Reducing Supply Chain Carbon Intensity

Logistic activities contribute annually 5% of the 50,000 mega-tonnes of carbon dioxide emissions generated by all human activity.

The World Economic Forum's Logistics & Transport Community, with the support of Accenture, has quantified and ranked opportunities to reduce supply chain carbon intensity. The report, "Supply Chain Decarbonization" examines the role the logistics and transport sector plays in reducing emissions in its own operations and by influencing shippers and buyers to undertake broader supply chain improvements.

According to the report, logistic activities contribute annually approximately 5% of the 50,000 mega-tonnes of carbon dioxide emissions generated by all human activity.

The report highlights five feasible opportunities with the greatest carbon dioxide abatement potential:

  1. Clean vehicle technologies (175 mega-tons CO2 abatement potential)
  2. Enabling low-carbon sourcing (150-320 mega-tons)
  3. De-speeding the supply chain (171 mega-tons)
  4. Packaging design initiatives (132 mega-tons)
  5. Optimized networks (124 mega-tons)

Opportunities that originate within the logistics and transport sector represent 60% of the 1,440 mega-tons CO2 abatement potential presented by the major opportunities. "The report clearly shows that there is substantial carbon abatement potential in the supply chain," said Winfried Haeser, Vice-President, Environmental Strategy and Policy at Deutsche Post World Net, "This has to be leveraged by different actors. The L&T industry can do a lot in their own business, but can achieve even more in partnership with their customers."

The report also provides a number of specific recommendations for logistics and transport providers as well as customers and policy-makers to decarbonize the extended supply chain.

Recommendations for Logistics and Transport Providers

  • Adopt new technologies industry-wide
  • Improve training and communication industry-wide
  • Switch modes where possible
  • Develop recycling offerings
  • Develop home delivery offerings
  • Promote carbon offsetting of shipments

Recommendations for Shippers and Buyers

  • Understand and reduce carbon impact of manufacturing through alternative sourcing
  • Plan to allow slower and better optimized transport
  • Reduce packaging materials
  • Work on product carbon labelling, standards, auditing tools and use
  • Increase shared loading

Recommendations for Policy-makers

  • Reflect cost of carbon in energy tariffs
  • Support carbon measurement and labelling standards
  • Build open carbon trading systems
  • Invest in infrastructure and flow management
  • Facilitate recycling along the supply chain
  • Encourage environmental refitting of buildings

"This report makes clear the need to look strategically at the end-to-end supply chain to include all aspects of the product life cycle, from raw materials to product disposal, when approaching the supply chain decarbonization challenge," said Narendra Mulani, managing director of Accenture's Supply Chain Management practice. "Clearly, the logistics and transport sector can contribute a great deal to the reduction of carbon emissions and obtain strategic business benefit from doing so. However, the greatest strides will be achieved by collaborative end-to-end supply chain optimization that includes shippers and buyers."

To view the report in .pdf format visit http://www.weforum.org/pdf/ip/SupplyChainDecarbonization.pdf

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