CSR logistics: How DHL packages its environmental initiatives

Christof Ehrhart, executive vice president, corporate communications and responsibility at Deutsche Post DHL (DPDHL, parent company of DHL) talks to PRWeek Asia about how his company looks to gain both operational advantage and goodwill from CSR initiatives.

Christof Ehrhart, Deutsche Post DHL (DPDHL)
Christof Ehrhart, Deutsche Post DHL (DPDHL)

The transport and logistics industry generates nearly a quarter of the world’s CO2 emissions, according to the International Energy Agency. That makes fuel efficiency for freight carriers a dual challenge. Spending less on fuel has clear operational benefits, but in addition, showing the world that you take steps to care for the environment also has a consumer and investor-relations element that companies should consider.

"Findings from DPDHL’s global Green Trends Survey," Ehrhart explains, "conducted across key markets including India and China, already in 2010 confirmed that customers are ready to make logistics-related purchasing choices guided by sustainability over other factors."

He also cites an Accenture study that claims consumers in Asia are more willing than shoppers in Western countries to pay an environmentally friendly premium. That report indicates that 84 per cent of consumers in China, India, Malaysia, and Singapore would accept a higher price for green products. But in the US, Japan, France, and Germany, only 50 of survey respondents said the same.

"This strongly signifies that our customers expect DPDHL to be committed to environmental stewardship," he says. "Through our environmental protection program, GoGreen, we have embedded environmental responsibility into DPDHL’s business operations and solutions offering, creating value for customers and increasing their preference for the brand, thereby strengthening our market position."

Furthermore, DPDHL’s business customers are becoming more aware of how environmental concerns impact their own brand image. With the exponential growth of e-commerce across the world and in Asia particularly of late, emissions from delivery services are becoming a larger concern.

Decisive factor

"Business customers also believe that within the next 10 years, the green transport of their products will become a decisive factor for them when it comes to winning customers," Ehrhart says.

Acting green, not just talking green, then becomes an important factor to winning new business. "To us, corporate responsibility is the principle that guides and permeates our actions as a company, and it forms the themes and agendas of the dialogues we have with our stakeholders. Corporate communications is the strategy guiding us on how to maintain these exchanges and the relevant topics to be discussed."

But companies need to make sure their efforts are understood in order to reap PR or business benefits. Most of the changes a company can make will not be immediately visible to consumers. To help overcome that challenge, DPDHL has combined its communications and corporate responsibility units into one department. "Both functions have a common goal of fostering awareness, acceptance and trust among internal and external stakeholders."

Ehrhart also underscores the importance of credibility. It’s not enough to make claims with numbers. Companies need empathy as well as "the ability to put ourselves into the shoes of the stakeholder we are engaging with in order to make a meaningful connection".

That step is easy to overlook, but it's a necessary one in an era of customer centricity.  "At the heart of credible communication, is the notion of corporate empathy with the expectations of that person." the communications VP says. At the end of the day, we want to ensure that our actions as a company respond to the interests and expectations of our internal and external stakeholders."

His sentiment implies a close relationship between operational behavior and the face a company shows to the world. Act right and it’s easier to look right. Aside from creating a good corporate image with consumers, the tactic is also beneficial for investor relations. People who believe in the sustainability and longevity of both the company and business model may be more likely to put monetary faith in it.

"Our investors have been unequivocal about the importance of DPDHL’s Group-wide environmental protection program, GoGreen, and our sustainability-related performance,"  Ehrhart says.

The company conducted an analysis of internal and external stakeholders last year and determined that environmental issues were a key topic. It found that environmentally responsible practices, products and services could help grow business and strengthen market share. At the same time there were indications of positive impact to both business performance and overall reputation.

Real actions

So what has DPDHL done to make itself more environmentally friendly? In 2013 the company burned over 440 million litres of diesel fuel for road deliveries and used 3,394 million kWh of energy to run its buildings and facilities. But both those numbers are lower than they were in 2009.

"In 2013 we enhanced our Group-wide energy efficiency standards for newly constructed, newly leased and renovated DPDHL facilities, Ehrhart says. "The standards address areas such as design and building materials as well as the equipment we install. For example, we have defined specifications for the installation of energy-saving, eco-friendly LED and T5 lighting. To maximize energy-saving measures in lighting, we make use of intelligent control technologies, sensors and dimmers. We also initiated a campaign to promote energy-conservation awareness among our employees."

Beyond that the company mandates all new vehicles be more energy efficient than the ones being replaced (increasing its green-vehicle count by 200 over the past two years. The express business unit in Asia Pacific has invested in lower-emissions cars and trucks, including electric and battery operated ones. It also tracks how fuel efficient its subcontractors are so it can steer more business to ones that post greener results.

In Asia the carrier has also developed a Green Transformation Lab, which is a joint collaboration between DHL and the Singapore Management University. The Lab’s mandate is to accelerate the evolution of sustainable logistics. "One of its innovations," Ehrhart points out "is the Carbon Dashboard 2.0, a supply chain management tool that maps CO2 emissions to critical business parameters."

"These collective GoGreen efforts have not only brought us more than halfway towards our 2020 target of improving carbon efficiency by 30%, but also enabled us to reach another sustainability milestone – more than 60% of our global electricity demand is now generated from renewable sources. In addition, we have helped customers across the Group offset a total of 193,760 tonnes of CO2 in 2013, representing a 44% increment over 2011."

In November the company announced that the DHL Express unit had improved its carbon efficiency year-on-year in Asia Pacific for the fifth consecutive year despite double-digit in volume growth. A standout was China, which had a 17 per cent improvement in CO2 efficiency, followed the Philippines (15 per cent) and Australia (12 per cent).

To communicate all these efforts and accomplishments DPDHL follows the AA1000 SES Stakeholder Engagement Standard developed by AccountAbility, an international organization that helps corporations, non-profits and governments adopt ethical, environmental, social accountability practices.

"We have been active in championing the formation of industry platforms such as Green Freight Asia and Green Freight Europe to help lower fuel consumption and reduce CO2 in the regions—and with our subcontractors. The founding members of Green Freight Asia, for example, include both manufacturers and logistics players such as HP, IKEA, UPS, Lenovo and of course DHL."

Talk the talk

The company has also established its own platform, the Delphi Dialog 2020 discussion series. Senior management and board members hold talks with business and scientific experts along with communities and the media. The sessions involve company execs taking questions from customers, business partners, journalists, analysts, investors and political figures. "A landmark Delphi Dialog session, which took place in China," Ehrhart says "explored the impact of gridlocked megacities and global environmental problems on the logistics industry."

Such outreach programs help create a public profile of a company that has real concern for its own impact on the world. And that, Ehrhart believes, is key. "We have made environmental awareness and climate-friendly actions a central aspect in all our business decisions, policies, operations and solution offerings," he says, "and we have been able to achieve significant gains in this area."

"Our environmental performance has helped us to foster greater trust and acceptance with our stakeholders to strengthen our market position, as we work towards our core business objectives—to become the provider, employer and investment of choice."

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