Making ESG second nature across the logistics value chain

Anjali Bhadbhade, CFO, DHL Express India talked to Rusen Kumar, India CSR on Making ESG second nature across the logistics value chain at DHL Express India.

By Rusen Kumar

Logistics companies need to accelerate their green efforts by increasing efficiencies around supply chain processes.

In today’s rapidly changing business climate, attention to environmental, social, and governance (ESG) concerns has become critical for competitiveness, but more importantly, for the benefit of the people and the planet. Since the pandemic, ESG has also risen to the top of the regulatory agendas. It has made organizations realize that responsibility towards ESG is a way to give back to society and improve corporate culture and employee engagement.  

As a leading international logistics company, we are responsible for reducing our company’s carbon footprint and setting the highest social and governance standards. Sustainability is our duty and the decisions we make today can have a positive impact tomorrow. Logistics companies need to accelerate their green efforts by increasing efficiencies around supply chain processes.

Green logistics policies have a strategic advantage over the competition. Not only do they set companies apart, but they also prepare them for a sustainable future. The logistics industry is a big carbon emitter. In fact, 70 percent of the greenhouse gas emissions of Deutsche Post DHL Group are generated by the air transport network.  

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As a result, leading logistics players like us are getting into agreements for sustainable aviation fuels to reduce carbon footprint. Additionally, it is found that millennials are estimated to pay more for products that have been produced and delivered sustainably. Thus, to be more environmentally responsible, logistics companies are increasingly adopting decarbonization strategies with the help of digitalization.

Besides hardware-based trends like robotics, it is essentially software-based technologies that leverage a substantial change in processes, operations, and functions. Logistics companies are also looking into options like electric cargo planes for sustainable aviation in the future. In a pioneering initiative, DHL Express has ordered 12 electric planes, Alice, to be delivered by 2024 to form an unparalleled electric network of cargo planes and commit to a net-zero emissions target by 2050.

Given the nature of the logistics business, we work with several stakeholders and communities. As logistics players expand operations, providing community welfare is our way of thanking and showing appreciation to the communities in which we operate. Employing locals ultimately gives a boost to the economy and increases the GDP of the country.

In addition to hiring locals, the logistics industry, which was predominantly male-oriented, is changing by hiring more female employees and championing diversity and inclusion. In India, we have added 19 females to the frontline operations team this year and aim to increase the share of women employees to 25% by 2027. The industry is also working with the government to adapt logistics infrastructure and hiring processes to support people with disabilities, and I believe we will see the results soon.

Many logistics players also contribute to society by providing education to marginalized children, and guidance to underprivileged women to help them become successful entrepreneurs. Logistics also helped disaster response teams deliver relief goods to flood-zone areas. Logistics played an indispensable role during the pandemic in the delivery of life-saving vaccines and other personal protective equipment.

We live in a global village where businesses work in a connected ecosystem. Therefore, global logistics players operating in several different countries must comply with the trade rules and regulations related specifically to each region. These trade laws can be overwhelming for MSMEs. To tackle these issues, we have set up ‘Yellow Yatra’ to help businesses understand the shipping process and the compliances required for international trade. Towards the same, DHL specifically designed a website called Trade Automation Service (TAS) to help businesses understand the landed costs in different countries and to help businesses price their products accordingly.

Talking about positives for the industry from a governance point of view, the recently announced National Logistics Policy effectively addresses supply-chain constraints, leading to lower logistics costs and greater competitiveness for Indian products globally. It effectively creates a single-window e-logistics market and focuses on the seamless movement of goods across borders. Stressing the need for technology and paperless EXIM trade processes will greatly tackle the current roadblocks of the logistics sector. The policy can potentially improve the various sectors of the economy and put significant importance on ease of doing business.

In my opinion, the policy was much needed to revolutionize the logistics industry sustainably in the coming decade. This follows a World Economic Forum report, which predicted that by 2030 the growth of e-commerce alone would result in 36% more delivery vehicles, generating an additional 32% of carbon emissions. Currently, the equivalent of a full truckload of plastic, from product parts to packaging, enters the ocean every minute. This will quadruple by 2050 if no action is taken today. With these predictions, companies, governments, and customers must make ESG an integral part of the logistics industry. This serves the business proposition and facilitates growth, attracts great talent, and builds trust among stakeholders.