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EU’s Corporate Sustainability Directive: Promoting Ethical Supply Chains

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Global Logistics, Global Trade Daily, International Trade, news

EU’s Corporate Sustainability Directive: Promoting Ethical Supply Chains

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The European Union’s efforts to instill ethical and sustainable practices within supply chains have reached a significant milestone with the adoption of the Corporate Sustainability Due Diligence Directive (CS3D) by the EU Council on March 15, 2024. This directive, following years of deliberation and negotiation, mandates stringent measures for large companies to identify and address human rights abuses and environmental damage across their supply chains.

Initially met with resistance, particularly from Germany, concerns over additional burdens on businesses were addressed through revisions to the directive. Notably, adjustments were made to the thresholds for affected companies’ turnover and employee count, alongside changes in implementation timelines.

Under the CS3D, companies are obligated to integrate due diligence into their policies, assess potential adverse impacts, engage with stakeholders, and develop transition plans for climate change mitigation. Failure to comply may result in fines up to 5% of global turnover, underscoring the importance of adherence to ethical standards.

Despite challenges, many businesses, including prominent names like Aldi, Bayer, and Nestle, have thrown their support behind the directive, emphasizing its role in promoting sustainability and creating a level playing field across the EU.

While the directive aims to enhance transparency and risk management, concerns linger regarding its potential unintended consequences, such as changes in sourcing behavior and the migration of production from regions with lower ethical standards to compliant ones. However, the long-term benefits of increased visibility in the supply chain and improved resilience are anticipated to outweigh short-term challenges.

Overall, the CS3D represents a significant step towards fostering ethical supply chains, aligning with the EU’s commitment to sustainability and responsible business practices.

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Enhanced CSX Carbon Calculator Helps Shippers Achieve Sustainability Goals

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CSX  today announced the launch of an enhanced carbon emissions reduction calculator that will help companies achieve their supply chain sustainability objectives by converting from truck to rail.

The enhanced tool offers freight shippers increased insight into the environmental benefits of rail through analysis of customer-specific data to calculate potential greenhouse gas emissions saved by choosing rail over trucks.

The new version of the Carbon Calculator is available to customers who use the ShipCSX online platform. The tool enables carload freight shippers to generate carbon savings analyses based on their historical shipment data; to view year-to-date totals and year-to-year trends; and to apply variables that provide additional insight for weighing carbon emission impacts when making supply chain decisions.

The Carbon Calculator draws on government and third-party studies of greenhouse gas emission factors of different transportation modes to calculate how much emissions are reduced when shipping by rail versus truck. The calculator incorporates freight type, distance and volume into its methodology.

Future versions of the Carbon Calculator will include the ability to calculate emissions savings on intermodal container shipments as well as advanced features that help companies evaluate supply-chain decisions that can further reduce their carbon footprint.

To use the enhanced calculator, customers must register at ShipCSX.com.

About CSX

CSX, based in Jacksonville, Florida, is a premier transportation company. It provides rail, intermodal and rail-to-truck transload services and solutions to customers across a broad array of markets, including energy, industrial, construction, agricultural, and consumer products. For nearly 200 years, CSX has played a critical role in the nation’s economic expansion and industrial development. Its network connects every major metropolitan area in the eastern United States, where nearly two-thirds of the nation’s population resides. It also links more than 240 short-line railroads and more than 70 ocean, river and lake ports with major population centers and farming towns alike.

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10 Technologies That Promise a More Sustainable Supply Chain

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Supply chains can often account for more than 90% of a company’s carbon footprint. Finding ways to reduce the carbon cost of moving goods and raw materials could help significantly cut down on the emissions businesses across the economy produce.

The growing demand for sustainable business practices has business leaders looking for ways to shrink company carbon footprints and environmental impacts.

Many new technologies from inside and outside the industry could soon transform the supply chain and help make it far more sustainable.

1. Biodegradable Packaging

Many packaging materials are not environmentally friendly. Plastics — often in materials like styrofoam — are common and can take thousands of years to break down. When they do, they can escape into the environment in the form of microplastics. These are microscopic plastic fragments that can cause a range of health problems in both wildlife and humans.

New sustainable packaging options made from materials like prawn shell chitin, agricultural waste, and beech tree pulp, provide the support that packages need and break down in normal environmental conditions, unlike plastic. The use of these materials can help reduce the long-term environmental impact that non-biodegradable packaging can have.

2. Electric Cars

Electric vehicles have the potential to transform logistics vehicle fleets and last-mile delivery. Already, these vehicles can help businesses sustainably handle last-mile delivery.

