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How To Measure The Success Of Your Logistics Sustainable Initiatives?

How To Measure The Success Of Your Logistics Sustainable Initiatives?

1) Sustainable logistics is a crying concern for the carriers and retailers of today.

The concern that we now have for our environment is growing rapidly – and, not a moment too soon either! We’re seeing everyday examples of how environmental damage and its impact on our lives aren’t “faraway, distant realities.” It is here, it is now. This summer’s heat wave in Europe has brought home the harsh reality… yet again. 

We saw how the UK government advised its people to work from home due to the heat! Also, lots of locals have quit their jobs to move to cooler climes. 

In some way, this marks the beginning of “climate refugees”, something that experts have long warned us about. Populations displaced due to rising water levels i.e. “water refugees” is another refugee crisis that looms. If we don’t act with speed, other disasters are just around the corner…

The COVID-19 pandemic increased the number of deliveries exponentially. On the flip side, more deliveries would mean more vans which would mean even more last-mile emissions.

There is growing legislation, as well as changing consumer habits – never before has it been more important to measure your carbon emissions. And, given the intensity of fleet-vehicle and resource utilization for executing last-mile logistics, this is among the first areas that Logistics and Distribution companies must look into. 

2) Awareness, flip-flopping, and apathy

Every day, headlines talk about new government legislation, corporate initiatives, and the much-vaunted target of “Net Zero.” The recently concluded COP27 sought to make a big change by asking for commitments from governments.  While there isn’t any doubt about key protocols like the Paris Agreement, people continue to fiercely debate whether the actions are stringent enough.

The World Economic Forum predicts a 75% increase in delivery demand across the 100 largest cities by 2030. Correspondingly, this will lead to a 35% jump in the number of delivery vehicles on our roads. A 30% rise in emissions. And, worse traffic! 

Alarmingly, surveys indicate that nearly two-thirds of companies don’t view Net-Zero targets as top priorities in our post-pandemic world! However, surveys have also shown that 50% of the companies out there also recognize that consumer preference and awareness are evolving. And, unless consumers see a brand as “environmentally-conscious” and doing enough to eliminate its carbon footprint, they will drop those brands.  

So, why such mixed realities?

3) The challenges of measuring green logistics

A major part of the problem is poor clarity on measurement methods of green initiatives and their impact. 

Research claims that only 10% of small- to mid-sized firms currently measure their emissions. Among larger firms, that number rises to merely 25%.

Hearteningly, given that the logistics and distribution industry is a major carbon emitter, it was seen that nearly 60% of large carriers currently measure their emissions. 

4) Sustainability legislation: upping the ante

Companies that have swept the Net-Zero mandates under the carpet thus far better wake up and smell the coffee – the new wave of legislation is here. Governments and their agencies all over the world aren’t just talking anymore, they need to see action. 

For example, the EU has already proposed that shipping be included in the carbon trading market. This would put retailers and carriers under much more pressure to adopt green operations.

A new UK law that seeks to cut emissions by 80% by 2035 already has retailers and delivery companies feeling the heat (no pun intended!)

5) Evolving consumer preferences

Borrowing a famous line from the hit 1994 film, “Jurassic Park,” which said “Nature finds a way,” one could say that environmental protection has come full circle. Here, the consumer is leading the way. 

Consumer demands have changed rapidly and sustainability is a leading purchase consideration for consumers as they decide which brands to buy. 

More than 80% of consumers view sustainability as “important” while shopping. About 60% of consumers are willing to switch brands if they see carbon negligence.

Increasingly, investors now ask their companies to publish data about their supply-chain carbon footprint.

However, as mentioned earlier, there must be standardization and clarity with regard to measuring carbon emissions. Carriers and retailers that operate the last mile must feel confident in forging ahead and publishing their sustainability data.

6) Green logistics: calculating the big picture

For the last mile, the most (negative) impact is created by the fuel burned on it. So, reducing emissions on the last mile would be directly impacted by reducing your fuel usage by, for example, switching over to electric vehicles.

However, it isn’t as simple as that, and it is crucial for everyone to grasp the full scope of what is necessary to measure sustainable logistics. And herein lies the most difficult challenge for green logistics: making sure you account for (minimize, eliminate, or control) indirect emissions throughout your entire supply chain.

The GHG (Greenhouse Gas Protocol) has established a global set of standards to make it easier to understand, divided into Scopes 1, 2, and 3. Scope 3 is the most difficult to measure and control—and the easiest to overlook. This is because it includes all indirect emissions that are generated by resources that are not under the control or ownership of the company but also include whatever the company indirectly impacts across its value chain.

The GHG scope-definition diagram is given below:

Diagram source: Researchgate.net 

Essentially, the GHG protocol establishes two ways to measure carbon footprint:

  1. Spend-based 
  2. Activity-based 

They recommend that you begin with the first, which looks at the financial value of goods and services purchased. Then, multiply it with an “emission factor” (amount of emissions generated by a single financial unit) to arrive at the total amount of emissions generated.

7) Execution: easier said than done

While the CHG protocol provides a useful guideline, executing it is often an extremely difficult exercise. Therefore, there is now the ever-growing breed of ‘Climate Consultants’ that can help you with assistance and advice. They bring a wealth of strategies, know-how, and resources to assist you.

The general rule of thumb is that most firms can establish the first cut of a sustainable plan within the first 6 months. This also outlines areas where more research/data is required. The most workable method, according to experts, is to have a fluid plan, which keeps evolving as one gets more data and learns through early steps (trial-n-error, even) since this is an ever-evolving and relatively new field.

For example, food companies that have embarked on the green-route measure their life-cycle usage across processing, transportation, packaging, ingredients, recipes, end-use, and waste. Often, there will be surprises regarding the carbon impacts of ingredients. Foods like beef are expectedly high, but others like peppers and rice clocked in higher than anticipated.  

8) Adopting complete process-automation:

Quite naturally, calculating, managing, and monitoring emissions as an ongoing (critical) activity is quite a difficult and resource-intensive task! 

Therefore, automating the supply chain and deploying specialized fleet management software (especially focused on the last mile) is imperative. These are designed to track every single unit of emission across your fleet vehicles, drivers, routes, package type (etc.). You can also set “targets” for carbon-emission units while optimizing your delivery logistics. 

Other advanced operating software – developed specifically for reporting to the GHG Protocol – enable businesses to monitor their carbon footprint and report data accordingly. Such software is so advanced that it can collect hundreds of thousands of data points and calculate your emissions within a few seconds! 

You can split your emissions by activity, process, product, region (etc.) to develop your sustainability models, and make informed decisions about reducing your carbon footprint.

Conclusion: As is evident, Logistics and Distribution firms will have to adopt green methods and measure them for effectiveness. Adopting technology such as automated delivery software is the first step toward achieving this goal.

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