut carbon emissions by 15 percent associated with outbound moves. With Caterpillar, we worked on cutting inbound transportation costs and emissions.”
Mathers champions EDF’s method of working with individual companies as a means to promote more widespread adoption. Probably the most famous example is the group’s work with Walmart. EDF even has an on-site office in Bentonville, Ark. and helps the retailer measure its environmental impact across seven areas: China, global warming, packaging, plastic bag waste, product lifecycle, sustainable agriculture and toxic materials.
“EDF pursues many avenues,” Mathers said. “Working regulatory and legislative issues, joining lawsuits when we need to. But we’re also working with some of the largest and best known companies to improve environmental performance.
“We want all consumer products companies, all retailers, all shippers, frankly, to be adopting best practices. We see a lot of companies making progress when they make sustainability real. When they set hard metrics and challenge themselves with multi-year goals,” he said.
Mathers takes a practical approach to EDF’s initiative, and understands there are some crucial initial steps on the road to reducing a shipper’s environmental impact.
“One of the things I think is challenging about logistics from the sustainability perspective is that I don’t think a lot of corporate sustainability folks know a lot about logistics,” he said. “And I think logistics people see sustainability as a distraction. There is this middle ground. You can tell the transportation folks, ‘hey you can leverage sustainability to do the things you want to do anyway.’ And you can tell the sustainability folks, ‘it’s not just about hybrid trucks — there’s something called co-loading that maybe isn’t as sexy, but it can deliver huge results.’”
EDF detailed how co-loading can reduce emissions on empty or underutilized capacity in early March (http://blogs.edf.org/innovation/2014/03/07/co-loading-your-way-to-green/
Mathers’ point is that communication between departments can lead to benefits on both sides. In many ways, the disconnect mirrors the common lack of transparency between logistics and IT departments, leading to misplaced priorities or a lack of logistics voice in enterprise-wide IT development. Often, sustainability goals are developed at a corporate level with little or no feedback from the logistics boots on the ground.
“The biggest barrier I see is a lack of understanding,” he said. “Another big barrier is defining what sustainability is. When we talk about sustainability (at EDF), we talk about reduction of greenhouse gas emissions. We think that should be a top-line metric.
“Another barrier is ownership of sustainability goals. The logistics folks are better off taking the leadership here. There is perceived risk there (i.e. a failure to meet emissions goals could lead to consequences) so many people play defense on this issue. But if they embrace it, the transportation folks can put forward that plan and own that plan,” he added.
Even outside the scope of EDF’s Green Freight initiative, Mathers noted there are shippers making strides.
“There are some companies doing things well, showing the characteristics of a company that’s on its way to this ultimate goal,” he said. “Unilever comes to mind. We haven’t worked with them, but they have a goal to reduce their emissions by 2020 back to 2010 levels, which would be something on the order of a 20 percent reduction per ton moved.
“I know IKEA and Nike have had some goals in the past. To me, I see a lot of companies setting those goals, and more and more they are performance-oriented, and that’s a sign of success. Performance-oriented goals are how you tie in the business case. Previously, goals tended to be more process-oriented — like, we’re going to join EPA Smartway. That’s a tool to reduce emissions, but joining it is not sufficient enough to reduce emissions,” Mathers said.
Sometimes, when the sustainability goals become so intrinsically business-oriented, it’s hard to tell they are even sustainability goals anymore.
“It’s about how companies are re-orienting goals,” he said. “Nike — I know they had a specific goal around shifting inbound freight from air to ocean. They set it in 2006, and they have more goals these days. I don’t know if it’s a pure transportation goal or if that’s rolled into a company-wide sustainability program.”
Mathers also touched on the role that IT investment could have in aiding sustainability plans. Simply put, sophisticated logistics IT helps companies become more efficient from a cost perspective, but also from an emissions reduction perspective.
“I do see a role for IT,” he said. “When I think about who can help people with sustainability, it’s the more technology-oriented 3PLs and 4PLs. They have the opportunity and potential to connect shippers, and help to co-load freight, filling each other’s backhaul. Or a model where companies might be able to readjust their distribution network to take advantage of intermodal shipping, or collaborate with other shippers on distribution.
“Obviously, we need more efficient trucks. But there are more emissions to be reduced just by using the stuff we have now better. Folks who can deliver that solution are the companies that are really good with managing information,” Mathers said.
This article was published in the May 2014 issue of American Shipper.