As EV infrastructure expands over the next few years, they’re likely to become even more practical, including for companies in rural areas, where EV infrastructure has traditionally been less robust.

3. E-Bikes

Decarbonizing last-mile delivery can be challenging. Electric vehicle fleets aren’t always practical, and the high cost of adopting all-new electric vehicles can be steep.

In dense cities, bike couriers can help reduce the carbon cost of last-mile delivery. E-bikes can significantly extend the range couriers can cover without generating carbon, while also speeding up deliveries completed by bike.

Because these bikes can be charged for as little as $0.50 in major cities, they can provide a valuable and cheap alternative to cars, mopeds, and similar transport options. If necessary, companies can retrofit e-bike batteries and motors onto existing company bikes, reducing the cost of adoption, as well.

While not a total replacement for fleet vehicles, e-bikes are a potential low-carbon delivery solution for logistics professionals in population-dense areas.

4. Hydrogen Aviation and Ship Fuel Cells

While battery technology is improving fast, it’s not practical in every case. Airplanes and cargo ships, for example, can’t support the size and weight of a battery needed to power the craft from port to port or airstrip to airstrip. Maritime and air shipping experts are trying to find a more sustainable fuel instead.

Pure hydrogen fuel produces no emissions when burned. Manufacturers can create it using a carbon-free production method, reversible electrolysis, that requires just electricity and water. Other viable methods include a solar production strategy that draws power from the sun and also produces no carbon emissions.

As these methods come into widespread use, it could become possible for logistics providers to stop using high-emissions fuels like aviation fuel and heavy fuel oil.

5. Electric and Hydrogen Semi-Trailer Trucks

Soon, semi-trucks powered by batteries and special hydrogen fuel cells may also help reshape how goods are moved worldwide.

Cutting-edge electric trucks have a range comparable to semi-trucks with conventional internal combustion engines, meaning the limited range of some EVs, which has slowed adoption in the past, may not always be a problem.

As electric vehicle infrastructure expands, it may quickly become practical for shippers to switch from conventional trucks to electric ones. This could significantly reduce one of the supply chain’s most significant sources of carbon emissions.

Hydrogen-fuel trucks offer similar benefits. Several hydrogen fuel stations for hydrogen trucks are already in the works in America and could soon provide the infrastructure needed to make hydrogen semi-trailers practical.

6. Demand Forecasting Algorithms

The pattern-finding abilities of AI make it an excellent tool for solving complex problems when vast amounts of data are available. With AI trained on sales data, for example, companies can create more accurate demand forecasts and build a better picture of what customers will want and when.

During times of market instability when future demand is particularly challenging to predict, these tools can help reduce supply-side waste and overproduction.

7. Driver Behavior Analysis

Modern telematics solutions can offer data that helps logistics companies significantly reduce the carbon impact of their fleet vehicles. For example, idling can have severe environmental impacts.

Devices monitoring driver behavior can detect whether a driver has left their vehicle idling and for how long. This system can reduce idling incidents, keep companies compliant with local anti-idling ordinances, and reduce the carbon impact of their fleet vehicles.

8. Route Optimization Algorithms

Other sustainable use-cases for telematics include route optimization tools that use live traffic data and can interface with business scheduling systems.

These tools optimize driver routes, ensuring vehicles are spending as little time as possible on the road. This technology can help reduce unnecessary driving, optimize scheduling, and cut down on company carbon emissions.

9. Blockchain

Blockchain, the digital ledger technology that powers cryptocurrencies, can significantly improve supply chain visibility and transparency.

The technology, which provides a reliable and difficult-to-manipulate digital record-generating tool, gives businesses the means they need to improve supply chain transparency and guarantee ethical sourcing practices.

With the secure, trustworthy transaction records stored on the blockchain, businesses have a better chance of knowing how goods supplied by third parties were sourced — and if sourcing was done sustainably or in a way that complements other shipping practices.

10. Exhaust Scrubbers

New technology also makes it easier to retrofit existing shipping equipment to reduce carbon emissions.

Exhaust scrubbers, for example, are becoming increasingly popular among cargo shippers. These scrubbers are used on cargo ships to reduce the sulfur emissions produced by heavy fuel oils and similar fuels. According to an estimate by Bloomberg NEF, 4,800 vessels could be equipped with these scrubbers by 2025.

How New Technology May Enable Supply Chain Sustainability

Because supply chains account for such a large share of business carbon emissions, logistics providers will play an essential role in the ongoing pivot to more sustainable business practices.

