New report: top ways to decarbonize global supply chains

Mark Adams, Managing Director, Head of Communications, Tel.: +41 (0)22 869 1212; mark.adams@weforum.org

• Global supply chain redesign will occur over coming years to reduce carbon use significantly according to a new World Economic Forum report
• Logistics & transport industry must drive dialogue with customers and policy-makers to ensure efficient transformation.
• 13 major decarbonization opportunities quantified and ranked – specific recommendations given
• To read the full report click here and for more on the Logistics & Transport group click here

Geneva, Switzerland, 12 February 2009 – In the first research effort of its kind, the World Economic Forum’s Logistics & Transport Community, with the support of Accenture, has quantified and ranked opportunities to reduce supply chain carbon intensity in a report released today.

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 reviews commercially viable opportunities to reduce supply chain carbon emissions  within the logistics and transport sector as well as across the extended supply chain  and, for the first time, assesses them according to carbon dioxide abatement potential and feasibility to implement. According to the report, the five feasible opportunities with the greatest carbon dioxide abatement potential are:

• Clean vehicle technologies (175 mega-tonnes CO2 abatement potential)
• Enabling low-carbon sourcing (150-320 mega-tonnes)
• De-speeding the supply chain (171 mega-tonnes)
• Packaging design initiatives (132 mega-tonnes)
• Optimized networks (124 mega-tonnes)

Opportunities that originate within the logistics and transport sector represent 60% of the 1,440 mega-tonnes CO2 abatement potential presented by the major opportunities. While the remaining opportunities address emissions generated by shippers and buyers within their own operations, the report concludes that organizations in the logistics and transport sector are in a position to influence shippers and buyers to collaborate across the extended supply chain in an effort to achieve the greatest decarbonization impact.

"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.

“By sizing decarbonization opportunities and focusing on commercial needs, the report helps the move from anecdote to action,” commented Sean Doherty, Head of Logistics & Transport Industry at the World Economic Forum.

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, who served as project advisor. “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.”

About the Report
The World Economic Forum’s Supply Chain Decarbonization is a comprehensive review of the scale of the logistics and transport sector’s carbon footprint, and the principal opportunities for reduction of emissions. Researched and co-written with Accenture, the report assesses the legal and commercial drivers for supply chain decarbonization. It establishes a framework for meaningful cuts in emissions across end-to-end supply chains and, through simple scorecards, analyses the relative importance of the main opportunities for change.

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About the World Economic Forum
The World Economic Forum is an independent international organization committed to improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agendas.

Incorporated as a foundation in 1971, and based in Geneva, Switzerland, the World Economic Forum is impartial and not-for-profit; it is tied to no political, partisan or national interests (http://www.weforum.org).