Demystifying Sustainability and ESG

ESG | Sustainability | Corporate Social Responsibility | Circular Economy | Going Green

Welcome to the language of today’s supply chain. What do these terms mean for members of the industry? And how can IT asset managers make the most of these emerging trends? We will look at the escalating role that sustainability and ESG plays in the IT asset hardware space and the benefits organizations can gain from adopting them.

Setting the Context

The reverse logistics industry will be affected by two major trends over the next decade: a shift by organizations to focus their goals and priorities on ESG (environment, social and governance) and the global transition among manufacturers toward a circular economy. Let’s start with some definitions of these terms.

The term ESG is the latest buzzword in the evolution of corporate social responsibility. Investment firms are shifting billions of dollars of investor funds away from fossil fuels and towards companies that practice sustainability. They are looking for ways to invest in companies that:

  • Measure and minimize their impact on the environment (E)
  • Operate under strong codes of social ethics around gender equality, diversity and inclusion in their workforce and communities (S)
  • Have strong policies in place around fair and equal pay, employee rights, executive compensation, and environmentally sustainable business practices (G).

Organizations large and small will be coming under increased pressure from their stockholders and customers to demonstrate their commitment to ESG principles. That means they will be looking at internal policy shifts as well as external partners that can help them achieve their ESG goals. Many are developing standards or scorecards for their supply chain partners that require them to document their progress toward these values.

The term “circular economy” refers to the shift away from the traditional linear “take, make, waste” approach of mining virgin materials, manufacturing products for a single use and disposing of them. In a circular economy, goods are produced in a way that enables reuse and recycling of materials that will be fed back into the supply chain. For example, many IT returns are shipped using disposable cardboard. A circular model would enable a reusable package and return of that packaging to the shipper for multiple uses. Manufacturers are now being measured and rated on their “circularity.”

In these larger contexts, “going green” takes on a new meaning. It can refer to corporate initiatives to switch to renewable energy, it can include looking at the ratio of independent contractors to employees, or it can implement policies to address gender equality or racial diversity. Sustainability is not just about lowering one’s carbon footprint. It can also mean increasing one’s community impact. Key areas of environmental impact to local communities by both your company and your suppliers and vendors include: emissions, water usage, waste and ecosystems.

Weighing the Factors

Let’s translate the traditional SWOT analysis into a format that applies to this transition:

  • Strengths = Reasons for moving towards sustainable business practices
  • Weaknesses = Barriers that could get in the way of this transition
  • Opportunities = Rewards for moving in this direction.
  • Threats = Consequences of not making the transition

Reasons for making the move – The benefits of moving toward sustainable business practices are many and may include compliance with regulation, increased customer satisfaction, employee goodwill, better brand image and a happier board of directors. And let’s not forget reduced waste and reduced costs.

Barriers to entry – Organizations considering a transition to sustainable business practices may not find it easy. First, the chances of success are highest when buy-in is attained at the highest levels of your organization. However, if your executive team is not yet ready to take the next step, you as an IT asset manager can certainly implement more sustainable business practices within your purview. Second, finding opportunities that are measurable can be a challenge. There is a plethora of greenwashing out there, and it is often difficult to know what is true.

Consequences of not making the move – What happens if you don’t make the transition to sustainable business practices? You could lose customers to organizations that are taking a more proactive approach to environmental, social or governance issues. You run the risk of alienating investors who finally see ESG as mandatory. Every department in your organization has a role to play in making progress toward net-zero goals. IT asset management can either lead, follow or be humiliated without a plan of action for contributing meaningfully. Where do you want to be?

Rewards for the transition – The rewards of embracing a transition to sustainability and ESG values will compound over time. Progressive companies will attract forward-thinking investors, team members and customers. ESG-oriented vendors will want to do business with you. Your organization can be run more efficiently and your community standing will be enhanced. And as an individual, you will be welcome in the multitude of new sustainability groups where you can share ideas and learn from your peers.

Next Steps

There is a lot to know about sustainability and ESG, and it is changing constantly. There are organizations creating standards to measure ESG that are used by your investors, supply chain partners and customers. Common impact areas addressed by these standards include: greenhouse gas emissions (GHGe), forestry, water, waste & pollution, worker safety, jobs impact, total materials used, use of recycled materials, package/product lifecycle management and circularity. Most standards relate activities to the widely accepted UN Sustainable Development Goals. Leading standards organizations that are developing best practices in which your organization may be participating include GRI, SASB and CDP, a not-for-profit charity that runs a global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts. Your challenge is to educate yourself so that you can make a meaningful contribution using whatever influence or power you have at your disposal.

What can Sustainable Logistics do for the Final Mile Industry?

Welcome to the language of today’s supply chain. What do terms like ESG, Sustainability, Corporate Social Responsibility, Circular Economy, and Going Green  mean for members of the final mile industry? And how can individual logistics carriers make the most of these emerging trends? That was the topic explored by a panel of CLDA (Customized Logistics and Delivery Association) members from key sustainability related fields at the Final Mile Forum.

Organizing their discussion around the traditional SWOT analysis (strengths, weaknesses, opportunities and threats), the panel looked at the escalating role that sustainability will play in the logistics space.

Setting the Context

The final-mile industry will be affected by two major trends over the next decade: a shift by retailers and other shippers towards companies involved with ESG (environment, social and governance) and the global transition among manufacturers toward a circular economy. The panel kicked off with some definitions of these terms.

