ESG Advocacy

Biodiversity refers to the array of life forms across ecosystems, species, and genetic compositions within the biosphere. In recent years, we have seen a concerning and unprecedented decline in biodiversity, and this is primarily attributed to human activity compounded by accelerated global warming. According to the United Nations Environment Programme (UNEP), approximately half the world's gross domestic product (GDP) is directly or moderately reliant on nature.

Although vital to global trade, logistics operations can have a negative impact on biodiversity while simultaneously relying on diverse ecosystem resources to sustain activities. Importantly, the industry is capable of positively influencing the biodiversity of local and regional ecosystems.

For example, logistics can adopt advanced technologies and practices to mitigate air, noise, and soil pollution to improve public health, protect against climate change, and safeguard biodiversity. An effective measure for mitigating the risk of biodiversity loss involves the implementation of rigorous monitoring and control measures for traffic noise, coupled with proactive promotion of initiatives aimed at its reduction. Sustainable mobility plans can be implemented and hazardous materials can be handled safely to prevent environmental contamination.

Similarly, logistics can help prevent the inadvertent spread of invasive species. This may necessitate finding ways to prevent the introduction of such species in imported goods. And it may mean adopting rigorous measures to stop proliferation of accelerants such as algae on ocean vessels. Stricter regulations are imminent, requiring logistics companies to integrate biodiversity conservation into their operations. For example, all ships must be fully compliant with the Ballast Water Management Convention by September 2024.

While it may appear biodiversity has no direct business implications, companies must preemptively integrate biodiversity conservation measures into their operations. Not only does this have future benefits, but it also strengthens the current strategic position.

Sustainable sourcing – the integration of social, ethical, and environmental performance factors in the supplier selection process – represents a critical pathway to addressing environmental and social challenges in supply chains and responding to the growing environmental consciousness of consumers and companies. It is essential for logistics to proactively engage in sustainable sourcing, fostering a more sustainable and resilient global economy.

However, it may be difficult to fully adopt sustainable sourcing. Challenges include longstanding contracts with existing suppliers, limited transparency across the entire supply chain, and the often higher costs associated with sustainably sourced products.

In this increasingly regulated business landscape, logistics managers have a key role in promoting environmentally conscious sourcing practices. They can prioritize transparency, risk management, and stakeholder engagement to enhance not only their own but also their customers’ resilience and sustainability.

The regulatory landscape surrounding sustainability indicators and requirements has evolved significantly in recent years, with growing emphasis on carbon accounting, particularly focusing on greenhouse gas (GHG) emissions. This has become a priority for every medium-sized and large company. But in the absence of a comprehensive framework to address broader environmental impacts such as biodiversity, companies need clear key performance indicators (KPIs), measures, and regulations to guide their analysis and effective alignment of business practices.

Logistics decision makers must acknowledge areas of business activity that impact local ecological systems, identifying where compensation is required and in which cases compensation represents only incomplete mitigation. Assessing this using standardized quantitative approaches is, of course, challenging as each location of business activity is likely to have unique characteristics. Companies should therefore make qualitative assessment of local ecological impacts, which introduces additional complexity. Emerging initiatives address this issue; for example, The Taskforce on Nature-related Financial Disclosures framework seeks to empower organizations to report and respond to evolving nature-related risks. It offers a set of disclosure recommendations and guidance intended to encourage and facilitate businesses and financial institutions in evaluating, reporting, and addressing their dependencies on nature, along with associated impacts, risks, and opportunities.

Governmental bodies are increasingly holding companies accountable for their procurement and sourcing practices. For instance, the German Supply Chain Protection Act requires companies with at least 1,000 employees in Germany to uphold basic human rights, combat child labor and exploitation, and address environmental risks across their supply chains.

In Europe, the Corporate Sustainability Due Diligence Directive (CSDDD) will be legally binding from 2029. It requires large companies in the region to conduct supply chain audits to address issues such as forced labor and environmental harm, adhere to human rights and environmental standards, implement preventative action plans, and ensure contractual compliance by direct business partners.

At DHL, we anticipate the implementation of regional and national biodiversity targets by governments, along with enforceable guidelines. As the regulatory landscape evolves, it will be imperative for companies to adhere to social topics as well. These measures will not only hold businesses responsible for detrimental environmental practices but also encourage initiatives that foster nature conservation and enhance human well-being. By embracing both environmental and social governance, companies can strive for a sustainable future that preserves biodiversity and promotes a thriving society.