The climate change is undeniable, and approximately 85% of all Carbon emissions are concentrated in 3 sectors. Companies in those sectors should be the ones most concerned about reduction initiatives, not only because of current and potentially new regulation policies, but also because of customers preferences and perceptions on companies that are not concerned with environmental protection initiatives. Nielsen has released a research that states that 45% of consumers are willing to pay more for an environmentally friendly product, proving that this issue is important to consumers.
According to the CO2 Emissions from Fuel Combustion report released by the International Energy Agency (IAE) in 2015, transport is responsible for 23% of global energy-related greenhouse gas emissions
World CO2 emissions by sector
Among these transports, “road” is not only the biggest one, but also the one responsible for most of the CO2 emissions increase since 1990.
CO2 emissions from transport
The DHL Program
DHL is the world’s leading mail and logistics group and, in 2008, pushed by stricter emission standards expected by regulators and consumers, decided to start focusing its efforts on climate protection, mainly through the reduction of carbon dioxide (CO2) emissions.
DHL was the first logistics company to set a clear carbon emission target and kickoff a sustainability program in 2008: the “Go Green” program has a target to reduce in 30% the Carbon emission levels by 2020 (based on 2007 levels) and increase transparency on company ‘s carbon emission levels.
This was a breakthrough move in an industry that has a business model that relies heavily on carbon emissions to survive. The carbon reduction strategy proposed focused on the three main initiatives below (but was not limited to):
- Network optimization – ensuring the shortest and most efficient routes to reduce the amount of fuel required in deliveries
- Fleets modernization
- Cars – shift towards alternative cars (electric, hybrid) and improve aerodynamics reduce the CO2 emissions
- Aircraft – renewal of fleets to more consumption efficient models
- Increase energy efficiency of buildings – reducing consumption and increasing usage of renewable sources (e.g. solar energy)
Results so far
As of 2015, DHL had already managed to reach approximately 25% out of the 30% reduction target set internally.
Source: investors relations website
Suggestions for future reductions
DHL has definitely taken a big step ahead just by implementing these reduction policies, but there is still room for further improvement. Going forward, I suggest that DHL start working on the three initiatives listed below:
- Further improving its fleet
- Expand alternative fleets – while electric cars would be the best solution, they are still expensive and somewhat scarce. However, it would be possible to reduce emissions now by changing the fleet to ethanol-moved cars, a technology that is cheap, available and wide-spread in some countries, such as Brazil
- Use lighter cars / aircraft to reduce fuel consumption– negotiate with suppliers to produce cars and aircraft with lighter materials and / or less accessories. In theory, DHL could even negotiate lower prices if the only change is in number of accessories, not to mention reduction in fuel consumption
- Educate consumers on the cost that short-term deliveries have to the environment and stimulate them to select green options, even if they are more expensive (have the traditional and green option available for everyone)
- Have indirect impact through waste reduction (reducing impact of the “industry” sector) by re-utilizing packages and stimulating consumers to do the same (maybe even offer a small monetary incentive)
Implementing these carbon reduction initiatives have the potential not only to impact the environment, but also to improve DHL’s results through cost reduction and top line growth through the creation of a brand that cares about the environment and wants to leave a legacy to the industry.