The term ESG is the latest buzzword in the evolution of corporate social responsibility. Investment firms are shifting billions of dollars of investor funds away from fossil fuels and towards companies that practice sustainability. They are looking for ways to invest in companies that:

  • Measure and minimize their impact on the environment (E)
  • Operate under strong codes of social ethics around gender equality, diversity and inclusion in their work force and communities (S)
  • Have strong policies in place around fair and equal pay, employee rights and executive compensation (G).

Shippers and retailers will be coming under increased pressure from their stockholders and customers to demonstrate their commitment to ESG principles. That will mean they will be looking for final-mile providers that can help them achieve their ESG goals. Many are developing standards or scorecards for their supply chain partners that require them to document their progress toward these values. For example, they may require a last-mile provider to report on emissions avoided through their use of electric vehicles. That’s because these shippers could count those benefits toward their own net-zero goals.

The term “circular economy” refers to the shift away from the traditional linear “take, make, waste” approach of mining virgin materials, manufacturing products for a single use and disposing of them. In a circular economy, goods are produced in a way that enables reuse and recycling of materials that will be fed back into the supply chain. For example, many final-mile providers that deliver large goods such as furniture are commonly stuck with disposal fees for the single-use packaging discarded after installation. A circular model would enable the recovery and return of that packaging for multiple uses.

In these larger contexts, “going green” takes on a new meaning. It can refer to first/final mile providers switching their office to renewable energy or transitioning to electric vehicles (EVs). It can include looking at the ratio of independent contractors to employees or having policies in place to address gender equality or racial diversity. Sustainability is not just about lowering one’s carbon footprint. It can also mean increasing one’s community impact.

Weighing the Factors

The panel translated the traditional SWOT analysis into a format that applies to this transition:

  • Strengths = Reasons for moving towards sustainable business practices
  • Weaknesses = Barriers that could get in the way of this transition
  • Threats = Consequences of not making the transition
  • Opportunities = Rewards for moving in this direction.

Reasons for making the move – The panel discussed the benefits to first/final mile carriers of moving toward sustainable business practices, which may include lower operating costs. These would be especially true for those carriers that begin using electric vehicles (EVs). As an added benefit, EVs generate more data, which can help improve efficiency, lower costs and be used as a selling point with shippers that need to meet their own net-zero goals or ESG benchmarks.

Barriers to entry – Carriers considering a transition to EVs may encounter some barriers. They will need to persuade or incentivize their independent contractors to make the switch. For fleet owners, it will mean a substantial upfront cost. There is also the matter of installing charging stations. Those that rent facilities will need to get landlord buy-in to the cost of installing those facilities. Another consideration is whether the local electric grid could handle the load of several EVs charging at once. In addition, there is currently a shortage of these vehicles. Right now, most commercial EV makers have sold out of their initial production runs.

Consequences of not making the move – What happens if logistics providers don’t make the transition to sustainable business practices? They could lose drivers. Rideshare companies are competing for drivers that have EVs because an increasing share of the market is demanding this. Shippers may develop their own sustainable fleets and bypass final-mile providers that are slow to transition. Retailers that are ESG-driven will rate and reward providers that meet their criteria for sustainability and drop those that don’t. Unpredictable fuel costs and ever-changing regulations may drive up the cost of doing business the old way. Customers may move their business to other providers that address environmental, social or governance issues.

Rewards for the transition – The rewards of embracing a transition to sustainability and ESG values will compound over time. Progressive carriers will attract forward-thinking drivers, team members and customers. ESG-oriented retailers and other shippers will want to do business with them. Carriers will run their companies more efficiently and enhance their standing in their communities. And a carrier that transitions to EVs capable of vehicle-to-grid charging will actually be helping to stabilize the local grid as part of a distributed energy network.

Next Steps

The CLDA is becoming more involved in helping its members tackle the issues involved in ESG. The Diversity & Inclusion Committee introduced members to a cost-effective way to train their team members to create a more inclusive workplace through an on-line training course.

For more information or to find out how to get involved with the CLDA, please contact us.

Onepak salutes the opening of The Climate Pledge Arena in Seattle

Why does a reverse logistics tech company care about a sports arena? We agree with the goals of the Climate Pledge: being net zero carbon by 2040. We agree that companies need to commit to regular reporting, carbon elimination and credible offsets. Those 200 companies who have already signed the Climate Pledge? That’s our tribe. As a relatively small company Onepak is nearly already there.

Seattle Climate Pledge Arena

Climate Pledge Arena in Seattle

Just as Onepak minimizes carbon emissions and offsets all transportation emissions with credible carbon removal offsets, so does this new arena. As Onepak transitions from single-use to reusable packaging for asset recovery, the Climate Pledge Arena is eliminating single-use plastics. Everything that Onepak transports will be reused, refurbished or recycled, so we celebrate the repurposing of the historic roof originally built for the 1962 Seattle World’s Fair.

We love the meaning behind naming such a public place for such a socially important ambition. Yes, fulfilling the pledge is environmentally impactful, but at Onepak, we lead by example. So building a public gathering place that will remind and inspire every visitor and every event viewer that such ambitions can be accomplished—that’s leadership.

Hats off to the Climate Pledge Arena and to the sheer will that it has taken to get it done right.

Is Sustainable Customized Logistics for You?

By Shawn Stockman.  Customized Logistics & Delivery Magazine. Summer 2021

OnePak Vice President Shawn Stockman recently participated in a CLDA Final Mile Forum, and in this article he recaps the group discussion around trends affecting the industry, the expanded meaning of “going green” and challenges to entry. Follow the link to the article for more insight into the language of today’s supply chain.

https://viewer.joomag.com/clda-summer-magazine-2021-final-1/0242992001632066112/p54?short&

 

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