XPO takes layered approach to supply chain sustainability
By Ashley Coker
April 29, 2022
Regulators, consumers expect logistics industry to clean up its act
Over the past few years, climate change has become a top priority for governments and citizens around the globe. This growing interest has helped push sustainability efforts into the spotlight for virtually all industries, including transportation and logistics. Companies across the industry will need to start considering their carbon footprint as new regulations come down and consumers start voting with their dollars.
Last month, the Securities and Exchange Commission proposed requiring companies to publicly disclose information about their greenhouse gas emissions and other climate-related issues. This proposal came in direct response to investor concern about how climate change — and related consumer perception — will impact a company’s long-term success and profitability, according to SEC Chair Gary Gensler.
XPO is leading the pack when it comes to prioritizing sustainability in the supply chain. In 2020, the company’s board of directors created an ESG Scorecard, which is designed to assess an organization’s environmental, social and governance risks and opportunities. In 2021, XPO established a sustainability committee to support the board’s efforts. The company intends to keep building on those efforts in the coming years.
“We are going after what we can achieve now with the technology that is available now,” said Emily Phillips, XPO vice president of advanced solutions and sustainability committee chair. “Within our peer group, this is a tough area to tackle, especially when you look specifically at fuel and emissions because we’re waiting for that tipping point where the equipment, technology and infrastructure is at a place where we achieve cost parity and functional range parity to the equipment we have today.”
On the asset side, XPO is working to expand its biodiesel and renewable diesel pilot programs to five states in the coming year, helping the company clean up about 25% of its fuel consumption, according to Phillips. The company is also working to make energy consumption improvements at its LTL facilities, including incorporating solar where appropriate.
“We want to make sure we understand and are able to pilot the technology early enough so that when we reach parity, we are able to pull the trigger and move forward,” Phillips said.
XPO recently launched a new rail freight service in Ireland, decreasing emissions by 75%. Globally, the company moved 217,000 rail shipments, saving 543,000 metric tons of greenhouse gas emissions. At the same time, XPO saved more than 2,500 tons of CO2 emissions through the use of LED lighting.
On the asset-light side of the business, XPO is guided by its customers. The work XPO does in this space is largely intended to help customers reach their own sustainability goals. For example, Phillips is currently working on deploying electric box truck pilots for a customer that plans to go zero-emission by 2025.
“We want to make sure that we are good partners to our clients that have already set carbon goals, to make sure that we have a road map and can work with them on achieving their goals,” Phillips said. “What is good for them is good for all of us.”
In the past year, XPO has managed to decrease empty miles and optimize freight networks through greater than 600,000 downloads of its popular XPO Connect app. The company also piloted zero-emission electric vehicles in the U.S. and introduced EVs in both France and Spain.
“Sustainability is a hot topic. People are educating themselves about it. You hear it all the time on the news. People are toying with EVs for their personal vehicles,” Phillips said. “It is something that has entered into the everyday vernacular. I think the more people talk about it at home and at work, the more comfortable people will get with it.”