What’s So Important About Green Logistics?
We do a lot of talking about sustainability and green technology. While imagery associated with recycling and Mother Nature might come to mind, what exactly are green logistics as an industrial practice?
Indeed, going green isn’t just some passing trend championed by “mamby pamby hippies” as some of the old guard capitalists might have you believe. With climate change becoming ever prevalent in headlines and humanity’s wasteful habits (both in industrial and commercial pursuits) spiraling out of control, no amount of creative writing convincing people otherwise can make the problems go away. Someone who understands the core principles of capitalism would ensure efficient resource use, minimizing input while maximizing output; simply ignoring costs (such as energy and carbon) doesn’t magically make them disappear. In fact, it’s downright dishonest — and people aren’t standing for it anymore.
As the average consumer becomes more aware of their effect on the global environment, sustainability has also been rising in importance. That being said, green logistics in business is also becoming a proper discipline as companies try to find balance between three pillars: the environment, the needs of society, and the economy at large.
The first pillar is the most obvious: green logistics are all about protecting the environment. From a business perspective, this means conservation of natural resources and finding renewable ones, minimizing carbon emissions and waste, and shrinking a company’s overall carbon footprint. While some business owners feel that the current costs associated with sustainability aren’t justified when it comes to their bottom lines, we like to posit that bottom line profits are pretty useless if you, your customers, and the world you do business on is dead due to greed and corporate negligence. Again, no amount of creative rhetoric will change that fact — unless we figure out how to eat, drink, and breathe money.
And while a lot of news on climate change and pollution is often gloom and doom, it’s not all bad. In fact, in 2014 the amount of carbon emissions released into the atmosphere had stalled despite the growth of global industry. This is the first time in four decades where carbon emissions didn’t increase alongside global industry from the preceding year:
“The [International Energy Agency] attributes the halt in emissions growth to changing patterns in energy consumption in China and OECD countries. In China, 2014 saw greater generation of electricity from renewable sources, such as hydropower, solar and wind, and less burning of coal. In OECD economics, recent efforts to promote more sustainable growth — including greater energy efficiency and renewable energy — are producing the desired effect of decoupling economic growth from greenhouse gas emissions.”
According to the announcement, there had only been three other times where carbon emissions fell in those past 40 years, all associated with “global economic weakness:” the beginning of the 1980s, 1992, and at the tail-end of the Great Recession in 2009. 2014 marked the first “decoupling” of industrial growth and carbon emissions, which means we are getting better at producing more while using less.
But it’s not just governments and major industry players that are lessening the strain humanity puts on the environment.
The second pillar of green logistics refers to society and its needs. Even if we cut back on food, water, and buying whatever sundry goods are on sale that week, humans, by biological definition, are consumers. We’ll still need to eat, drink, and entertain ourselves with our various gizmos and toys but that doesn’t mean we have to be wasteful in doing so.
With people becoming more aware of the importance of sustainable, green technologies and their impact on the world and its natural resources, so too does the demand for greener industrial and commercial initiatives. Roughly ten years ago, a 2007 consumer survey illustrated that just over half (53 percent) of consumers “prefer to purchase products and services from a company with a strong environmental reputation.” In a survey conducted last year, that number has grown to 81 percent:
“As personal accountability and sophistication grows, consumers are also considering their own role in addressing social and environmental issues. Global consumers surveyed state they are willing to make personal sacrifices for the greater good: four-in-five are willing to consume or purchase fewer products to preserve natural resources or buy a product from an unknown brand if it has strong CSR [corporate social responsibility] commitments. Consumers are even willing to forgo elements such as ownership or quality to push progress forward.”
At this point, by not participating in sustainable technologies and programs that promote greener industry, you could be costing your business even more money: “The leading ways consumers want to get engaged with companies’ CSR efforts are actions tied directly to their wallets, with nine-in-ten just as likely to purchase (89 percent) as to boycott (90 percent) based on companies’ responsible practices.” Just as publicly traded shares are largely purchased on faith that the company in question will continue to perform well, modern consumers understand they’re voting for certain business ethics with their purchasing dollars, opting to let companies with questionable ethics fail than continue to shop there.
In other words, if you’re unwilling to hold yourself and your company accountable based on its social and environmental practices, your customers will eventually do it for you.
With money in mind, the benefits of corporate social responsibility definitely outweigh any short-term costs associated with switching over to sustainable practices: “In line with 2013 results, when companies support social or environmental issues, consumer affinity overwhelming upsurges: 93 percent of global citizens will have a more positive image of that company; 90 percent will be more likely to trust that company; [and] 88 percent will be more loyal (i.e. continue buying products or services).”
But for those who are solely interested in their bottom-line profits, the last pillar of the green logistics trifecta can put your mind (and wallet) at ease.
The third and final pillar of green logistics comes down to the economy. As we’ve covered in the other sections, increased awareness on all levels are producing positive changes in the war for sustainability. But for those who’re only motivated by the amount of cash coming in, it’ll end up costing you, especially as social trends demand corporate social responsibility more and more. If you don’t believe me, compare the tobacco industry at its peak and now in present day; what was once romanticized is now ostracized. Turns out people don’t like getting cancer and pumping their bodies full of toxic chemicals. Looking back, it was only a matter of time that people wizened up. Sustainability and other green logistics trends are no different.
True lovers of capitalism understand that efficiency (again, minimizing input while maximizing output) yields long-term benefits. If it takes less resources to make something — or, preferably finding ways to make even more without expending more — this looks good both for your accounting department as well as while you’re trying to woo public investment. A good company is defined by how efficient it is. You can try to artificially inflate your profit margins by jacking up prices but that merely opens the door for competitors to undercut you and steal away your market share. The market will always self-correct and frankly, only fools think themselves better than the beast that is free market commerce. The Dutch tulip mania of the 17th century is one of many examples proving that building castles in the air on unsustainable practices and trends will come crashing down eventually.
Instead of seeing sustainability as cutting away at the status quo of your industry, look at all the possibilities green logistics and technology are opening. With PreciousPlastic, for example, a lone Dutch student saw the problem for what it was: recycling plastic, given current means, is just too darn expensive. So rather than accepting that, Dave Hakkens seized opportunity by encouraging entrepreneurial ventures in upcycled plastic. With literally hundreds of millions of tons of plastic floating in the oceans and with numerous innovations focused on reclaiming that waste for second-life purposes, I’d be surprised if “plastics mining” didn’t become an industrial trend in the coming years. As Hakkens said, it’s just money sitting there — and if you’re in the plastics business, you know the time, energy, and fiscal costs associated with making brand new plastic. Letting it just litter our world, leaving it to rot usually after just one use is just plain foolish.
So whether you’re motivated by protecting the environment, supplying society with what it needs, or simply making money, green logistics is only going to become more central to industrial ideology, especially as resources continue to dwindle at the rates they are.
Ultimately, the choice is left up to you: will you join the green revolution or be swept up in the undertow, undercut by your forward-thinking competitors? You don’t need to wait to get started either; EcoTransIT and GreenRouter both provide business leaders calculators to determine and benchmark their carbon footprint.
So what are you waiting for?