By Vikash Agarwal, Managing Director, Maersk South Asia
The prioritization assigned to sustainability by businesses is becoming emphatically more focused and strategic. Earlier, sustainability used to be pursued because it was good for a company’s image. Most businesses used to take just those set of actions that seemed like ‘the right thing to do’ and leave it at that. Over time though, businesses realized that the pursuit of sustainability had more benefits beyond helping them be chummy with their customers and the public – it also improved their operating costs and prepared them for resource or price shocks.
With the shift in preference for environment-friendly products, green-aware customers are demanding more information to gauge the sustainability of the overall supply chain of the products they purchase. Such as the raw materials used, the conditions under which it was manufactured and produced and the logistics operations of the movement of this product throughout its supply chain. Additionally, businesses are also under pressure from regulators and investors to divulge their sustainability strategy, initiatives and results.
What is sustainability analytics?
Sustainability analytics is the collection and processing of data in order to get a statistical analysis of the impact of a business’s operations on the environment, society and economy at large. It can also be leveraged by businesses to determine the effectiveness and progress of their sustainability initiatives and gauge the need to continue or modify the actions that they are undertaking.
There are three broad areas of sustainability that a business needs to take into account when attempting to ensure an entirely green value chain.
– Sustainability within their own premises and processes
– Sustainability amongst suppliers and vendors
– Sustainability in Logistics
Sustainability analytics can help businesses get a more accurate picture across this entire value chain and make data-driven decisions to reduce the impact of their operations on the world at large.
Why is sustainable analytics important?
Businesses of today are actively working around reducing energy and water consumption as well as greenhouse gas emissions within their own premises and facilities. Intelligent supplier management, i.e., considering carbon emissions alongside price and delivery time as a selection criterion for suppliers, is becoming a decisive competitive advantage for businesses. Furthermore, increasing their scope of monitoring the working conditions and impact within their own supply chain and their direct suppliers, companies have also taken into consideration their downstream suppliers as well. They are also exploring the use of alternative greener fuels like bio-fuel, electric vehicles or alternative energy sources like solar power amongst others to reduce their carbon footprint.
Sustainability initiatives or improvements, like the above-mentioned, requires a certain level of investment by businesses. And even if some businesses are ready to pay a premium for sustainable practices, the rising costs of energy, assets and employee wages have made them be more cautious of their expenditure.
As a result, businesses seek an accurate analysis of their carbon footprint in order to help them optimise their investment and ensure that their chosen sustainability strategy has the most meaningful impact. Most supply chains are fragmented and thus highly complex due to the larger number of stakeholders and logistics nodes involved. The resulting multitude of data points translates to a higher complexity in gauging the impact of a business’s operations in terms of sustainability.
Sustainability analytics helps them overcome this challenge by providing a highly transparent and accurate evaluation of their operations. Thus enabling them to identify the most relevant areas to prioritise for sustainable actions as well as implement those sustainability initiatives that have the maximum benefit within an economical framework. Moreover, with the recent innovations in these tools and technology, businesses are also able to analyse and evaluate vast amounts of this data across the three dimensions of time – past, present and future.
How can you use sustainable analytics for green logistics?
As an enabler of global trade, logistics plays an important role in the growth of businesses across any industry. However, it also generates an unsustainable footprint. In 2020, the logistics sector contributed up to roughly 21% of the total carbon dioxide emissions around the world. Although there is an increased awareness and willingness from businesses to undertake necessary sustainable actions, there are still some challenges in the use of as well as in scaling up green offerings.
Some of the challenges in pursuing green logistics include: –
- Limited infrastructure to support green offerings globally, i.e., Limited availability of facilities for green fuels, energy, vehicles and equipment etc at landing or transit hubs like airports and ports
- Higher cost of sustainable solutions. For instance, the price of biofuels is still higher than that of conventional fuels
- Lack of an industry-wide global standard for green supply chains.
But digitization can also be leveraged by logistics providers to provide solutions based on accurate sustainability analysis, that can have a larger positive impact while also optimising their customer’s costs, time and efforts. And the thought that goes behind this is simple – what is our customer’s pain point and how can we help them with it?
In today’s age, there is ample data available to you at the click of a button. What’s difficult is putting that data together into a cohesive analysis that can enable you to take the necessary decisions and actions for your green logistics goals. Maersk’s Emissions Dashboard is an example of how a sustainability tool works in logistics. It is an interactive sustainability tool that provides businesses with an overview of their carbon footprint across their entire value chain and trade channels. This dashboard addresses the primary challenge faced by all businesses of visibility on the impact of their operations. Having identified 5 key reporting dimensions to analyse and optimise emissions, the Emissions dashboard enables them to make informed decisions to decarbonise their logistics as per globally recognised standards
There are several other case examples of sustainability tools that are helping businesses get better control over their supply chain and gain a more in-depth view of where the sustainability gaps lie. With this higher level of transparency, businesses can implement intelligent sustainability strategies to help them achieve science-based targets while also reducing their costs and improving their bottom lines. And as technology advances, there will be new innovations that we can expect to come forth that further refines and simplifies the pursuit of sustainability. It’s no longer a question of whether this is relevant for your business or not, it’s a question about when you’re going to join the bandwagon as we journey together to a greener tomorrow.
