Getting to Zero! How Changing Regulation Will Help Logistics Managers Make Greener Choices

Getting to Zero! How Changing Regulation Will Help Logistics Managers Make Greener Choices

Carbon neutrality, which means achieving net-zero carbon dioxide emissions, is the business buzzword du jour and many companies are touting their plans to reach this lofty goal. In 2019, Amazon famously made the Climate Pledge, a commitment to be net-zero across all its businesses by 2040. More recently, Deutsche Post DHL announced its new commitments to reach carbon neutrality by 2050. Are other logistics companies in the world making similar promises and how are they planning to fulfill them?
Putting it over simply, there are two ways to achieve carbon neutrality — by removing emissions that have already been generated through carbon offsetting or by eliminating emissions from the source. As things stand today, for even the most dedicated eco warrior amongst us, it is close to impossible to be net-zero in our day-to-day lives. We commute in vehicles that emit copious amounts of carbon dioxide, we power our homes from energy grids that rely on fossil fuels, and we feed ourselves with products that are carbon-positive.
But, the journey to zero is not about what the world looks like today; instead, it’s all about what is on the horizon. Several emerging trends are clearly pointing to a net-zero (or close to net-zero) future for large logistics companies. One key development is the role of regulation and how it will push forward the change to a carbon-free logistics system. The expectation is that some regulatory actions will come about to counteract the current business environment that rewards the use of environmentally damaging fuels. More and more, greenhouse gas emissions will be become a tax liability.
Until now, the human and financial costs of pollution and climate change have not been accurately attributed to their sources. Societies have been paying for health costs linked to industrial and transport pollution, but those costs are paid in taxes that go into healthcare systems. The costs are also paid in taxes that go to cover higher infrastructure costs because of more damages resulting from extreme climates. By not accurately and directly attributing the costs of pollution and climate change to their sources, societies at large do not see the benefits to move to cleaner technologies.
As governments consider putting a tax on carbon outputs, clean fuel innovations become more attractive. So much so that Deutsche Post DHL CEO Frank Appel even told the press assembled for the carbon neutrality press conference that the world’s largest logistics company he helms would welcome a carbon tax. The belief is this will level the playing field for transport companies and it will offer competitive advantages to those that are most effective at eliminating carbon from their systems. The devil is always in the details though.
Since the Kyoto Protocol was ratified in 1997, the world has struggled to come up with an efficient and realistic means to tax carbon. Years of inaction and half-hearted attempts significantly dampened any motivation to innovate. But, European governments are now trying to change this by reworking the EU Emissions Trading System, which is a mechanism that allows companies in regulated industries to buy carbon credits to offset their emissions. In the near future, companies will likely see lower caps on allowable emissions and more stringent criteria. In addition to Europe, other countries are likely to follow suit.
So far, as the EU tweaks the system and more carbon credits are sought, impact has already been felt in the carbon trading market and the cost to offset one ton of carbon has increased to 50 euros from 20 euros just a month ago.
As governments continue to look for new ways to account for carbon costs, many logistics leaders are seeing the writing on the wall: the future is pointing at expanded carbon taxing and they are making sure to position themselves most competitively by investing in innovative technologies.
This to me, as someone who cares deeply about the climate health of our planet, is definitely welcomed news.

Timothy Foote - Susymbio - Founder

Tim Foote runs Susymbio, a boutique consulting firm advising clients on e-commerce logistics solutions and provides sustainability program management services. Tim worked in various positions with MNCs for more than 25 years, gaining a wide knowledge and expertise in logistics operations, Tim has crafted delivery solutions for many e-commerce clients and managed the supply chains for several chemical and freight forwarding companies.

At DHL eCommerce’s first Asia Pacific Head of Go Green, he put in place various programs, including carbon footprint management, sustainability training, illegal wildlife smuggling monitoring training, and employee engagement.

Tim volunteers his free-time with the Singapore Wildcat Action Group, a not-for-profit organization that raises awareness and funds for wildlife conservation.

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