ESG Reporting in Logistics

In recent years, Environmental, Social, and Governance (ESG) issues have gained increasing importance in the business world. The European Union has introduced regulations that require companies to prepare reports on these aspects. This article will explore what ESG reporting is, the challenges it presents, and the benefits it can bring to businesses.

In 2022, the European Commission published a directive mandating the disclosure of non-financial information related to sustainability by companies. The European Sustainability Reporting Standards (ESRS) will come into effect in 2024, initially targeting the largest companies. While this requirement may be viewed as an additional cost and challenge, ESG reports can offer numerous benefits to companies, including improved reputation, increased attractiveness to investors, and enhanced risk management.

What is ESG Reporting?

ESG reporting is the process of disclosing information about a company’s actions and performance in three key areas: Environmental (E), Social (S), and Governance (G). It is a tool that allows stakeholders to assess how a company manages risks and opportunities associated with these three domains. This report does not focus on financial performance but rather on the company’s approach to sustainable development.

The report should include information on how the company addresses climate risk, outlining its strategy, describing both threats and potential benefits. Additionally, it is necessary to set goals and methods for monitoring progress. All reports must be prepared in a digital format following a standardized template, allowing for easy comparison and data collection.

One of the critical elements that companies in the logistics and transportation sectors will need to include in their ESG reports is the calculation of carbon dioxide emissions generated across their entire supply chain. They will also need to present the actions taken to reduce their environmental impact and achieve climate neutrality.

Key Areas of ESG Reporting:

Environmental

• Climate Change: Greenhouse gas (GHG) emissions, emission reduction strategies.
• Resource Management: Energy efficiency, water consumption, waste management.
• Nature Conservation: Biodiversity, impact on natural environments.

Social

• Labor Rights: Working conditions, wages, health, and safety.
• Diversity and Inclusion: Hiring from diverse backgrounds, promoting gender equality.
• Local Communities: Impact on local communities, social engagement, charitable activities.

Governance

• Board Structure: Board composition, independence of members, competencies.
• Business Ethics: Anti-corruption policies, ethical business conduct.
• Transparency: Disclosure of financial and non-financial information, investor relations.

Objectives of ESG Reporting:

• Enhancing Transparency: Providing stakeholders (investors, customers, employees, local communities) with clear and reliable information about the company’s impact on the environment, society, and governance.
• Risk Management: Identifying and managing ESG-related risks that could affect the long-term value of the company.
• Building Trust: Improving the company’s reputation by demonstrating a commitment to sustainable development and social responsibility.
• Regulatory Compliance: Meeting legal and regulatory requirements for ESG reporting, which are becoming increasingly common in various jurisdictions.

Challenges of ESG Reporting

ESG reporting comes with several challenges. One of the main issues is the complexity of the data. Collecting and analyzing information on various environmental, social, and governance aspects requires advanced tools and is a costly and time-consuming process. The lack of unified reporting standards further complicates the situation. The diversity of existing standards and guidelines makes it difficult to compare results between companies, potentially affecting the credibility of analyses. Moreover, ESG reporting requires companies to be fully transparent, including being willing to disclose both positive and negative aspects of their operations. This, in turn, can impact a company’s reputation and requires them to communicate their actions responsibly.

Benefits of ESG Reporting

ESG reporting is becoming increasingly important in the global business environment, offering companies numerous benefits. Primarily, it helps in risk management, improving reputation, and building long-term value. Companies that consider environmental, social, and governance factors may gain better access to capital, as investors are increasingly guided by ESG criteria when making investment decisions. Furthermore, actively managing ESG issues provides companies with a competitive advantage, allowing them to stand out from the competition. Attention to the environment and society also promotes greater employee engagement, as they tend to prefer organizations with a positive social impact. Ultimately, effective ESG reporting supports sustainable development through better resource and risk management, contributing to the long-term stability and profitability of the company.

ESG Report Using New Goodloading Algorithms

Using a loading simulator can be a significant support, not only for the day-to-day work of a planner but also as a validation of actions aimed at reducing CO2 emissions.

According to a report published in 2012 by Argusi as part of the CO3 project, the average transport order has a cargo space utilization rate of 56%. An unexplored portion of this value pertains to situations where, despite the theoretical availability of free space, it was not filled due to a lack of knowledge, concerns about axle overload, or the inability to properly arrange the cargo. In test instances compared to the current Goodloading algorithm, it is estimated that space will be used 9 percentage points more efficiently. In this example, when comparing the execution of 11 loads over 100 km (i.e., using 11 cargo spaces) with the current Goodloading algorithm, the new generation algorithm would save the equivalent of 1 cargo space, saving 102 kg of CO2 released into the atmosphere. At the same time, in addition to reducing the carbon footprint, the profits of transport companies would increase.