Green logistics: What ESG means for businesses operating in Malaysia

In an era in which global warming and sustainability have become crucial concerns, businesses around the world are looking for ways to reduce their environmental impact. Malaysia is no exception, with companies here beginning to embrace Environmental, Social, and Governance (ESG) principles as well as green logistics practices that can help reduce emissions and environmental damage from transportation.

ESG meaning: What is ESG

ESG is an approach adopted by many businesses, such as DHL, worldwide and in Malaysia to measure the sustainability performance of a company or an organization. It emphasizes corporate social responsibility, environmental stewardship, and good corporate governance when making decisions. 

This falls in line with one of the key themes of the 12th Malaysia Plan, ‘advancing sustainability,’ which outlines its aspirations to become a carbon-neutral country by 2050. According to The Star, Malaysia is the only ASEAN country that introduced a voluntary carbon market in its Budget 2022, setting a platform for carbon credit trading between green asset owners and other entities transitioning towards low-carbon practices.

ESG in the logistics industry

The logistics industry, while essential for global trade, has a significant environmental impact. Integrating Environmental, Social, and Governance (ESG) principles into logistics operations is crucial for minimizing these impacts and promoting sustainability.

For its part, DHL Express is committed to leading the way in sustainable logistics in Malaysia and around the world by focusing on crucial areas like: 

• Reducing carbon emissions: Investing in alternative fuels and energy-efficient vehicles, such as electric vehicles, and exploring sustainable aviation fuels.
• Optimizing logistics networks: Utilizing advanced technology and data analytics to optimize delivery routes, reduce mileage, and improve fuel efficiency.
• Developing sustainable packaging solutions: Promoting the use of eco-friendly packaging materials and encouraging customers to adopt sustainable packaging practices.

Benefits of incorporating ESG

A company that takes a proactive stance towards coming up with a sustainability strategy and embracing sound ESG principles, like green logistics, can reap significant rewards, including:

1. Higher cost savings

Implementing sustainable practices such as reducing waste and incorporating sustainable packaging can lead to significant cost savings for companies due to better resource management.

2. Increased competitiveness

With greater cost savings from adopting ESG practices, green businesses in Malaysia stay ahead of the curve and also gain a competitive advantage, particularly in an industry like logistics where sustainability and social responsibility are becoming increasingly important. 

Additionally, by taking a long-term view of ESG, companies can minimize their exposure to financial and operational risks, ensuring their sustainability for the future.

3. Improved reputation and brand loyalty

Other than more significant cost savings and increased competitiveness, a company that demonstrates a commitment to ESG principles can also improve its reputation and build trust among stakeholders. 

When a company appears to be devoted to green logistics and ESG goals, it instills confidence in employees, customers, investors, and the general public that their money is going towards something meaningful. As such, brand trust can often be improved.

With both the public and Malaysian government increasingly taking a keen interest in corporate policies regarding sustainability, diversity, and good governance practices, it is becoming essential for businesses in Malaysia to consider ESG as a critical aspect of their operations and decision-making processes.

So, how can companies in Malaysia do so?