Advanced technology will likely be critical for supply chain managers wishing to make their operations more sustainable. Electric vehicles, e-bikes, hydrogen fuel, and bio-derived packaging could soon enable managers to reduce the environmental impact and carbon emissions of shipping.

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How to Lead When the Industry is Volatile

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In 2011, Prince William was marrying Kate, investors’ eyes were on Greek Prime Minister George Papandreou, and global trade experts were predicting a volatile 2012.

A decade later, Prince Harry just welcomed his first child with Meghan, Greece is still in the EU, and global trade experts are predicting a volatile 2022. 

As the saying goes, don’t wait for the storm to pass — just learn to dance in the rain. For the global trade industry, this translates into: get used to the volatility.

To build a truly sustainable supply chain in an era where the only stable prediction is instability, company leadership must embrace flexibility. Creating an agile organizational structure that’s ready to adapt at the drop of a hat (or the obstruction of a barge) ought to be considered a critical task for any workforce in the industry. Because — and this is the last quote I’ll reference, I promise — as General Electric’s Chief Innovation Officer Sue Siegel said in a 2018 keynote address, “The pace of change will never be as slow as it is today.”

The experts, however, got the cause of the volatility wrong back in 2011 — they thought it would be inflation. Who would have predicted the COVID-19 pandemic, or the Suez Canal disaster? 

Company leaders who pay attention to the growing data on worker productivity and how they rate their satisfaction on their work/life balance will continue to embrace work-from-home culture (now referred to as WFH by those in the know), instead of dismissing it as a temporarily allowable measure during the pandemic.

Within my own company, until last year we enforced a strict policy of keeping computers at the office — we’d decided the risk of damage during transit and at home was just too great. The pandemic forced us to reverse that policy in an instant, on a Thursday in March, without time to prepare. But we haven’t had to replace any equipment yet; it turns out adults can be trusted to take care of their valuables — and to roll with the punches. When I reflect on the resiliency our employees have demonstrated over the past year, I’m amazed.

In fact, I think the first subheading in the economy section of the 2020 history books will be “WFH.” Employees appreciate the flexibility, and those who benefit from mental and physical health-related workplace accommodations are thriving under the ability to create their own schedule and work environment. 

Meanwhile, COOs are shaking their heads wondering why we’ve been paying for all this office real estate over the years.

Leadership coaches have long preached that innovation is prevented when you’re comfortable with structure, and 2020 forced every member of the team to learn this lesson head-on.

Another takeaway for company leadership that the talking heads have been leaving out of their morning segments is that providing total visibility to clients and customers is the first way to ensure viability during a disaster. Yes, you may get an earful at the time when delivering bad news — but they’ll appreciate it in the long run (and trust you more for it) because a sugar-coated status report doesn’t allow managers to make the best decisions possible for their projects. 

Time for one more?

Those whose leadership style leans toward positivity were more likely to see their staff weather the 2020 storm. In a crisis, employees want to grab onto hope — it’s your duty to serve as their cheerleader. At the same time, make sure you have an outlet to vent that frustration away from work, lest you compress yourself into a powder keg that creates an entirely different problem down the line. 

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Richard J. Bolte, Jr. was born in Philadelphia in 1957 and joined BDP International in 1973. Throughout his 47-year career with the company, he has held positions covering a broad range of the firm’s operations in global logistics and transportation. His formative experience at BDP centered on ocean exports and supply chain management, with particular emphasis on company operations. Rich was Vice President of the company’s Northeast Region before taking the position of Chief Operating Officer. In 1996 he was named President of BDP International.
 

In 2006, Rich Bolte was named BDP’s Chief Executive Officer; and subsequently, in 2013 the Board of Directors appointed Rich as BDP’s Chairman & CEO. He now serves as the organization’s Chairman to the Board. Rich championed BDP’s global expansion, and the company now employs nearly 5,000 employees in 135 offices throughout nearly 40 countries. He can be reached at rich.bolte@bdpint.com.

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THINK GREEN: 5 WAYS TO IMPROVE YOUR SUPPLY CHAIN SUSTAINABILITY

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Concern over climate change is increasingly mainstream. In fact, the concern has gone from being hypothetical to being real: 59 percent of consumers say climate change is impacting their local communities, and 31 percent say it affects them personally. Likewise, sustainability is becoming less of a nice-to-have and more of a need-to-have for businesses—and their supply chains.

What is supply-chain sustainability?

As an evolving concept, sustainability is hard to pin down. Broadly speaking, sustainability refers to a framework for decision-making that considers the economic, social and environmental consequences of the decisions in question.

Sustainability provides the context, or guidelines, to make decisions about resource use with a focus on long-term viability rather than just immediate risks, benefits and costs.

