There Will Be No Austainability in Logistics Without the Commitment from the Drivers of Green Change
Sustainability is no longer merely a buzzword;it’s a shared responsibility. Addressing the impacts of the climate crisis falls on everyone, from governmental bodies and NGOs to global businesses. The logistics industry, unfortunately, remains one of the most emission-intensive sectors in the global economy. However, change is imperative, and it’s already happening.
Radhika Ralhan, Sustainability Manager at UPS SCS, and Christof Thesinga, EU VP Marketing at Coyote Logistics, discuss these critical issues in their interview. They delve into the challenges of waste reduction in road freight, greenwashing within logistics and highlight the collaborative efforts of UPS SCS and Coyote to make our industry more environmentally friendly.
The first question is very broad: do you think logistics companies can be sustainable at all?
Christof: Eliminating product distribution isn’t feasible, so transportation remains a necessity until we discover new methods of delivery, which for now is just science fiction. However, I believe logistics companies can still achieve sustainability. This depends on embracing circular economy principles, efficient resource use, and adopting renewable energy sources. Pursuing this path can lead to sustainability, but defining it is more of a philosophical question. Introducing any truck on the road seems inherently unsustainable. Nonetheless, I’m eager to hear your thoughts, Radhika, given your expertise in this area.
Radhika: The very nature of the supply chain lies in transportation, which accounts for a significant portion of emissions.
However, for me, sustainability encompasses more than just environmental concerns. It also involves the safety of drivers and operational staff in the supply chain, as well as the well-being of the communities affected.
For instance, any transport vehicles, e.g. trucks do pass through cities, urban centers, rural areas where communities reside, and thus it is crucial to also comprehend how we engage with societal stakeholders. After all, sustainable mobility target SDG 9.1 and sustainable transportation SDG 11.2, are intrinsic components to achieve sustainable infrastructure (SDG9), Sustainable Cities and Communities (SDG11) and for this it is imperative to revamp the way we consume and produce.
This perspective aligns with the focus of current regulations, such as the Corporate Sustainability Reporting Directive (CSRD). It’s somewhat regrettable that regulations are necessary to spur companies towards sustainable practices, but it’s the reality. Nonetheless, complying with these directives is an important task.
How would you define the most important sustainability goals in our industry?
Christof: Slashing carbon footprints is our main objective, but the challenge lies in how to achieve it, particularly in road freight. This sector is riddled with potential inefficiencies.
By optimizing supply chain efficiency, we can minimize environmental impact. A crucial step is transitioning to low-emission vehicles, but this presents significant obstacles.
Currently, these vehicles are prohibitively expensive, and there’s no realistic method for refinancing them. Despite the high initial investment being worthwhile, not every company can afford to make this leap.
Radhika: Technology in the transportation sector is advancing rapidly. We’ve swiftly moved from discussing electric vehicles to now focusing on HVO. As a leading logistics company heavily reliant on road freight, we’re integrating electric vehicles and aiming for 40% of our ground operations to use alternative fuels. However, in the European context, it’s crucial to identify feasible directions. Transportation, particularly road freight, is a top priority in our supply chain strategy.
It’s essential to view the supply chain systemically. Every element, from transport to logistics, is critical due to risks and external factors. The most effective direction for reducing emissions isn’t always clear, so we must remain adaptable in our approach.
Christof: I completely agree with your perspective on sustainability. It represents not just a strategy, but an attitude. Historically, the focus has been on finding the fastest and cheapest ways to do things. Now, we need to shift our question to: what is the most sustainable way to achieve our goals? Often, this approach aligns with cost efficiency, which is a significant advantage. Identifying this potential requires a change in both our working methods and mindset – it’s about adopting a new attitude.
Radhika: Yes, this attitude permeates every level of the organization, starting from the top governance. Having the right mindset is crucial. Only then can it be effectively driven at the operational level.
One major issue in our industry concerning sustainability is waste in transportation. Could you explain to our readers what this waste entails and how we can work to reduce it?
