SUSTAINABILITY E-NEWS - Q1 2018 EDITION
We are pleased to share the new edition of our GoGreen Brief – DHL Global Forwarding’s Sustainability Newsletter. With this quarterly newsletter we are aiming to share our insights and knowledge on carbon reporting, reduction approaches and climate change abatement trends as well as other related sustainability topics. We hope you find it of value and we welcome your comments and suggestions.
Sustainable Supply Chain Management (SSCM): Myth or Fact?
Sustainable management practices are transforming businesses and challenging the status quo by establishing sustainability as an integral part of supply chain management (SCM). It can be a key factor in the success of a company. In a newly released white paper, DHL Global Forwarding explores the most important parts of Sustainable Supply Chain Management (SSCM) and discusses its various functional areas. The white paper offers insights and approaches on how to get started with and achieve business success through sustainable supply chain management.
Is embedded sustainability a sunk cost? Is it a distraction from core business?
The answer to both questions is ‘absolutely not’ – sustainable management is a necessary part of a sound management approach. Various leading companies around the world know that embedding sustainability into their core business drives value creation and business success; in fact, these are the same businesses that are outperforming their competitors and markets.
Over the last decade, global megatrends, declining natural resources and rising social and commercial expectations have put companies’ supply chains into the spotlight. For instance, according to one McKinsey study, the value at stake on sustainability issues can range from 25 % to 70 % of earnings before interest, taxes, depreciation and amortization. A KPMG study showed that environmental damage caused by 11 key industry sectors in 2010 was equivalent to 41 % of their pre-tax-profits. Not surprisingly, stakeholders expect more environmental, social and economic awareness from the market place. At the same time, external regulatory pressure, as well as companies’ internal drive to reduce costs, have led them to consider sustainable solutions that create new business opportunities.
Understanding sustainability as an integral part of SCM has led to the emerging field of Sustainable Supply Chain Management (SSCM). SSCM makes an important and often underestimated contribution to a company’s overall success. It focuses on identifying the best areas in which to take advantage of business potential and contribute to sustainable development.
According to SSCM, a sustainable approach to supply chains can help reduce costs, particularly in logistics, due to a reduction of transportation costs and the reuse of products and materials. Appropriate transport decisions and delivery management can make all the difference in a company’s sustainability objectives and reduction of CO₂ emissions.
The white paper provides a roadmap of potential actions for businesses that want to intensify their environmentally friendly and socially responsible actions while increasing their economic success. The presented case studies demonstrate how renowned companies have improved profitability and operational performance by implementing sustainable solutions.
Circular Economy: A Theoretical Concept or a Strong Business Model in Practice?
Recycling materials is a practice that goes back thousands of years; even the ancient Romans used recycled glass from Egypt and the Eastern Mediterranean. But this ancient practice is now being redefined in the business community under the concept of the circular economy. Although similar to recycling, the circular economy aims to increase share of renewable or recyclable resources while reducing consumption of raw materials and energy as well.
The overall benefit of the circular economy is simple: it aims to keep products and materials at their highest utility and value at all times. According to the Ellen Macarthur Foundation, the circular economy seeks to rebuild capital of all kinds, whether financial, manufactured, human, social or natural. This ensures enhanced flows of goods and services.
According to current estimates, the concept of circular economy offers significant potential:
- The change from a linear to circular economy could enable global economic growth of $4.5 trillion by 2030.
- Estimates predict $400 billion to $600 billion potential revenue for automotive companies via select circular economy business models by 2030 (Accenture; 2015).
Circular economy in action:
Businesses today are taking a close look at how they design their products and packaging in an attempt to make them useful beyond their shelf life. Ultimately, the goal is to create products that can be used as resources for upcycling, or the creation of a product more valuable or higher quality than its original form. You can find a well-known example of the circular economy in almost every office with your printer and copy machine.
- Today, you can lease a copy machine instead of buying one. In this case, you don’t only lease the device itself, but you also buy the maintenance and replenishment service with it.
- Before you even realize that your cartridge is running empty, a replacement is sent to you. The old cartridge no longer ends up in the bin, but is properly recycled and reused.
- Since the copier company owns the equipment and remotely supervises and maintains the equipment, the hardware can be reused.
A look into practices of the global market of print services shows impressive potential for the circular economy. Company examples show that implementing circular models can lead to reduce up to 45% of CO₂ emissions within 10 – 15 years. In the field of toner cartridges, individual companies have managed to reuse over 23 million kg of recovered cartridge materials. Best practices show that in 2016, companies were able to achieve return rates of cartridges of up to 50% and reuse 36% of it.
Almost all industries that manufacture products requiring mined materials or resources can benefit from a strategic plan to join the circular economy. Although this model can be applied to almost any industry, there are a few in particular exploring this approach and getting creative about it.
Car manufacturers are a perfect industry for the circular economy, as cars include raw materials such as steel, cooper, textiles and plastics. Some car manufacturers are making headway by reclaiming aluminum scrap and putting it back into the production processes with high-quality automotive-grade materials. Other options in the automotive industry, which is already making great strides in some cities, include ride-sharing and car-sharing, which contribute to the circular economy by extending a vehicle’s life span.
How can businesses benefit?
Companies using the circular economy benefit from cost savings by reducing the need to purchase virgin materials for their products, thus optimizing resources and reducing environmental impact. The circular economy can also help businesses minimize their heavy dependence on raw materials imports and even help create job opportunities.
The public sector is taking steps to make this model a widespread reality, with some governments pushing for legislation and guidance to ultimately build a circular economy that facilitates a more competitive business atmosphere, creates sustainable change and makes a tangible positive impact on the environment.