Every year, India moves around 4.6 billion tonnes of freight, which creates a need for transport that covers 2.2 trillion tonne-kilometres, emitting 2.3 gigatonnes of carbon dioxide (CO2). Experts predict that this demand will go up in the future, leading to a surge in road freight transportation to 9.6 trillion tonne-km by 2050. Today, India is third in the world for CO2 emissions, preceded by China and the United States.
Climate change will have consequences with significant effects on financial assets and inflation resulting from supply shocks caused by food and energy shortages, leading to price instability. The transportation sector accounts for approximately 14% of global emissions, with road freight significantly contributing to this issue. If no action is taken, the World Bank estimates freight emissions could increase by over 50% by 2050.
Climate change has a significant impact on the Indian economy. The Report on Currency and Finance (RCF) estimates that India needs to invest at least 2.5% of its GDP annually until 2030 to finance sustainable projects, highlighting the scale of the effort needed for climate action.
The massive implications of these emissions on the climate make it imperative to embrace sustainable practices in logistics, with several opportunities available to explore:
- Optimised use of road transport: This includes reducing empty miles, increasing loading efficiency, and promoting the use of larger trucks in the market
- Modal shift from road to rail transport: India could greatly benefit from promoting rail transport, which has a lower carbon footprint than road transport. Encouraging the adoption of rail transport, even if it’s not a complete shift, could significantly contribute to reducing emissions
- Adoption of eco-friendly transportation: Encouraging the adoption of cleaner fuels like LNG or electric vehicles (EVs) can be a viable solution to reduce emissions and costs. EVs have emerged as a promising option with zero tailpipe emissions
- Green warehousing practices: To make warehousing operations more eco-friendly, it’s important to use energy-efficient technologies like LED lighting, motion sensors, and solar panels. This helps to reduce energy consumption and therefore minimises carbon emissions
- Implementation of green technologies: Adopting smart logistics systems, like an AI/ML-enabled route optimisation software or a visibility and data analytics platform to identify and mitigate carbon footprint
- