The prioritization assigned to sustaining businesses has become more focused and strategic. With the shift in preference for environmentally friendly products, green-conscious customers are demanding more information to assess the sustainability of the entire supply chain of the products they purchase. Such as the raw materials used, the conditions under which they are produced and produced and the logistics operations of the movement of this product throughout its supply chain. In addition, businesses are also under pressure from regulators and investors to disclose their sustainability strategy, initiatives and results.
Currently, intelligent supplier management, ie, the consideration of carbon emissions along with price and delivery time as a selection criterion for suppliers, has become a decisive competitive advantage for businesses. In addition, increasing their scope to monitor working conditions and impact within their own supply chain and their direct suppliers, companies also consider their downstream suppliers. Therefore, transparency is key as businesses strive to implement sustainability strategies that cover the entire value chain of their products.
As an enabler of global trade, logistics plays a vital role in the growth of businesses in any industry. However, it also creates an unsustainable footprint. By 2020, the logistics sector will contribute up to 21% of total carbon dioxide emissions worldwide. With increasing demand from customers, pressure from regulators and investors and the new green supply chain laws, sustainable logistics is a must for companies.
Sustainable Logistics
The supply chain consists of two parts – the physical and the digital supply chain. The physical supply chain involves the storage and movement of cargo through various transportation mediums and facilities until it reaches its final destination. While the digital supply chain deals with the storage and movement of relevant documentation through various platforms and tools for booking, permitting, rescheduling, tracking and monitoring etc. arrival of the cargo at the final destination.
When considered in this way, there are many initiatives that businesses can take for both aspects. In the part of the physical supply chain lies the use of alternative greener fuels such as bio-fuel, electric vehicles or alternative energy sources such as solar power to name a few. When it comes to the digital front, there are many innovations being explored to make trade paperless through the use of automation, machine learning and blockchain technology. Digital tools also help businesses track their sustainability metrics and measure impact and support more accurate reporting.
Although there is more awareness and willingness from businesses to take the necessary sustainable actions, there are still some challenges to use and also to increase the green offerings.
Challenges of Going Green
- Limited infrastructure to support green offers globally, ie, Limited availability of facilities for green fuel, energy, vehicles and equipment etc. at landing or transit hubs such as airports and seaports
- Higher cost of sustainable solutions. For example, the price of biofuels is higher than that of conventional gasoline
- Lack of a global industry standard for green supply chain
But digitization can also be used by businesses from the beginning to make the necessary sustainability initiatives, based on accurate data analysis, which can have a greater positive impact while also optimizing the their costs, time and effort.
How can digitalization support the sustainability agenda of a business?
The implications of digital tools and sustainability innovations are extremely beneficial for businesses. In general, sustainability or improvement initiatives require a certain level of investment by businesses. And although some businesses are willing to pay a premium for sustainable practices, rising costs of energy, assets and employee wages make them more cautious with their spending.
As a result, businesses are looking for an accurate analysis of their carbon footprint to help them optimize their investment and ensure that their chosen sustainability strategy has the most meaningful impact. Most supply chains are fragmented and therefore highly complex due to the large number of stakeholders and logistics nodes involved. The resulting multiple data points translate into a higher complexity in measuring the impact of a business’s operations in terms of sustainability.
Maersk’s Emissions Dashboard is an interactive sustainability tool that gives businesses an overview of their carbon footprint throughout their value chain and trade channels. It is a neutral window that combines the emission data of all carriers and modes of transport, be it Maersk or third parties. In addition, it follows an industry-leading calculation method that complies with GLEC, so that businesses can also set science-based targets for the future.
