How To Develop An ESG Framework For Transport & Logistics
Businesses globally must deal with complex supply chains, the energy transition, and geopolitical uncertainties. Furthermore, there is mounting pressure from stakeholders on companies to act responsibly towards the environment, society, and governance. Today all businesses should develop an ESG framework.
This article is written by Rudi Stalmans and featured in the 2023 Tank Container Supplement of Tank News International. The title of the article in the Magazine is “How To Develop An ESG Framework For Transport & Logistics”.
The 17 UN Sustainable Development Goals contain the blueprint to achieve a better and more sustainable future for all. They address global challenges such as poverty, inequality, climate change, environmental degradation, peace, and justice.
There is also an increased focus on environmental, social, and governance investing in equity markets. ESG in investing is used to screen investments based on corporate policies and to encourage companies to act responsibly.
To achieve a sustainable future and meet the 2030 Agenda, a sustainable transport and logistics sector supporting world trade and facilitating the global economy is vital. According to ourworldindata.org, the transportation sector’s contribution to greenhouse gas emissions worldwide is 16.2%. A large portion of this 16.2%, namely 11.9%, comes from road transportation. 60% of road transport emissions come from passenger travel, and the remaining 40% from road freight, such as lorries and trucks. Aviation and shipping account for 1.9% and 1.7%, respectively. Rail and pipeline combined cover less than 1%. Many industries, such as aviation, have already put great effort into preparing and compiling annual sustainability reports. Some industries, such as the shipping sector, have been lagging but are catching up on the trend. That is important since we must know where emissions come from to develop effective solutions.
Today, investors are increasingly eager to align their portfolios with ESG-related companies, making it an exciting area of growth that also has positive effects on society and the environment. Businesses in the transport and logistics industry, including tank container operators, should develop an ESG framework.
Your transport & logistics ESG framework structure
You should develop your framework around the elements of ESG, with clear commitments and strategic targets. To develop a strategy, you can review your business practices, benchmark relevant organizations and companies, and engage with stakeholders to learn about their ESG expectations for the transport and logistics industry and your business.
Then identify critical ESG topics for your business and define your priorities. This process will help define your ESG vision to develop a strategic methodology for implementing your program and goals. Your ESG strategy should consider the UN Sustainable Development Goals and focus on SDGs relevant to your operations and sector.
Environment – The E stands for Environment and covers energy usage and efficiency, climate change strategy, waste reduction, biodiversity loss, greenhouse gas emissions, and carbon footprint reduction. This element currently has the most indicators and reporting in place. Your commitment could focus on decarbonizing logistics and supply chains with green solutions to clients, environmental management, and climate risk management.
Social – The S stands for Social and covers fair pay and living wages, equal employment opportunities, employment benefits, workplace health and safety, community engagement, responsible supply chain partnerships, and adhering to labor laws. Your commitment could focus on ensuring that people thrive at work by providing a safe and inspiring workplace with diversity, equity, inclusion, and labor rights.
Governance – The G refers to Governance, which in a corporation is the system of rules, practices, and processes by which a firm is directed and controlled. That covers risk management, compliance, ethical business practices, avoiding conflicts of interest, and accounting integrity and transparency. Your commitment could focus on operating based on responsible business practices, with a positive economic impact, ethics, and innovative customer services.
Overall governance of your ESG strategy should be anchored in your management and leadership team by putting in place an ESG management structure and supporting employee engagement with ESG.
Continue to read part 2 of this article – “4 ESG Benefits For Supply Chains“.
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