A survey undertaken for the Foundation for Future Supply Chain in collaboration with its research partner, Ti Insight, has found that out of 184 of the world’s largest transport and logistics companies, only 105 measured and published their carbon emissions, just 57% of the total.
Measuring emissions is a fundamental step that needs to be taken before greenhouse gas reduction programmes can be initiated. Given that the transport industry’s success in reducing emissions will be critical to meeting governmental net-zero targets, the fact that such a large proportion of industry leaders have yet to start measuring their emissions is of major concern.
Source: FFSC/Ti Insight
The sample provided a cross-section of the industry worldwide, comprising the largest companies in each of the following industry sectors: Trucking/Road Freight, International Freight Forwarding; Contract Logistics; Express & Parcel; Postal Operators and Shipping.
The majority of the companies in the sample had revenues of over $1 billion and so the low proportion publishing carbon emissions data cannot be put down to cost or lack of resources, as might be assumed for small and medium-sized operators. Instead, it is likely due to the low priority given to the issue by management, the lack of pressure from customers and weak or absent regulation by governments. Although legislation has forced some corporate entities to publish data in certain parts of the world, its application seems only to have had a limited effect on the transport and logistics industry.
However, the survey also revealed some more encouraging data. Although there is a way to go, the number of industry leading companies measuring emissions data has risen significantly since 2016 as the concept of disclosure is increasingly embraced. In 2016 just under a quarter of logistics companies were publishing carbon emissions data (23%), increasing by 34% to its present level (57%).
Source: FFSC/Ti Insight
One particularly interesting finding of the survey was the significant disparity in the number of companies publishing data from sector-to-sector. At one extreme, almost all shipping and postal operators were found to disclose their carbon emissions. These markets are characterized by large players, with many companies nationalized or listed on stock exchanges. This typically means that not only are they likely to have strong governance but also that many are compelled to publish data by government regulation. At the other of the scale, smaller (albeit by the nature of the survey, still very large), predominantly privately owned trucking/road freight companies feel less obliged to measure or publish data.
Source: FFSC/Ti Insight
The findings of the survey are corroborated by analysis of data from the Science Based Targets initiative (SBTi), a cross-industry organization which defines and promotes best practice in emissions reductions, helping companies to set and meet net-zero targets.
Despite being used by a total of 1420 companies, the SBTi has seen relatively low adoption rates by transport and logistics businesses (just 91 companies in May 2021 including those involved in passenger transportation and infrastructure). This may be partly due to the lack of homogeneity across the sector, with separate agencies setting targets in the air and maritime sectors; hyper-fragmentation in the road freight/trucking sector and the difficulties involved in defining ‘logistics’ as a sector in its own right.
Most sectors of the transport and logistics industry are dominated by large numbers of small and medium-sized businesses, many of which will need support if they are to shoulder the additional cost burden of measuring emissions, setting targets and implementing carbon reduction strategies. These costs are significantly easier for big businesses to absorb and this could be an additional way in which to differentiate their operations from smaller competitors. Despite this, there seems to be a reluctance on the part of many corporate managers to embark on the net-zero journey, a position which is increasingly untenable. If more companies do not embrace the need to measure emissions, they will increasingly find themselves at a disadvantage when bidding for new business, or looking for new capital from investors becoming more sensitive to environmental considerations. Furthermore, governments around the world will undoubtedly regulate, or extend existing regulations, for mandatory disclosure.
Further data and analysis from this survey can be found by accessing the latest whitepaper: The Challenge of Measuring and Meeting Climate Change Targets
Source: Foundation for Future Supply Chain, May 20th 2021
Author: John Manners-Bell