Corporate Social Responsibility (CSR) refers to business practices involving initiatives that benefit the society. It has particular relevance in today’s changing logistics sector.

The past 50 years have seen unprecedented, rapid economic expansion; however, because the world depends on oil and fossil fuels for 90% of its energy, this exponential global expansion has fueled a drastic growth in greenhouse gas (GHG) emissions. 

NASA statistics show that, while the earth’s climate has changed throughout history, the current escalating pace of global warming is the fastest in 10,000 years. Since the 19th century, the earth’s surface temperature has increased by some 2-degrees F (1-degree C), driven by increased greenhouse gas emissions and other anthropomorphic (human) activities. Global records show 2023 was the warmest year since record-keeping began in 1850:  2.12 °F (1.18 °C) above the 20th-century average of 57.0°F (13.9°C).

According to Smart Freight Centre [1], 11% of global GHG emissions can be attributed to the logistics industry.

 

Logistics’ Cause & Effect

Yet, while logistics – in particular freight transportation – are a major source of greenhouse gases, the sector is also highly vulnerable to the impacts of climate change. Increasing incidents of extreme weather hammer ports, highways, and factories worldwide, disrupting global supply chains.

Recent crises such as the COVID pandemic and extreme weather events have exposed the cracks in corporate supply chains, while emphasizing their importance in the functioning of virtually all social and economic structures.

In recent years, weather-related climate change disrupted essential economic activities around the globe:

  • Freezing weather in Texas triggered the worst involuntary energy blackout⁠ in U.S. history, forcing railroad closures and severing heavily used supply chain links between Texas and the Pacific Northwest for three days.⁠ This in turn forced the closure of three major semiconductor plants, exacerbating the global pandemic-related semiconductor shortage, further slowing the production of microchip-dependent cars. 
  • Heavy rainfall and increased snowmelt in February caused the Rhine River, Europe’s most important commercial waterway, to overflow its banks, shutting down river shipping for several days. Then, in April, a long-term drought caused Rhine levels to drop so low that cargo ships could load just half their usual capacity to avoid running aground. 
  • Flooding in central China in late July disrupted supply chains for commodities such as coal, pigs, and peanuts⁠, and forced the closure of a Nissan automobile plant. 

 

Government and Agency Responses

In the last decade, governments, international agencies, trade organizations, and businesses have increased their measures to mitigate climate change. The most notable of these was drafted at the 2015 United Nations Climate Change Conference (COP21) in Paris, France, and is commonly referred to as The Paris Agreement. 

Negotiated in 2015 by 196 parties and ratified in 2016 by 195 members of the United Nations Framework Convention on Climate Change (UNFCCC), the treaty focuses on three scopes: 

  • Scope 1 covers all direct GHG emissions owned or controlled by a company, such as fuel combustion and company vehicles,  
  • Scope 2 covers indirect GHG emissions associated with the purchase of electricity, steam, heat, or cooling. 
  • Scope 3 covers indirect emissions up and down og the company value chain, including purchase of raw materials, ransportation of goods from supplier, used of sold products. Scope 3 is usually the largest source of corporate emissions, especially for a LSP.

The Paris Agreement also seeks to keep the rise in global surface temperature to well below 2 °C (3.6 °F) above pre-industrial levels -- preferably limiting the increase to only 1.5 °C (2.7 °F). Reaching these goals would mean achieving collectively net zero carbon by 2050.

In addition, the UN’s 2030 Agenda for Sustainable Development, including 17 Sustainable Development Goals (SDGs), recognizes that ending poverty and other deprivations depend on strategies that improve health and education, reduce inequality, and spur economic growth – all while tackling climate change and working to preserve oceans and forests. The annual High-level Political Forum on Sustainable Development is the central UN platform for the follow-up and review of these SDGs.

 

Private Sector Climate Frameworks

Commitments by companies and governments to reduce environmental impact and align with increasingly structured international frameworks are intensifying. 

  • On March 6, 2024, the U.S. Securities and Exchange Commission (SEC) adopted rules to enhance and standardize climate-related disclosures by public companies. Today, 93% of the world’s 250 largest companies publish annual corporate responsibility reports[2].
  • California recently passed new legislation, SB 253 and SB 261, requiring companies above a revenue threshold to disclose emissions and climate-related risks.  
  • The recent EU Corporate Sustainability Reporting Directive (CSRD) modernises and strengthens the rules concerning the social and environmental information that companies have to report. The objective is to help investors, civil society organisations, consumers and other stakeholders to evaluate the sustainability performance of companies, as part of the European Green Deal.

 

CEVA decarbonization strategy

CEVA deploys low-carbon solutions for its global ground, sea, and air transport to reduce its GHG emissions, and indirectly those of its customers.  The company’s goal to reach net zero by 2050 is already well underway: in 2023, CEVA’s overall CO2 footprint was 6.0 Mt CO2e, marking a reduction of 200,000 tons compared to 2022.  

Our sustainability approach rests on three key areas. 

1) Making energy efficiency and decarbonization improvements in our nearly 1,000 global warehouses.

  • CEVA will use 100% low-carbon electricity to power its global warehouses by 2025.
  • All CEVA warehouses will be equipped with LED lighting by the end of 2024. 
  • By the end of 2025, the company expects to have approximately 1.8 million square meters of solar panels installed at its facilities.

2) Investing in electric and low emission vehicles for our CEVA fleet of trucks and vans.

  • CEVA will reach 1,450 EVs in our Ground logistics operations by 2025.
  • That size of EV fleet is estimated to reduce annual carbon emissions by estimated 67,000 tons of CO2.

3) Engineer more sustainable solutions for the transport we purchase from carriers for our customers.

  • As transport solutions purchased from its partners account for some 95% of its emissions, CEVA uses its global reach and long-standing relationships with carriers to encourage and support alternative fuels in road, ocean and air freight.
  • We work with customers to explore more decarbonization levers and find ‘Better Ways’ to transport their products, while maintaining a high level in our quality of service. 
    • Flows and loading optimization 
    • Routes optimization 
    • Modal shift and multimodal 
    • Carriers selection including CO2 performance 
    • Low-carbon fuels 

 

The Business Case for CSR

In recent years, increased consumer awareness of issues such as climate change, income inequality, unfair labor practices, and gender inequity has been a factor in businesses’ embracing CSR practices. Today, 64% of CEOs say that CSR is a core part of their business. 

In addition, 88% of business school students think that learning about social and environmental issues in business is a priority . Harvard Business School’s sustainable business practices courses points out some of the bottom-line benefits deriving from CSR policies:

  • Increased innovation -- reviewing practices can uncover opportunities while also increasing efficiencies.
  • Reduced risk -- using renewable energy sources means greater energy security.
  • Reduced production costs – examining the corporate supply chain can identify money-saving more sustainable alternatives.
  • Retaining and attracting new employees and customers -- Companies with high levels of CSR report 13% more engaged employees than companies with low levels of CSR; 92% of consumers say they are more likely to trust a company that supports social or environmental issues[2].

Social responsibility is now more than a duty; it is a means of securing a competitive advantage, provide flexibility, reduce employee turnover, and increase sales and profit. Climate change is a long-term challenge, and progress depends upon a company’s ability to innovate and collaborate, with accountability and on-going measurement. 


FOOTNOTES:
[1] Global non-profit organization for climate action in the freight sector, of which CEVA Logistics is a member.
[2] Statistics compiled by Wifi talents, April 2024