With all 27 EU member states committed to achieving net zero emissions by 2050, you don’t have to look far to notice a particular shift happening — the world is going green. Since transportation is now one of the leading causes of CO2 emissions producing nearly a quarter of all greenhouse gas emissions (GHG) in the EU, the freight procurement industry is speedily aiming to reduce its carbon footprint.
What is green procurement and why is it so critical now?
In transport management, green procurement involves structuring, executing, and assessing logistics with environmental conservation at the forefront. Sustainability in logistics spans the entire supply chain, from the RFI, bidding, and selection processes to shipments’ packaging, waste disposal, recycling, and much more.
Governmental & business regulatory changes are making sustainability in transport mandatory. Even back in 2017, a whopping 93% of the freight industry’s energy came from fossil fuels, accounting for 25% of the EU’s GHG. So, governments are committing to lower emissions, reducing pollution, and preserving natural resources through initiatives like the "Fit for 55" plan and the sustainability reporting duty on certain companies in the EU CSRD. So, it’s worth adjusting your freight procurement processes to reflect this trend.
How to level up your sustainability efforts in freight procurement
To take "going green” from a one-time action to being at the heart of freight procurement, it's essential to adopt a proactive approach in your strategy and in your chosen procurement platform.
Your transport management solution should weave green procurement modules within your workflows by understanding the legal & organizational obligations to define sustainability goals and KPIs and incorporating them throughout the system.
Here are some tips to implement the theory into practice:
Build a carbon emissions baseline and automate KPI monitoring
Your team should have the ability within your freight procurement platform to set a minimum CO2 target and benchmark against the industries and markets you serve. Data is key to start measuring CO2 emission baseline. You should not wait to have the “perfect” database, but start measuring baseline with existing data.
To expedite this, you can adopt tools like SHIPSTA, which are connected with external data sources, to set a baseline and compare your KPIs against industry benchmarks. Once you have started measuring your sustainability data, you can utilize automated workflows to hit GHG reduction targets without increasing your team's administrative load. Opting for a freight procurement solution that tracks progress on autopilot and pushes timely alerts would be ideal in this scenario.
Visualize CO2 emissions alongside critical shipping data easily
Consider freight procurement platforms that track carbon footprint by shipment, project, and overall emissions. Once you have ensured that you are monitoring lanes, mode, cost, speed, etc., with a CO2 calculator that allows you to set sustainability related KPIs, the next step would be to enable your team to assess trends and identify hotspots so they can prioritize actions that will lower pollution. For instance, creating customized dashboards and reports in your tools to enhance visibility on sustainability KPIs while evaluating overall performance in real-time.
Continuously measure the success of your efforts and provide recommendations accordingly
Your platform should gauge the success of green procurement initiatives and track ROI to ensure you meet targets. Platforms that provide automated combinatorial analysis can aid your team in selecting the most optimal route and mode, while considering green targets. If you do not have internal resources to accurately measure and optimize your performance, you can benefit from on-hand support of freight procurement experts and DIY tools.
Having the right solution, and a support team within the solution, will help you monitor emissions in logistics holistically. For instance, there are now mix consulting, managed services, and self-service tools available to control and monitor CO2 emissions on behalf of your team.
Optimize for sustainability across your entire supply chain
Extending your efforts to the entire freight procurement process and beyond will lead to compounded achievements in green procurement- starting from the RFI process to gather the needed information about your suppliers’ capabilities and services, launching tenders or spot requests incorporating your sustainability criteria, automating the analysis and leveraging combinatorics modules to surface the best option in terms of CO2 emissions plus other requirements, and up to automating the award of business to consider your sustainability criteria.
A best practice can be to leverage a cross-platform supply chain solution that integrates your sustainability related data from different systems in one place, becoming a single source of truth, and ensuring you never miss out on your environmental goals at any stage.
Take the next step towards green procurement
Sustainability isn’t just about avoiding penalties, staying compliant, or appeasing customers; it can improve your profit margins, too. 62% of consumers say they’re willing to change their buying habits if it lessens their environmental impact. So, soon, sustainability will be one of the critical factors in evaluating bids and awarding business.
With rising fuel prices, a looming recession, capacity shortages, and sustainability’s popularity with buyers, green procurement initiatives are now beneficial for companies reputationally and financially. E.g., The EU has tax right-offs, reductions, penalties, and duties like the Carbon Border Adjustment Mechanism's reporting obligation.
Learn how SHIPSTA can help you move forward in your journey towards smart, data-driven green procurement: