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Sustainability as an integral topic is debated worldwide. The depleting resources are catching public attention as environment is non-negotiable.
Currently, no nation has mandated environmental, social, and governance (ESG) compliance specifically for the logistics sector. However, several countries have proposed regulations and standards related to ESG, which may indirectly benefit logistics operations.
Supply chain plays a major role in every industry and ESG has become significant in recent years as companies recognize the impact of their operations beyond just financial metrics. As the awareness is increasing, stakeholders seek more transparency and accountability from the companies.
To integrate sustainable practices into every stage of the supply chain process, companies must prioritize and collaborate with suppliers that demonstrate commitment to sustainability and responsible business practices. Evaluate potential and existing suppliers based on their ESG performance.
Adhering to the environmental factors, supply chain fraternity must reduce carbon footprint by optimizing transportation routes, use sustainable packaging materials, minimize resource and waste generation, and procure eco-friendly materials from suppliers to mitigate environmental impacts.
While addressing the social side, a company must ensure compliance with labour laws throughout the supply chain and interact with local communities affected by supply chain operations to mitigate any adverse social impacts.
Establishing strong relationships with suppliers based on trust, fairness, and collaboration is key to promoting good governance within the supply chain. Increasing transparency throughout the supply chain helps identify risks and ensures compliance with ESG standards. Establish mechanisms to trace the origin of materials and components in the supply chain and encourage transparency by sharing relevant ESG information with stakeholders.
However, business responsibility and sustainability reporting (BRSR) software is gradually evolving as companies are under increasing pressure to enhance and report their ESG performance. BRSR metrics specific to logistics consists of measuring CO2 emissions per kilometre, fuel used per unit of cargo transported, or similar metrics. Few criteria include highlighting the adoption of technology like route optimization, electric vehicles, ensuring timely delivery, handling complaints, and providing eco-friendly logistics solutions for clients. For logistics firms, BRSR reporting helps demonstrate accountability and commitment to sustainable business practices.
Integrating ESG principles into supply chain management offers risk mitigation, cost savings, improved brand reputation, and long-term resilience. For continuous improvement, companies must establish key performance indicators (KPIs) to track ESG performance across the supply chain. Regularly monitor progress and identify areas for improvement. Collaborate with suppliers, industry partners, and other stakeholders to drive innovation and find sustainable solutions to supply chain challenges.
Businesses that prioritize ESG consideration in their supply chain are better positioned to meet the expectations of investors, customers, and other stakeholders in an increasingly sustainability-focused business landscape.
