Why sustainability is critical to 3PLs’ survival

Why sustainability is critical to 3PLs’ survival

Sustainability isn’t just a hot topic, it has become a critical consideration for companies across all industries to secure their future. With COP28 on the horizon and climate negotiations in full swing, the transportation, logistics and warehousing sector’s impact is likely to be under growing scrutiny, especially when an 18 wheeler truck’s carbon footprint alone amounts to a staggering 223 tons of carbon dioxide per year. As policy makers and industry experts gather to discuss the industry’s role in contributing to and fighting climate change, pressure is building for companies of all sizes to implement sustainable practices at the heart of their business.

There are numerous practical actions third party logistics (3PL) providers can take to support environmental targets, from adopting energy and emissions management software to leveraging route optimization to support last mile efficiency. What’s more, there are a multitude of small actions that can drive powerful outcomes when scaled across an organization, such as improving the lifecycle management of mobile devices to prevent unnecessary waste and choosing battery-free scanning technology to negate the need for lithium-ion batteries ending up in landfills and potentially leaking toxic chemicals. The fact is that taking baby steps across operations can result in leaps of progress in the future.

However, despite the solutions being out there, many mid-sized businesses are stalling implementations of necessary technologies for fear that investments will impact profitability or disrupt processes. But in delaying putting sustainability values into action, they are blindsiding themselves to the rewards of sustainable practices and even risking their future.

Rising demand for responsible business

It’s not just governments regulations that are fueling the need for cleaner, greener supply chains. Investors actively seek out those who can prove their ESG credentials and exclude those who endanger carbon transition plans, as do other businesses when assessing viable partners. To put this into perspective, a study by Standard Chartered revealed that 78% of multinationals will remove suppliers that threaten their carbon transition plan by 2025, and it’s estimated that approximately 35% of their current suppliers won’t make the cut as a result.

Consumers and employees alike are also adding to the imperative, with calls for companies to become more proactive and put their money where their mouths are – or risk facing irreparable reputational damage. Purchase decisions are increasingly influenced by companies that can demonstrate tangible efforts and measurable outcomes. According to The Economist Intelligence Unit, there has been a 71% rise in online searches for sustainable goods globally and a McKinsey & Co study revealed that 66% of all respondents consider sustainability when making a purchase. This figure rises to 75% for millennials.

What’s more, a growing number of employees are consciously seeking workplaces with a strong purpose and values, making sustainability key to supporting a healthy pipeline of talent for the future. It now takes more than money and benefits packages to attract and retain employees – workers engage with companies that prioritize sustainability because it offers meaning to the work they do. Again, this is increasingly true of younger generations, with Deloitte reporting that 40% of Gen Z and Millennials have changed jobs or sectors due to climate concerns.

The financial and business impact of sustainability is clear, but gearing up for a greener supply chain demands a holistic approach. Once 3PLs have clearly defined their key goals, including ambitions related to carbon neutrality, energy efficiency and reductions in scope 1, 2 and 3 emissions, they need to align solutions that will deliver real outcomes and continue to assess their effectiveness.

Investing in your future

Even when a solid roadmap of tools and tactics has been built, driving a sustainable business doesn’t stop at the organization’s internal practices and operations. When supply chains are highly complex and consist of a broad network of vendors, businesses need to think bigger and surround themselves with ethical partners to ensure they don’t fall short of investors’, customers’, and employees’ expectations and suffer from reputational damage by association.

Partners with likeminded goals and values can not only extend the business’s efforts indirectly, but they can also pass on valuable learnings based on their experiences. For example, those who have a deep commitment to ESG like Honeywell can offer insights on evolving sustainability challenges. As well as the ability to meet business goals such as performance and productivity metrics without pressing pause on day-to-day operations, Honeywell can build sustainability into the heart of 3PLs’ operations. 60% of Honeywell’s research and development investments are dedicated to solving ESG challenges and over 6,100 sustainability projects have been successfully completed since 2010, meaning that customers benefit from tried-and-tested approaches while gaining access to the latest innovations.

Ultimately, a holistic approach to sustainability is what will enable organizations to champion a greener supply chain. By making conscious changes across different processes, surrounding themselves with a strong ecosystem of partners and proactively identifying areas for improvement, 3PLs will stand the best chance of driving long-term growth. Investing in sustainability now, rather than holding off, means investing in a brighter future.