Radhika: I find myself in a unique position, working in the transport sector without owning a car, and with no plans to get one. For me, the critical issue is the overall reduction of transport. Is it essential? Yes, I believe so. But the world without any form of transport is an utopia, therefore we must address its challenges. We’re exploring various technological pathways and emission regulations for road freight. We’re considering 4-5 technologies, including hydrogen, and looking at ways to minimize impact.
An interesting approach involves integrating packaging with transport to reduce emissions at the source. Traditionally, these have been seen as separate entities, but a systemic approach reveals their interconnectedness.
Furthermore, economies of scale play a vital role. We need to focus on responsible mobility and transport, including reverse logistics.
Cost-efficient solutions don’t always mean investing in expensive fuel technologies. It’s also about finding other ways to minimize impact while maintaining efficiency. These combinations, just a few examples, are increasingly being adopted by companies. This doesn’t mean abandoning air or ocean freight, but rather investing more in ground transport support. It’s about using a diverse set of strategies.
Christof: Waste in logistics, especially in transportation, is closely linked to inefficiencies. If we use our resources inefficiently, waste is inevitable.
Coyote was founded precisely to address this issue. Many might not know that a third of trucks on European roads run empty. Our aim at Coyote has been to reduce this 30%.
Inefficient resource utilization, such as fuel overuse, suboptimal routing, and poor load management, not only leads to increased carbon emissions but also to higher operational costs. These inefficiencies represent significant waste, and there’s substantial potential to improve in these areas.
Radhika: The greatest inefficiency in a supply chain is empty trucks, indeed, an issue we haven’t fully solved yet. It’s not just about removing inefficiencies through operations;it requires creative and strategic thinking. We need to rethink our models, moving beyond the conventional understanding of circular economy, which is more than just reverse logistics and recycling.
Coyote, for instance, is more than a platform;it’s a sustainable mobility system. It’s not about superficially labeling actions as ‘circular’or ‘sustainable’to eliminate inefficiency. We need to fundamentally redesign how supply chains are envisioned.
We’re redefining sustainable logistics and reshaping supply chain mapping. This involves not only reevaluating the business case but also decarbonizing logistics in a detailed manner. Identifying inefficiencies in the supply chain is a costly and complex task in itself. Recognizing existing efficiencies is crucial. Simply because something isn’t labeled as circular or sustainable doesn’t mean it isn’t. The operations of Coyote inherently offer a sustainable, circular solution.
Let’s discuss the topic greenwashing, where companies claim to be sustainable but act otherwise. Last March, the EU issued a new directive on green claims aimed at curbing greenwashing. Is greenwashing indeed a huge problem in logistics?
Christof: Greenwashing, a term combining ‘green’and ‘whitewashing’, refers to companies falsely advertising their environmental efforts. Sadly, it’s prevalent in logistics and other industries. The EU Directive on green claims is designed to tackle this by enforcing strict standards for transparency in environmental claims.
Now, let’s consider our current context, particularly with AI’s role in marketing. Today’s marketing is flooded with AI-generated content, making it easy to create but challenging to earn trust and memorability as a brand. Without these, a company risks losing its relevance.
Companies engaging in greenwashing, bombarding customers with unsubstantial, spam-like messages about their environmental efforts, will quickly lose credibility. This situation places marketing teams in a crucial position. We must ensure all communications, including sustainability efforts, are genuine and transparent. We need to avoid any greenwashing activities and be clear about our actions and limitations. Deceiving customers and audiences is not an option. This is why marketing and communications teams are vital in maintaining integrity and honesty in our messaging.
Radhika: The Green Claims Directive, part of the Green Deal, highlights that sustainability isn’t driven by a single stakeholder. Responsible NGOs, civil societies, communities, and consumers are all involved. This directive emerged from scrutinizing the basis of ambitious product claims regarding sustainability, like recyclability percentages, which significantly impacted sectors like FMCG and airlines.
