Among a number predictions relative toglobal logistics made by the analysts at Gartner is this one: "By 2016, over 50% of Global 1000 logistics organizations will be required to systematically report verified emissions and environmental data," and it notes the impact of this could be especially significant for logistics.
Gartner says that sustainability efforts can have many benefits, among them that they often stir up stagnant thinking and drive innovation and efficiency into a company's operations.
In logistics specifically, Gartner says, "Sustainability can have a major impact in two ways — by improving the operational efficiency of logistics, and by transforming logistics to be sustainably driven. Customers — internal and external — will increasingly demand that logistics be sustainable."
The landscape is also changing, moving from "aspirations and feel-good platitudes around sustainable logistics" to verified requests for detailed, accurate environmental and greenhouse gas (GHG) emissions information and actual performance outcomes.
There are a number of forces, of course, driving the emerging need for such reporting, from specific sustainability scorecards major companies such as Walmart, Procter & Gamble, Tesco and others are requiring, to similar supplier reporting as might be requested by the Carbon Disclosure Project on behalf of many of the world's largest companies to voluntary programs such as the US Environmental Protection Agency's SmartWay program.
Gartner also notes the emergence of the "WRI Scope 3 protocol." That is a relatively new standard from the World Resources Institute that defines how indirect, "third-level" emissions from value chain activities such as logistics should be calculated and reported. The Scope 3 protocol makes it easier for companies to structure reporting programs around "indirect" emissions from carriers and suppliers in terms of logistics activities.
Gartner says there are a number of other factors to consider. Those include:
• At the simplest level, sustainable logistics can drive an increase in operational efficiency, reducing fuel consumption, carbon footprint and material usage.
• Sustainable logistics can go further, transforming the logistics network to meet the vision of the company, driving innovation, adoption of new technologies and processes, and marking the company as a leader in sustainability.
• Customers are increasingly demanding sustainable logistics services as an important input to their own sustainability initiatives.
Today, many 3PLs see sustainability as an important offering in their product portfolios, and the number of companies offering these services is set to increase significantly.
While efforts to reach a global treaty on GHG emissions appears stalled (see Environmentalists Cheer Last Minute Climate Accord in Durban, but Agreement is Very Weak), there are other regulatory actions still moving forward. Those include California's own Cap and Trade regime, which will embrace fuel distribution as part of the program in a few years, Australia's planned carbon tax, and the European Union Emissions Trading System's recent move to include emissions from freight carriers originating outside the EU as applying to the carbon caps within the EU.
"Governments are set to continue to enact environmental legislation that has a profound impact on logistics operations," Gartner says.
This combined with rising shipper interest in becoming more sustainable in logistics opens up a real opportunity for 3PLs, Gartner says.
"Many companies who use 3PLs are looking to them as partners to help drive the overall sustainability agenda. For 3PLs, this represents a significant opportunity, moving away from simple carbon offsets to providing services oriented around sustainability," Gartner observes. "They will meet the sustainable objectives of their clients by reducing energy consumption, reducing carbon footprint and reducing materials used through services such as network optimization, inventory management or multimodal shipping."
The net of all this is that shippers will make investments in metrics, measurement and reporting systems to underpin their sustainable initiative objectives. This will also provide opportunities for service providers to implement technologies and business processes, and undertake verification services.
Even further, "Sustainability will become the key mechanism for logistics innovation — "smart" logistics will emerge," Gartner says.'
The bottom line: whether you are a channel master, supplier or 3PL, Sustainability will have a big impact on strategy, reporting, innovation and more. It's time to start thinking that way, and invest accordingly.
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