Amid talk that the global recovery from the pandemic must be a “green” one, a broader move towards sustainability is the overarching trend dominating the evolution of supply chain management and logistics in recent years.
Increasing carbon taxes and a new generation of consumers increasingly conscious of the environmental impact of the products they purchase are having an impact with companies working hard to decarbonise their supply and logistics chains. The Irish market is not immune to this but while some attempts to make supply chains more sustainable are to be lauded, others are merely paying lip service and avoiding the fundamental problems with their business model.
So says Mark Pagell, who has been closely observing the evolution of supply chains, both in Ireland and globally, for many years. As professor of sustainable supply chain management at University College Dublin, he has seen hundreds of organisations eager to "green" their operations.
But Pagell admits he is “cynical” about some apparent efforts to ameliorate the environmental impact of supply chains, noting that many companies will focus on their recycling initiatives, for example, rather than addressing the root problems with their packaging and transportation – bottled water being a glaring example.
“Food and dairy processors get excited about their energy savings but increasing the number of cows in Ireland will not help the sustainability of their industry despite that being one of their goals,” he says. Pagell is also deeply critical of recent Covid-19 outbreaks in meat processing plants, saying this was the result of how their tight supply chains are structured for maximum profit. “We saw society paying the cost of that business model.”
Pagell highlights the Food Academy at SuperValu as a shining example of a sustainability initiative.
“There are greenhouse gases associated with producing food anyway but a lot of food is carbon-intensive to transport either because it is perishable or because it has got a lot of water content. A lot of what we produce in Ireland is both,” he notes. “The Food Academy addresses these issues, it’s local meaning less transportation but it’s also better for people running the farms and the people working on the farms.”
He also singles out the Icewater group, a business that provides filtered water and filtration systems to a range of organisations. A recipient of a Green Award earlier this year, it offers the “benefits of bottled water without the bottles and the transport”, Pagell says.
As with most sectors, the logistics and supply chain sector has also become more focused on sustainability in recent years, says Brian O'Kennedy, chief executive of Clearstream Solutions, an independent carbon management and corporate sustainability consultancy.
He qualifies this, however, by adding that the sector’s low carbon journey has been relatively slow to this point and will “not be an easy transition”. The freight transport sector accounts for approximately 7 to 8 per cent of energy-related global carbon dioxide emissions, with physical transport responsible for about 90 per cent of all logistics emissions.
Many Irish companies are still at an early stage in their decarbonisation journeys and are unsure of the process, O’Kennedy says. “When we started Clearstream Solutions 12 years ago, very few companies understood what sustainability was and only the large corporates were measuring and reporting their emissions,” he notes.
With sustainability now a core business issue for many companies, businesses are beginning to compete on the basis of their sustainability credentials and performance. This presents an opportunity to drive competitive advantage, O’Kennedy says and unsurprisingly Clearstream’s services are in increasing demand.
“We help our clients to measure the impact of their business, products and supply chains. Setting a baseline and having an historic measure of greenhouse gas emissions is the starting point. Once we have a measure, we then look to set targets such as Science Based Targets aligned to the Paris agreement and targets in step with Government targets such as ‘net zero’ by 2050,” he explains.
According to Mick Curran, chief executive of Chartered Institute of Logistics & Transport Ireland (CILT) and network promoter of the CILT Skillnet, growing efficiencies in supply chains are having the knock-on effect of making them more sustainable. The freight industry remains extremely competitive, meaning companies are constantly working to evolve and develop, investing in the newest engine technology.
Curran explains that some of the larger freight companies based in Ireland have invested in compressed natural gas (CNG) trucks. While this is a clean-burning efficient fuel, it is not without its drawbacks, meaning companies must engage in a “leap of faith”.
“Just as ‘range anxiety’ exists with electric vehicles, so too does the same apply with CNG vehicles,” he says. “We as a country do not have a sufficient gas infrastructure to maintain a large fleet of CNG trucks. The current operators of CNG trucks in Ireland that I know, use them on very specific routes only and the trucks are also more expensive to purchase.”
Curran also points out that biogas is becoming increasingly popular, and BWG, which owns and operates the Spar, Eurospar, Londis, Mace and XL brands in Ireland, has made a significant investment in this technology. "The first two biogas trucks operated by BWG will return an annual saving of 200 tons of carbon emissions annually," he says.
O’Kennedy highlights the efforts of local delivery services, which he says are engaged in “a significant push towards decarbonisation of the parcel delivery network”.
"Post-Covid with many more of us shopping online, services offered by the local parcel companies in cities have already become significantly electrified with companies such as An Post and DPD offering electric courier deliveries. An Post in particular as a semi-State organisation deserves great credit for its decarbonisation strategy, and we've also seen some interesting developments from the CIE group of companies towards decarbonisation," he says.
Carbon taxes may be a relatively recent introduction but they aren’t going anywhere soon, says Curran.
“They are here to stay and will constantly increase. With no intervention the ramifications of this are simple: goods and people will become more expensive to move. There is currently no incentive for a company to move away from an older, more pollution diesel to a newer, more efficient diesel. Were financial incentives to be considered by Government for hauliers to upgrade to the newest technology, I believe that the haulage sector would engage significantly.”
Yet despite the growing acknowledgment and acceptance of the need to decarbonise supply chains, there is no one silver bullet for the sector. O’Kennedy believes solutions are likely to include a mix of initiatives.
“We will see a continued focus on fuel efficiency, driver training, increased use of technology to measure and provide insight into efficiency and continued investment by businesses and the Government in lower carbon infrastructure as the most immediate of actions to take on our decarbonisation journey.”