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ESG as a differentiator: How logistics companies are winning business with sustainability

In the current business environment, the concept of corporate performance has shifted from the financial perspective to the environmental, social, and governance (ESG) dimensions. For logistics companies, which are central to global trade and supply chain management, ESG is more than just compliance, it is an opportunity that addresses the new market demands, investors, and governments.

Logistics companies are significant contributors to global greenhouse gas (GHG) emissions. The transportation sector alone accounts for nearly 28 per cent of global GHG emissions, with logistics operations being a major part of this figure. With the world moving towards ambitious climate targets, including achieving net-zero emissions by 2050, the pressure has been mounting on logistics companies to transition to sustainable business models that have minimal negative impact on the environment. Especially in India, logistics is a key industry contributing to 14 per cent of the nation’s GDP, and the country’s progress towards achieving its goal of reaching a USD 5 trillion economy depends on its success. A major source of employment and contributing to 14 per cent of India’s GDP, the sector needs to conform to the national and global commitments towards sustainability to reduce its carbon footprint.

Shifting to green logistics is not a concept that is restricted to the mere reduction of carbon dioxide emissions but entails a reinvention of logistics operations. This change requires more than the conversion to new fuels and technologies, as well as a change in organisational culture to embrace sustainable ideas and principles. One of the most visible changes in the logistics industry has been the transition to the use of new or ‘greener’ fuels like electric cars and biofuels. The major industry players across the world have already started exploring and investing heavily in EVs and looking for biofuel solutions for their vehicles. Currently, the use of electric trucks is still in its early stages in India; however, this is slowly changing because electric trucks are expected to have a greater impact on ensuring that the sector achieves a lower carbon emissions.

Another key aspect of green logistics is the upgrading of existing structures to incorporate energy-saving technologies. Some of the trends that have been seen in the design of these commercial buildings include; solar panels, efficient lighting, and advanced climate control systems to save on energy. Green materials are being used and LEED (Leadership in Energy and Environmental Design) standards are being implemented into the construction processes. Thus, the transition to green warehousing aids not only in cost cutting but at the same time has a positive impact at the global level by diminishing and controlling the amount of CO2 emissions by logistics companies. Green warehousing eradicates energy wastage through systems that effectively control temperatures and lighting, embracing the use of renewable energy sources such as solar power, and heavily minimising the reliance on non-renewable.