Politicians, society and investors are demanding that companies contribute to sustainable business. The Green Supply Chain (GSC) plays a key role in this. It is the basis for the transformation to an emission-free and socially just economy. Decision-makers in companies are called upon to take ecological and social criteria into account. It is important not just to give in to pressure, but to commit to the green philosophy. Today, sustainability is no longer a nice-to-have, but a must-have.
What is a supply chain?
A supply chain comprises all activities for value creation. The proportions and weightings differ depending on the industry. The value chain has a considerable influence on economic success. The relationships between suppliers, producers, customers and recyclers play a major role. Many companies today are globally oriented. Therefore, the management of production and logistics processes is a major challenge. The supply chain in detail:
- Resource cultivation
- Raw materials procurement
- Product design
- Production process
- Packing
- Storage (raw materials, products)
- Transportation
- Returns
- Customer Service (After Sales Service)
- Recycling
Green Supply Chain: The path to greater sustainability
In the supply chain, the focus is on economic goals. The GSC, on the other hand, expands the goals to include ecological aspects, with the involvement of all stakeholders. The aim is to reduce CO2 emissions and thus the ecological footprint. At the same time, the company should remain competitive, with increasing revenues. Before companies can reduce their CO2 emissions, they have to determine them. To do this, the most intensive section of the supply chain in terms of emissions must be considered above all: logistics.
Determine CO2 emissions in the supply chain
In Europe, pretty much everything is regulated by DIN standards. For example, the European standard DIN EN 16258 specifies how energy consumption and CO2 emissions are to be determined. The DIN standard distinguishes between two methods for transport services. Well-to-Tank (source to tank) records indirect emissions through fuel consumption. Tank-to-wheel (tank to steering wheel), on the other hand, takes direct emissions from vehicle operation into account. This is exactly where you can start to satisfy the trend towards sustainable shipping.
Transparency of your greenhouse gas emissions is a step in the right direction. If only to prevent greenwashing accusations. TÜV Süd, for example, offers certification according to DIN EN 16258. It checks both the calculation methodology and the transport emissions. This makes it transparent what your CO2 balance actually is.
At the same time, the certification shows optimization potential. You discover where you can save energy and raw materials. Do good and talk about it. This is also the case here. You communicate your commitment to the environment to the outside world.
Development of a sustainable strategy
The goal of every company must be to reduce CO2 emissions. Already in their article "Sustainability in Supply Chains" McKinsey & Company saw starting points in the supply chains of companies. They were responsible for 90% of the environmental impact and 80% of the GHG emissions. A holistic strategy for a future-proof, green supply chain is therefore essential. The GSC integrates environmental aspects in all dimensions.
But it is not only environmental protection that speaks in favor of a green supply chain. Financial aspects should not be ignored. After all, rating agencies and analysts also evaluate companies in terms of their sustainable maturity. Let's take a closer look at the most important factors that affect green maturity. Answer the following questions. You will then know whether your business is ready for the green challenges:
- Do you already have a CO2 balance sheet that complies with the DIN standard EN 16258?
- Have you audited your core processes for their environmental impact?
- Does your company have a clear green supply chain strategy?
- Can you transparently demonstrate goal achievement?
- Do you offer your customers climate-neutral products or logistics services?
Green supply chain: strategic fields of action
The path to a green supply chain leads through various fields of action. Within the company, research, development and production must be put to the test. Environmentally friendly manufacturing focuses predominantly on regenerative resources and new manufacturing technologies. A decisive factor here is energy consumption. By reducing consumption, you cut costs and protect the environment.
Across the company, resource procurement and logistics in particular are decisive fields of action. Sustainable procurement is the basis of the green supply chain. This can be recycled materials to avoid waste or ecologically grown and harvested raw materials. Recycling also plays a major role. A closed, green supply chain requires materials to be returned to the cycle.
Important aspects in logistical processes are packaging, warehousing and transport. Sustainable packaging materials avoid waste, are biodegradable or remain in the cycle. For example, interchangeable containers are ideal to avoid empty transports. Green warehousing focuses on efficient operations. This includes low energy consumption, in-house or outsourcing. Large warehouses are often designed as distribution centers. They are strategically located and ensure efficient warehousing.
Environmentally friendly transport depends on the place of delivery and the demands of the consumer. Companies that operate globally cannot do without air freight. The aim here is to bundle shipments and avoid intermediate storage. This is the only way for companies to save costs and reduce their impact on the environment. Alternatively, you can shift long-distance transport to rail or inland waterways.
