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Q&A: How can companies reduce their CO2 emissions in supply chains?

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The consumer world is changing: Customers are paying more and more attention to the question of whether goods are produced according to ecological standards and whether a sustainability strategy is anchored in the respective company’s philosophy. Enterprises have likewise recognized the relevance and competitive advantages of a sustainable supply chain in the long term. One important factor in this context is the reduction of harmful emissions. But how can companies implement their sustainability plans in practice and reduce CO2 emissions? Our sustainability expert Anna Schuldt, Business Analyst at Hermes International, a business unit of Hermes Germany, discusses this question.

Green supply chain management as a success factor

The ecological footprint in the production of goods is increasingly becoming an indicator of responsible corporate management. In addition, official regulations such as the increasing CO2 taxation and the German Supply Chain Act, which comes into force in January 2023, call for proactive measures.

According to the 15th Hermes Barometer on Green Supply Chain Management, companies are becoming increasingly willing to make their supply chain processes more sustainable against this backdrop. Around half of the 200 logistics decision-makers surveyed for the Hermes Barometer (56 percent) said they had set themselves ambitious targets for reducing CO₂ emissions in the future. Alas, what can companies do to minimize CO2 emissions along their supply chain? At what point should responsible parties start? Anna Schuldt, business analyst and sustainability expert at Hermes International, has the answer:

There will be no short-term solutions

The current situation in the world suggests that the topic of ecological and economic sustainability is more pressing than ever before. It is not only a matter of reducing CO2 emissions, but also of ensuring the economic survival of one’s own company. At the same time, we cannot fight the problem with the same means that caused the situation in the first place. Anyone who is serious about sustainable strategies will soon realize that there is no quick and inexpensive solution. While short-term measures such as transport optimization, compensation and modernization are important, it is above all the long-term view that must be aimed at.

green supply chain management expert Anna Schuldt

Anna Schuldt, Business Analyst and Sustainability Expert at Hermes International, a business unit of Hermes Germany

The first step: Analyzing your own CO2 emissions

Companies should start with an analysis of the current situation: What quantities of CO2 are being produced at which stages within the supply chain? The more concrete data there is, the better. Companies can seek support in this process: Hermes International, for example, accompanies its customers with the evaluation of existing data and helps to identify areas with potential for a sustainable design as well as an individual strategy for the reduction of CO2 emissions. A large proportion of CO2 emissions are caused on the long haul of the transport route. However, there is often a lack of transparency in this area – customers feel that they have little influence. A precise analysis and evaluation of the transport data helps to initiate effective changes. A change in transport modes, better container utilization, lower-emission transport carriers or a change in warehousing strategy can lead to CO2 savings. Issues such as near-sourcing are also coming to the fore again. Further, relocating procurement and production to geographically closer regions shortens transport distances and thus reduces CO2 emissions.

Long-term strategies: Rethinking is essential

The second aspect is the necessary change that must be initiated in the long term: Those who want to hold their own in the market should be aware that we need a rethink. Sensible strategies for conserving resources include producing long-lasting basics, switching to slow fashion, targeted re- and upcycling, and refurbishing goods that are still usable. Also in view of the current supply chain disruptions, companies are realizing that just-in-time production purely oriented toward cost efficiency no longer makes sense and is not viable for the future. It is no longer a matter of choosing the region with the lowest manufacturing costs as a matter of course, but of finding a sensible balance between economic considerations, production reliability and sustainability goals. Those responsible should therefore take a very close look at what, how and where they produce in the future. Less consumption, more awareness is the credo. Less consumption, deceleration and a shift to long-lasting products are at the core of sustainable business and effective methods for reducing CO2 emissions.

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