Driving sustainability: Innovations in logistics and ESG

Will Lovatt
29 April, 24

As consumer preferences shift towards sustainability, it’s evident that packaging choices are no longer just about features and functions but also about environmental impact. McKinsey’s, recent global survey revealed a clear willingness among consumers to pay extra for sustainable packaging across various regions and industries, ,

Of course, features and functions remain important, but the sustainability and ESG aspects of the logistics process are becoming increasingly significant to consumers also. The entire supply chain, including sourcing manufacturing, packaging, delivery methods, and return policies is under scrutiny.

Today’s informed consumers are making deliberate choices, favouring brands and delivery services that align with their values in these areas. It’s essential therefore, for brands to both maintain high standards of service and also provide a variety of delivery options. This range should cater to immediate needs as well as providing solutions such as batched deliveries at convenient pick-up points, thereby catering to the growing demand for flexibility and sustainability in the shopping experience.

Regulation and risk mitigation

Regulations are also driving the need for ESG considerations in logistics. For example, the European Union’s Sustainable Products Action Plan mandates businesses to provide information about the environmental impact of their products. We expect regulators to be closely monitoring final mile delivery and whether zero emissions vehicles are being utilised, particularly in urban areas.

From a risk management point of view, ESG considerations are critical. Neglecting ESG risks exposes businesses to reputational harm, financial penalties, and legal repercussions. Today’s consumer sentiment is such that unsustainable logistics practices can result in consumer boycotts or lead to regulatory fines, highlighting the importance of ESG compliance in modern logistics operations.

Harnessing technology for sustainable logistics

So, what strategies can enterprises employ to mitigate ESG challenges? To tackle these hurdles, businesses need to evolve from traditional paper-based systems to sophisticated technological solutions. Such solutions enhance visibility throughout the entire supply chain, from production to dispatch. Distributed order management systems, for instance, offer real-time insight across extended fulfilment networks, facilitating the optimised allocation of consumer orders to the most suitable stock sources, balancing cost and speed. In the current climate of rigorous ESG and sustainability criteria, it’s crucial for organisations to maintain thorough surveillance over the transit of goods and the various stakeholders involved, beyond mere timing. This technological shift is critical for conforming to the shifting requirements of ESG compliance and sustainable logistics practices.

Actively tracking the credentials and integrity of every checkpoint in the supply chain is now everyone’s problem. Consumers are increasingly concerned about the ethical sourcing of raw materials and the employment practices of third-party logistics firms engaged in product sourcing. Technology empowers organisations to chart the complete movement of a specific client order, from acquisition to final shipment, before then notifying that customer directly.

Organisations are also tasked with implementing sustainable practices in the warehouse, utilising technologies to optimise operations. This includes employing technology to determine the most efficient customer packaging sizes, reducing waste, and guiding staff on consolidating orders to minimise shipments and cut carbon emissions. Additionally, offering consumers options like click-and-collect can align with their existing plans, promoting sustainability over mere speed of delivery. Providing flexible delivery options is increasingly regarded as imperative as the fastest route is often not the most environmentally sound.

A sustainable future

As the threats associated with data and computer security advance, we are now moving towards heightened regulations around how our products are made, procured, packaged and shipped to the public. For a wide range of reasons, from ethical to legal and public sentiment, ESG considerations and controls are becoming more and more important in logistics and fulfilment. In the current market, there’s a noticeable shift toward increasing sales via Direct-to-Consumer (DTC) channels. This trend is fuelled by consumers’ desire for more convenient services and their readiness to switch brands if their needs are not met. This situation highlights the necessity for businesses to focus on sustainable practices. Modern consumers expect the flexibility to customise their delivery options and select from options with clear pricing. If businesses fail to meet these expectations, consumers are prepared to switch to competitors. To stay competitive, it’s crucial for brands to effectively manage their ordering and delivery processes.

The key to improving supply chain management lies in adopting sustainable order management and fulfilment technologies. This approach is about future-proofing businesses and contributing to environmental sustainability. After all, these technologies are not just tools; they are comprehensive solutions that promote regulatory compliance, DTC operational cost-efficiency, and sales growth. – and that represents a ‘win win’ across the entire logistics supply chain both today and in the future.

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