DC Velocity - November 2016

example, I think of the work that FedEx is doing to get a long-term agreement in place to procure more aviation biofuels. Aviation is critical to its business and a significant source of greenhouse gas emissions. Today, there’s not a lot it can do to use biofuels at the scale needed to reduce those emissions. But over the long term, it can change its access to cleaner fuels and make investments to build that market. FedEx has decided that this is a critical issue that it needs to be a part of.

QWhy should supply chain and logistics professionals be concerned about global warming? AOver the last few years, we have worked to get a better sense of where emissions lie in a company’s operations. [We found that] the supply chain is the source of upward of 80 percent of the [carbon] footprint for consumer goods companies, retailers, telecommunications companies, and food and beverage companies. So supply chain has the potential to have more impact on a company’s environmental footprint than any other function.

QWhat do companies risk by not looking at how they can reduce carbon emissions?

AThere are a few risks. One is falling behind. A company like General Mills that has a long-term greenhouse gas reduction goal in place is getting more efficient every day, and it’s challenging itself in a unique way. Companies that are not doing this are missing out on [opportunities for] innovation.

You also risk missing out on appealing to the next generation of business leaders, who are increasingly looking at what sustainability strategy is in place when deciding which company they want to work for.

You are also missing out on real cost savings. If we do not get stronger truck efficiency standards in place, shippers will end up paying millions of dollars a year more in fuel and total trucking costs than they would with [tighter] standards in place.

So I think there are a lot of things that you miss out on, with the biggest one being the opportunity and reason to innovate. Unless you challenge yourself, you don’t know what you can accomplish. For example, FedEx set a goal of improving fleet efficiency, and the company just announced that it has exceeded its goal five years early and has ended up saving a lot of money. Wal-Mart challenged itself to double the efficiency of its fleet operation in regard to how it loads and uses its trucks, and it beat that goal earlier this year. It’s impressive how much cost the company is taking out of its operations.

QHow have things changed with respect to business- es’ focus on sustainability in the last five years? ACompanies have become more systematic about sustainability, bringing it more into their overall strategy. It used to be that companies would focus on just one or two projects, like using recycled paper or using hybrid cars for their sales fleet. While those are important steps for raising awareness, they weren’t really core to the business and weren’t long-term and systematic. Now, you are seeing more alignment between companies’ sustainability goals and their overall strategic objectives. It’s more meaningful, more impactful, and more real.

QWhat’s next for EDF?

AWe have had a lot of success in developing best practices in the logistics space, and we have also done some work in deforestation and helping make factories more energy-efficient. Next, we want to pull all of these things together and provide companies with a more comprehensive road-map across their operations in those three areas.

To build a more sustainable future, we need to engage government and companies in a dialogue to create smart, well-designed public policy.

We see business as a critical stakeholder in this. What we would want to see is business first acknowledging the urgency of having rules and regulations and incentives in place to reduce climate change-related pollution and greenhouse gas emissions. Then, businesses need to be proactive in sharing with policymakers their experiences and steps that would help them reduce their environmental impact. A clear example is the work that Pepsi and other groups have done with heavy-duty truck efficiency standards. Fleet owners and equipment manufacturers need to be up front about the challenges they face and how we can structure rules to foster innovation.

Editor’s note: This article originally appeared in the Quarter 2, 2016 issue of our sister publication, CSCMP’s Supply Chain Quarterly.

To learn about steps shippers can take right now to cut their carbon footprint (and save money in the process), watch our interview with Jason Mathers on Channel 1 on DCV-TV ( www.dcvelocity.com/dcvtv/). You can also check out our archived webcast, “Sustainable logistics: You can turn ‘green’ into gold,” on Channel 3.