The best way to manage your own fleet is with customized logistics software. It simplifies route planning and helps to use the cargo space more efficiently. Alternative technologies such as e-drives reduce CO2 emissions. Stricter climate protection measures in major cities are forcing the use of more environmentally friendly alternatives. This is where sustainable transport service providers like Liefergrün come in handy for the last mile. Because we deliver packages with electric cars or cargo bikes.
Green supply chains: advantages
The path to a green supply chain is challenging. Nevertheless, the efforts are worthwhile. There are lucrative results to be had, as the Boston Consulting Group (BCG) found in its study "Total Societal Impact: A New Lens for Strategy." A sustainable corporate strategy can contribute to higher profit margins and lower business risks. Investors, employees and customers appreciate sustainable efforts.
Most consumers prefer green goods and are even willing to pay a 5% premium. Thus, a green supply chain is an essential competitive factor, provided it is transparent. Through the marketing communication of your green values, you create trust and win new customers. In addition, you make an active contribution to climate protection through a consistent, green supply chain. You show your heart for a healthy environment and a future worth living.
Green supply chain: influencing factors
A GSC is forward-looking and lucrative. For the change to succeed, various influencing factors must be taken into account. If ignored, they can easily become hurdles. Therefore, deal with the essential factors for the consistent development and implementation of your GSC strategy.
Green Compliance
Management and executives must stand united behind a green supply chain. It is essential that they develop and live the holistic GSC strategy. Half-hearted implementation leads to problems in individual processes. In addition, the effectiveness of green approaches suffers. It then remains a project without commitment to green values. Ultimately, it is doomed to failure on this basis.
Know-How
The know-how of all project participants has a major influence on the development and implementation of a GSC strategy. This applies to experts who think and act green as well as to new technologies. Various tools and technologies support GSC management.
Employees must be prepared to learn and apply new things. They should be prepared to implement and optimize green values in a sustainable manner. The corporate culture supports this process of change. Otherwise, it will be difficult to anchor a green supply chain in the organization.
Costs
The costs associated with developing a GSC strategy should not be underestimated. SMEs in particular often shy away from the effort involved. Yet the necessary investments are manageable. Good planning and analysis are half the battle. This will help you determine which processes already fit the green supply chain. You will also see starting points for optimization, for example in logistics.
The goal is for GSC investments to lead to greater effectiveness and savings. For example, the costs for a green transport solution are kept within limits. In principle, spending on GSC measures is a capital investment. Competitiveness, image gains and positive sales effects outweigh the costs.
Offsetting instead of green supply chain: greenwashing or way out?
Those who shy away from the effort of switching to a green supply chain resort to offsetting. This also applies to industries that have energy-intensive production processes. This includes, for example, the production of fertilizers with CO2 as a byproduct. On the one hand, carbon dioxide is produced from CO2, which in turn benefits beverage manufacturers. On the other hand, there is the possibility of offsetting excess CO2 emissions.
Companies can buy CO2 certificates from climate protection projects such as the expansion of renewable energies. This is how it works: One certificate corresponds to one ton of greenhouse gas emissions. Depending on the CO2 emissions, your company buys the corresponding number of certificates. Through this compensation, your company can then call itself climate neutral.
The system of compensation has advantages and disadvantages. Of course, it does not encourage you to avoid GHG emissions. It soothes your conscience and motivates greenwashing. Under the guise of offsetting, your company presents itself as climate neutral. One advantage is that money flows into environmental protection projects worldwide. Many climate protection projects would not be possible without these compensation payments.
It is important to look for seals of approval such as Gold Standard when offsetting. This ensures that the projects support climate protection and at least one UN sustainability goal. For a better overview, there is a guide from the Federal Environment Agency "Voluntary CO₂ compensation through climate protection projects". You can find out more about CO2 compensation in logistics in our blog entry .
Offsets are a building block to compensate for unavoidable greenhouse gas emissions. At the same time, it is essential that companies reduce their CO2 emissions and start with a GSC strategy.
Conclusion
The green supply chain is a success factor for companies in order to hold their own on the market in the long term. It is not enough for just one process step to be sustainable. The shift to sustainable business requires a holistic, green supply chain. From raw material cultivation to production and delivery, the entire process must meet sustainable requirements.
There is great potential in last-mile transport to end consumers. An emission-free delivery in the sense of tank-to-wheel is guaranteed, for example, with delivery green. Through a consistent GSC strategy, your company supports ecological objectives. At the same time, your company improves its profitability through savings. A green supply chain is therefore environmentally friendly and lucrative.
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