Why does supply-chain sustainability matter?

As a concept, “sustainability” has been popping up more often: in ads, product branding and social media. It can be tempting to place sustainability in the buzzword box. But, according to data from GetApp, with 76 percent of Americans shopping for eco-friendly products at least some of the time, it’s not a term businesses should shrug off so readily.

Your customers are beginning to expect transparency around your business’ practices, and supply chains are ripe with opportunity. Every stage of the supply chain—from production to distribution—can be evaluated on the sustainability of its practices.

In addition to taking environmental measures such as examining emissions levels and resource efficiency, businesses can evaluate the ethics of their labor practices and fairness of their economic practices. A GetApp survey found that respondents also think sustainable companies should donate to a social cause (28 percent), follow ethical practices (53 percent) and not test on animals (32 percent).

Make your supply chain more sustainable with these 5 steps

1. Understand the risks and opportunities in your supply chains

Because of the complexity inherent to many supply chains, businesses often don’t have a full understanding of its sustainability impacts. A good first step in closing that gap is mapping your supply chain: listing suppliers, identifying social and environmental risks associated with each one and prioritizing related efforts.

One way to prioritize suppliers is to consider spending, volume of business and geography. Top suppliers can then provide sustainability metrics to further classify them based on environmental performance. This information can later be built into the design and procurement of future projects.

You don’t have to take everything on at once, but focus on the areas that will have the most impact within as short of a time frame as possible. Your suppliers are different: Assess them differently.

2. Set sustainability targets within the procurement process

To evaluate your suppliers and build sustainability into your business’ procurement processes and operations, set sustainability targets. Targets will help you track supplier performance and incorporate these new standards into future contracts.

Communicate these goals to your teams, customers and suppliers to make them a part of the conversation. It’s not only important to make sure all stakeholders understand the importance of sustainability and the goals your business has set; it also matters that they are able to take ownership of these initiatives.

Hyatt Hotels established sustainability goals under their 2020 Vision plan, with the objective of reducing GHG emissions and water and energy usage. In just two years, Hyatt reduced water usage by 18% percent, GHG emissions by 19 percent and energy consumption by 10 percent in the United States.

3. Set a baseline supplier performance

Once you’ve mapped your suppliers and set targets, collecting data from your suppliers will help your business understand where they stand.

One way to do this is to administer a baseline questionnaire or survey that suppliers can use to self-assess their performance on various key areas.

Some businesses have chosen to model their surveys after GRI guidelines and CDP questionnaires. A few industries, including the pharmaceutical industry, have also gone as far as to implement a standard survey so that suppliers don’t have to fill out a different survey for each client.

These surveys can be used to check supplier performance on energy and water usage, waste generation and disposal, and greenhouse gas emissions, among other things.

4. Leverage data to make informed decisions

You’ve mapped your supply chain, set goals and measured supplier performance—congratulations! Just one more thing to consider: Taking these steps probably means you’ll have lots of data on your hands. Managing this data isn’t easy, but it’s essential to making informed decisions.

Making use of your business’ supply chain data can help you spot inefficiencies, automate decision-making and improve customer experience. The more accurate your data, the more efficient you’ll become and the clearer your picture of your business and suppliers will be.

5. Use software to analyze data and automate processes

The key to wrangling your data and squeezing the most value from it may be to use a reliable supply chain management software solution. Not only will the right system gather the data you need, it will also analyze it, derive insights and automate processes.

Not sure where to start? Look for solutions that include at least a few of the following features:

Supplier relationship management: Enables users to plan and manage interactions with suppliers. This centralizes communication, ensuring a consistent message and improving collaboration between several teams. SCM software that has this feature may also help with step No. 3 (setting baseline performance) by gathering relevant survey data and tracking responses.

Asset management: Tracking assets and delivering maintenance in a timely manner will help you ensure your business’ operations run smoothly but also keep you ahead of their depreciation curve and running on minimal energy.

Shipment tracking: Tracking shipments will keep you in the know but can also allow you to benchmark carrier performance. Timeliness encourages resource efficiency, but the logistics side of your supply chain has more potential: Think route optimization and fuel efficiency, among others

Reporting and analytics: This feature is essential to leverage your data. A solution that processes data, identifies trends and triggers alerts will reduce manual processes and improve information accuracy.

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Victoria Wilson is a specialist analyst with GetApp, an online resource for software buyers to compare products side-by-side with free interactive tools, detailed product data and user reviews. Founded in 2010, the Barcelona, Spain-based Gartner company also serves as an online lead generation channel for SaaS.