How corporate leadership can catalyze sectoral change

Amsterdam, 23 October 2020 - By Eszter Toth-Weedon, Senior Partnership Manager, Smart Freight Centre. It's not always the size of the company that makes a difference. A review of the sustainable freight approaches of selected sectors.

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“The world is in trouble”, said David Attenborough who recently broke Instagram records with his campaign aiming to tackle environmental crises and share potential solutions. This is great; we need more leaders asking for immediate change while also offering solutions!

Crises arising from freight emissions should be acknowledged as an issue that we urgently need to address. But there is still a lack of overview as according to our recent joint report with CDP; just over 500 companies report their (scope 3) freight emissions, accounting for only 10% of global transport emissions. included in the ITF Transport Outlook 2019.

Some multinationals are already setting an example, showing the industry how to measure and reduce freight emissions in the most efficient ways possible. Their leadership doesn’t just energize change internally, it also galvanizes others to take climate action and could even get an entire sector to move.

The exact approach may differ, but in the end those who act to cut their freight emissions are contributing to the same goal. There are several initiatives happening at the modal level (Clean Cargo for container shipping, Sea Cargo Charter for bulk shipping, Getting to Zero Coalition for sea freight; North American Council for Freight Efficiency (NACFE) for trucking or the Sustainable Air Freight Alliance ). On a regional level there are also great sustainable freight programs, like the SmartWay program in the US, Canada and Mexico and 26 countries now have green-freight programs.

However, efforts vary significantly between sectors. This is a shame because — expanded to all key sectors using freight transportation heavily— they could make a big difference. SFC’s approach to develop a Sustainable Logistics Roadmap determined that the potential of climate action by companies or their sectors depends on four key factors:

1. The sector’s contribution to global freight emissions
2. Freight emissions as a percentage of total emissions
3. Strength of sectoral associations and sector related labels and programs
4. Pressure from consumers, government and wider public to act

Putting these factors together, there are a number of sectors which have great potential to significantly reduce global freight emissions, when acting unitedly.

  1. Fashion
    Fast fashion has been publicly scrutinized in the past two decades, bringing out pressing supply chain issues related to the use of water, chemicals and child labor etc. Leading companies had to be fast to react to all relevant accusations and make improvements, but most of them acted alone instead of collectively.

Since then, the number of sectoral initiatives related to sustainability has multiplied every year. But sustainable freight was not on their agenda. Three years ago, the United Nations Framework Convention on Climate Change (UNFCCC) created the Fashion Industry Charter for Climate Action, which also established a Working Group on Logistics, led by Smart Freight Centre (SFC) and Business for Social Responsibility (BSR).

The Charter has recently published the first Playbook for Climate Action, developed by the Fashion Industry Charter Signatories. This provides guidance for fashion companies and includes how to manage and reduce their freight emissions. There are signs that the existing fashion initiatives will join forces to cooperate on many ongoing efforts, including freight — for example the Sustainable Apparel Coalition and the Fashion Charter are launching joint webinars to provide further support to fashion companies to reduce their freight emissions.

It is too early to see if there are any leading companies of the sector which can promote sector wide efforts or pledges to reduce freight emissions instead of acting alone in the hope of gaining a competitive advantage. We are yet to find companies to join forces to educate end product customers about the true cost of online shopping and stop saying the delivery is free, because it is not.

According to the Stand Earth report (A Roadmap to Fossil Free Fashion), apparel and textiles were among the largest market segments in both ocean and air shipping in 2019, with 8% of ocean cargo freight volume and 6% of air cargo. Imagine these companies collectively demanding and supporting the use of low emission fuels and vehicles. Having shared carriers, they could also enable the much-needed investment to reduce freight emissions significantly for their sector.

  1. Chemicals
    Freight emissions represent a relatively high percentage of the chemical sector’s total greenhouse gas (GHG) emissions. This industry has been under pressure to collaborate on safety after some major incidents in the past. Therefore since its early days the chemical industry has recognized the importance of collaborating with stakeholders to improve the industry’s safety and sustainability performance, and developing sector-wide guidelines are an efficient way to go.

They also unite around important sector-wide programs, like ResponsibleCare® and SQAS, promoted through influential associations like Cefic (The European Chemical Industry Council) and ECTA (European Chemical Transport Association). Cefic has been working on the topic of freight emissions management since 2010 when it launched the report ‘Measuring and Managing CO2 Emissions’ , in collaboration with ECTA.

Currently, Cefic is looking into ways to enable the sector to use the Global Logistics Emissions Council (GLEC) Framework for a collective emissions calculation, with support from ECTA and IWT (Inland Waterway Transport). These developments take place over time and with a lot of effort and commitment from individual companies, like the Dow Chemical Company, BASF, Borealis, LyondellBasell.

  1. Electronics
    The electronics sector is driven by many sustainability-related standards. Logistics emissions is increasingly being considered as a priority within these standards. The Institute of Electrical and Electronics Engineers (IEEE) produces nearly 1,300 standards; amongst them the Environmental and Social Responsibility Assessment of Computers and Displays, which recommends the GLEC Framework for the calculation of GHG emissions from product transport.

The Green Electronics Council (GEC) supports institutions implementing sustainable procurement through its flagship Electronic Product Environmental Assessment Tool (EPEAT) program. The EPEAT system evaluates electronics on more than 50 environmental criteria; products are rated gold, silver or bronze depending on how many optional criteria they meet.

HP Inc. was among the first companies to adopt the GLEC Framework, and subsequently led efforts to ensure that EPEAT includes relevant logistics related requirements. Currently, only those electronics that calculate their logistics emissions based on the GLEC Framework or similar approach can receive the gold rating. So, it’s no wonder that there is increased interest from electronics companies to improve the management of their logistics emissions.

  1. Steel
    The steel sector has not only a greater than average contribution to global freight emissions, but it also has a big freight emissions footprint compared to its total GHG emissions. However, the industry is not a leader in sectoral collaboration on freight-emissions management, at least not yet. But there are clear signs that they are heading that way. Their Responsible Steel™ initiative is the industry’s first global multi-stakeholder standard and certification program promoting sustainable supply chain practices.

The initiative is currently working on establishing industry standards on GHG emissions, including scope 3 emissions. We hope to see some leading steel companies promoting ambitious standards and targets for the sector, in line with the GLEC Framework.

A further positive sign is that the steel industry is one of the eight sectors prioritized in the World Economic Forum (WEF) Mission Possible initiative. The programme’s net-zero steel initiative will mobilise steel-industry leaders who want to work together to underpin the transition to zero carbon emissions in steel. This, we hope, will also include collaboration related to freight emissions management.

What we can see in successful sectoral efforts, is that they either have one or more pro-active initiative or association plus at least one leading company that pushes for more ambitious targets for the whole sector.

Multinationals not only need to lead the way, but as individual companies they play a crucial role in getting the entire sector to move forward. Raising the bar for all is the only way towards substantial sectoral changes. How do you support change in your sector concerning freight? Help your company AND your entire sector to calculate and report freight emissions consistently using the GLEC Framework or develop a Sustainable Logistics Roadmap to reach zero emission freight. We are keen to hear and discuss how we can support you!

Photo credit: Rob Walsh