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March 2011 2022 by Steve Beda HELPING THE WORLD IS GOOD FOR BUSINESS. STRATEGIC STEPS TO LOWER OPERATIONAL CO2 EMISSIONS - AND IMPROVE BOTH PERFORMANCE AND PROFITS Com CO2 There aren't any times in any industry when going the extra mile to do the right thing is actually really good for business 100. But it does happen Skeptical? You're not alone. Aher two years of juin pivoting problem solving imagining and then doing soal of which have drained energies and operational budgetary transportation logistics executive in charge of budgeting could be forgiven for taking a hardline on non-essential expenditures Proactively protecting the environment? That's a must do for every industry, but it's low on a priority list that has been exclusively focused on finding and retaining carrier capacity and keeping the flow of goods moving across the country and around the world As we al continually re-examine ways to cut costs and realize even greater operational efficiencies improving environmental protocols and reducing 2 emissions specifically presents a rare win-win dynamic in which operations leaders can preemptively align around incoming regulations, optimize network and reduce C02, an Problematic contributor to greenhouse gasses (GHG) and overall environmental impact. If all of that sounds a little having your cake and eating it you're not wrong. Let's dig inget some broader perspective and take a closer look at the issues and strategic steps to lowering emissions and raising profits The Global Perspective efforts to reduce emissions Protecting the environment seemed more an extreme activist position a few decades ago but it's rightly now a global perspective good reason. The Paris Accord - an agreement by countries around the world to reach net serocarbon emissions by 2050 - mandates a target of no more than a 1.5 degree Celsius change in global temperature beyond pre-industrial levels According to Stanford University as of March 2021.64 countries signed the agreement but there is on. While pandemic lockdowns and other confinement measures cut global emissions by 26 billion tons of CO2 about seven percent below pre 2019 levels experts say that level of control cannot be maintained and the world is on track to increase global temperature by 3-5 degrees Celsius by the end of the century a world-changing problem with on The good news is that change is being affected at the global, national corporate and individual levels. Or at least inte are in place to fast track now behaviors. Al the intentional level 27 countries have implemented a carbon tax imposing fees on industries for carbon emissions in a effort to incentive a switch to improved practices and both green technologies and power sources Pro-tax countries include Argentina Canada Chile China Colombia, Denmark the European Union 127 countries. Japan Kazakhstan, Korea, Messico, New Zealand. Norway, Singapore South Africa, Sweden the United Kingdom and Ukraine Others considering joring include Brazil Brunei Indonesia, Pakistan Russia Serbia Thailand Turkey, and Vietnam. In addition 54 carbon pricing intatives recurrently in force across the globe on various regional national, and subnational levels with three more scheduled for implementation according to The World Back Together these tives have been estimated to cover 21.5% of the goal greenhouse gas emissions in 2021 A graduated to reabile energy worldwide is also underway with solar generated power leading the way. Whe cool and gas still account for around 50% of the world's energy renewable forms of energy production are growing fast According to Earth.org, worldwide power production has grown 25year-on- year with overall able energy con Accounting for 20% of the global power supply and the first countries, le loeland being close to 100% renewable energy powered. This pace of change will pick up, but it's also going to require the major industries that generate le amounts of CO2-for example manufacturing and livestock-based meat production as well as the private sector companies and every team within them to affect change from the top down and bottom up. While the earth's agricuture golstackle damaging methane gas emissions of US greenhouse gas emissions a society wide movement is beginning with the adoption of consumer and coming commercial lectric vehicles, singlese plastics, aide sharing and plant-based food production The C-Suite Perspective targeting the supply chain and improving visibility Wheat of this remendously encouraging and needed. corporate America and its global counterparts are being asked to do more. Forbes reports leaders now recognize the need for the companies and organizations to drive more procove tironmental change through CO2-limiting practices across the organation but particularly in relation to the supply chain According to the Environment Protection Agency (EPAL company supply chains now account for a staggering 60% of organization's greenhouse gas (GHG) emissions. While changes to other emissions reducing strategies, including business ravel practices, electric vehicles and renewable energy use all help corporations were carbon footprint tacking supply chain emission from manutduring to the transportation handing and management of goods as the single greatest impact generator for many businesses, Kevin Sneader, global managing partner, McKinsey & Company Na the nal squarely on the head about exact what's needed to affect this level of network de change while there wasn't much debate about the sonor of nowy reduction of five and investors were concerned about the lack of reliable data on the efforts companies and society are making, not to mention the impact Greater clarity is required in order to speed development of new standarde to help markets ad more ulicy and reward progress. The answers, as with many operational efficiencies initiates, in clear access to data across your supply chain operation How much Co2 is being ermitted at any given time? What are the major causes modes or geographies and other contributing variables? Only by tracking the data, by embedding an enterprise-wide approach ongoing we build effective strategies to manage and reduce iciencies and realize greater same time. This is especially critical post global pandemic as many Industries re-set and examine better practices to mitigato risk and manage challenges Creating Sustainability Practices in Transportation Logistics When it comes to creating sustainable practices in logistics transportation, the great news is that the train has already left the station Meaning shippers are already organically looking for better Ways to improve execution and lower costs. And typically those changes optimizing network and mode.cameSP selection via advanced routing as well as dimensional weight and tricou-wil at contribute to emissions reduction. The challenge, of course, comes in how to measure any impact from these actions as part of an overal carton reduction program How do we begin thinking about Co2 monitoring and measurement? How do we acquire quantitative proof of progress or KPI's that can demonstrate were delivering against our footprint reduction goals? Measurement at needs to include everything from the role warehouse management, packaging, produd sourcing all play in emission as well as, of course, the movement of wound materials or inventory delivery and outbound transportation of goods across mode region and geography Tracking CO2: Supporting a Broader Sustainability Initiative As we set about to review sustainable practices within an operation, it's a good Idea to adopt a broader view of sustainability. Yes, transportation will be major driver of CO2 emissions and require monitoring, but let's review other contributing factors too. Do your carriers across your network practice emissions reduction strategies? Things like load consolidation, which will typically lower cost per unit weight, reduce your number of shipments reduce fel needs and lead to an overal reduction of CO2. If they're not using basic emissions-reduction practices or considering doing so, it may be time to Indi new carries Unfortunately, there is no global standard to measure CO2 in relation to transportation logistics which makes comparison across the industry extremely difficult at present in the United States the EPS Smartway program is attempting to standardize co contient but not companies have adopted a single source of CO2, nor a common definition as it relates to transportation logistics Unt this happens, the best course of action is internal measurement consistently monitoring and measuring across your operation and benchmarking emissions reduction against your own goals and initiatives to affect them. Only by doing this and having the data-driven proof points can we set new goals as well as broader sustainability targets that can albe reported to customers, partners, investors and other stakeholders All About Data: FAP's Role in CO2 Measurement Visibility is the key tong on your targets for sustainability and emisson reduction, and that can only come from data collection, curation and analysis. Two fundamental components for measuring CO2 emissions in on logistics decling CO2 which means do they need to travel what's the e el required and how it is consumption? A good in Freight Audit and Payment AD) system tracks weight and are, which can hep chicale distance, plus additional variables, making it a foundational tep and required tool for any co measurement and reduction effort. While there is no sing source orthod to 2yet distance weight and mode of transportation are at key fundamentalement support the calculation of CO2 related to sportation logistics. The bottom line that by combining these input with CO2 coefficient, 's possible to call the CO2 associated with anyshment regardless of mode of transport and geographic region A natural place to begin is where carbon emissions reduction has a material impact transportation logistics and where transportation spend management dat is available historical record of shipping activity with specific distance, weight mode of transport av Dashboards and brands long with KPIs for both cost to serve meric cost per unit cost per shipment content weight) and carbon emissions Co2 by lane by ) and can be used to be besines and SP create awareness transporto spend tireston. Tra ignment for both can reduction and same dashboard can be used by logistics procurement operation management and Recuves to sign on and report progress at all levels of the organin at any given time. Getting the Most from Your Prs According to Forte 50% of companies worldwide wil data driven strategies and that number is growing as even smalto Medium sized organize benefits of data analysis. As you build your sustainability protocols and measurement practices to get the most from your KPIs, two things are important 1. Continuous Process Improvement Set goals and use appropriate KPI's and influencers cost per unit of stance CO2 per unit of distance which will deliver ongoing process Improvement proper supplier and LSP management across your operation as well as more informed decision making for everything from mode of transportation and packaging choice all the way to corporation Seges vel decisions wound emissions control 2. Optimized Strategies Build carbon emission reduction strategies into your overall optimization strategies They re one and the same. Putting in place operational changes to prove efficiencies wil reduce amont Singsins reduction goals will And consistent standardized and high quality data is esse for bon De both of these things continually drive improvement across every process and embracedats- driven decision making to optimize Strategies and you'll putin place the steps and tools to not ust lower CO2 emissions, but related operational costo ste changes