Latest ESG Trends in Logistics and Opportunities Ahead

by Meagan Fitzsimmons

Leading brands recognize that logistics can play a critical role in meeting their own ESG goals.

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Companies around the world increasingly are focusing on ESG. They’re doing this not only because it is the right thing to do, but also because it aligns with their own interests as well as the interests of their stakeholders. Stakeholders — not just employees and investors, but also customers and community members — are increasingly interested in Environmental, Social and Governance issues. They want to work for, invest in, partner with and buy from greener, safer and more ethical companies.

The result? Leading brands recognize that logistics can play a critical role in meeting their own ESG goals, so they’re looking for partners that can help them achieve or even exceed those goals. At the same time, logistics providers are looking for customers that share their ESG values. The opportunities for both are enormous.

What leading 3PLs can offer

Third-party logistics providers that are committed to doing business the right way can add value beyond increasing efficiency and productivity for their customers. And they can do this in a number of ways. For environmental, they can help make decisions that are responsible, sustainable and ethical. For social, they can provide a safe and supportive workplace and help build a culture of diversity, inclusion and belonging. And for governance, they can build stakeholders’ confidence through smart risk-management and strong governance practices. All these examples of adding value for customers can turn logistics into a competitive advantage.

Being committed to doing things the right way permeates the culture at my own company, GXO. Our emphasis on ESG performance inspires team members in every function in the organization, and we embed ESG goals in all that we do, including emissions, energy and resource use, diversity, community impact and compliance management. I like to refer to ESG as our “how” — how we do what we do and how we deliver results.

Environmental — redefining logistics to include sustainability

When I look around the industry, I see a shift in how the leading logistics providers think about solutions. They’re designing innovative solutions that create greener supply chains for their customers. To develop these solutions, it’s necessary to partner with customers. Working together, you can find the most sustainable ways to get products to the end consumers, as well as to get returned products back into the marketplace sooner. These types of partnerships are critical in helping customers and logistics providers reduce their environmental impact. Pardon the cliché, but it’s a win-win. In GXO’s case, we were not only able to help our customers make progress on their ESG goals, but also successful enough with our own robust ESG programs to earn an “AA” rating from MSCI.

Packaging is another area where logistics companies can help their customers. If you shop online, you know that some parcels arrive in a box that’s too big, and the extra space is filled with paper or plastic. To solve this problem for one of our customers, we introduced an innovative Small Order Automated Packaging machine. It automates the final stages of packaging to perfectly fit parcels at a rate of up to 700 packages per hour, enabling our customer to reduce the overall number of shipments and transportation-related greenhouse gas emissions as well as cardboard use and waste by up to 15%. 

Logistics providers can also partner with their customers, landlords and vendors to pursue sustainability initiatives that minimize GHG emissions and waste. LED lighting, renewable energy, demand response technology that adjusts a site’s energy consumption when demand surges on the grid, occupancy sensors, recycling projects that include composting and waste diversion — these are all ways to help your company and your customers hit environmental targets.

Social — changing logistics for employees and communities 

In many ways, Social is the broadest part of ESG, covering numerous aspects of how companies interact with their people and communities. To be successful at Social, we are concentrating on becoming an employer of choice.

In this environment of intense competition to hire and retain talent, that means offering pay, benefits, training and development that are customized to be competitive in local markets.

But that also means creating a great workplace — a workplace in which employees feel that they are cared for, that their health and safety are everyone’s top concern and that they have opportunities for professional development and career advancement. It means championing diversity, inclusion and belonging throughout the company and giving each person the support needed to thrive. And it means seeking new ways to strengthen the communities where employees live and work.

At my company, we’re known for using technology and automated solutions not just to create a more efficient and productive workplace, but also to create one one that is safer and more engaging. For example, we’re constantly expanding our use of collaborative robots, or cobots, to improve our team members’ safety in distribution centers. Cobots minimize injury and make work easier.

I can’t overstate the importance of creating a respectful, ethical and collaborative workplace where every employee belongs. Cultivating such a workplace starts by diversifying the workforce, creating networks to enhance inclusion and belonging, and partnering with organizations that align with our core value to “Be Inclusive.”

And while recruiting and hiring talent is the first step, a more important step is retaining that talent by providing support and development opportunities, mentoring programs and defined paths for career advancement.

Finally, helping the communities where employees work and live is another way logistics providers are remaking themselves as employers of choice. These communities are home to customers, colleagues and families, and creating a better world starts by being a good neighbor.

Governance — doing business the right way  

I’m an attorney and I oversee compliance at GXO, so I have a very strong attachment to the Governance aspect of ESG. Strong Governance is the foundation of any successful business. Just as logistics providers are turning to ESG to guide their decisions on environmental and social issues, they are also turning to ESG to reinforce strong governance structures and practices. They’re reflecting their commitment to integrity and transparency for employees, shareholders and business partners. 

This commitment can take many forms, including the composition of the board of directors. I’m very proud to work for a company where 50% of our directors are women, 75% are independent and 100% of standing committee and subcommittee members are independent.

An open workplace is also important — what we call a “speak up” culture at GXO. This means that every employee has the right and responsibility to raise questions or concerns about values, ethics or other standards without fear of retaliation.

The bottom line for ESG trends in logistics

Doing things the right way works and comes with a clear return on investment. Sure, ESG commitments come with a financial cost, but the benefits more than offset those costs. Whether those benefits are lower energy bills, increased efficiency, a more engaged workforce or a stronger reputation, they make a strong commitment to ESG good for their employees and investors as well as their customers, communities and the planet.

Meagan Fitzsimmons is the Chief Compliance and ESG Officer for GXO Logistics, Inc.