The responsibility lies with businesses making these claims to ensure they lead to tangible results. Marketing and communications professionals must be not just strong but responsible. Directives target those who don’t follow rules, but they also emphasize the importance of accuracy in operations. When engaging with external stakeholders, it’s unacceptable to use unverified figures on waste reduction or water neutrality.
The Green Claims Directive covers both products and systemic operations, targeting those without sustainability knowledge but who still make such claims.
This rise in directives necessitates close coordination between marketing and sustainability experts within companies. It’s now their responsibility to let those with specialized knowledge advise and guide. This directive reinforces the responsibility to ensure there’s science behind the numbers. Companies must be guardians of their knowledge, as the risks from regulatory, economic, and consumer pressures are significant. Greenwashing shouldn’t be limited to products;it applies to anyone using sustainability terms without sound, specialized knowledge.
Therefore, as stakeholders, it’s crucial to be cautious about what we communicate.
Christof: I completely agree, especially regarding the importance of knowledge. This is precisely why we are focusing on science-based targets in our discussions.
Could you explain to our readers a little more about what these science-based goals are?
Radhika: The Science Based Targets initiative (SBTi) is a consortium of or a global coalition of multi stakeholder organizations UNGC, WRI, CDP, WWF and WeMean Business Coalition with a clearly-defined path to reduce emissions in line with the Paris Agreement goals. More than 4,000 businesses around the world are already working with the Science Based Targets initiative (SBTi). At UPS we are committed to assessing whether our 2035 target meets SBTi criteria for a near-term target which we could submit at the requisite time to meet SBTi near-term commitment requirements and are actively working on green transportation solutions that could enable our customers to reduce their scope 3 upstream transportation emissions. Many of our key customers, particularly in healthcare, are SBTi signatories, actively submitting their sustainability roadmaps for strategic review.
The process involves submitting these roadmaps to the SBTi, which then reviews the set targets and methods of achievement. Drawing from my past experience when SBTi was just launched when we submitted our plan, it was a new initiative for the organization too that was eventually approved by the SBTi. After approval, companies must work diligently on their investment and initiative plans. The SBTi serves as a strategic roadmap assessing goals, plans, and targets with a scientific approach to align with the 1.5-degree pathway. While I’ve simplified it here for clarity, the process of meeting these targets and navigating different pathways for reduction is quite robust and extensive.
Both UPS and Coyote are critical to continuing to operate in an increasingly sustainable manner. Could you describe our partnership on environmental issues?
Christof: We collaborate on environmental initiatives and share sustainability insights in this rapidly evolving field. Sustainability is a dynamic topic with daily updates, so exchanging new insights and information is crucial.
We’re actively investing in green technology and aligning our strategies to reduce emissions. Our joint commitment to the environment drives us to leverage every opportunity to enhance the sustainability of our services each day.
Radhika: Collaboration is driven by individuals like Christof, Joep and yours truly, who are catalysts for change.
Our collaboration began as an exchange of ideas within a committee, although Christof and I prefer more innovative approaches than traditional committees. Our shared belief in knowledge exchange has been instrumental.
Sustainability workshops are crucial, especially when focusing on sustainable mobility and initiatives like hydrogen. These workshops require experts from different transportation sectors. Christof’s marketing expertise adds valuable insights into sustainability networks, bridging the gap between marketing and supply chain logistics.
The People’s Network plays a vital role in driving change, as seen in our customer sustainability workshops, with the next one scheduled for January 25, 2024. We present a unified voice and create initiatives that promote collaboration. We’re also planning to launch initiatives related to the Sustainable Development Goals (SDGs).
This exchange of knowledge and collaboration is essential for stakeholders to understand that when it comes to sustainability, both Coyote and UPS are reliable partners.
One noteworthy example of our collaboration is the rapid launch of the digital business card initiative, driven by Christof’s initiative. It was implemented within two weeks and rolled out to UPS SCS. Another success this year was the UPS SCS’ Sustainability Snacks newsletter, in which Christof was involved as well.
In essence, it’s about industry change-makers coming together, and hosting them in our workshops enriches our knowledge and expertise.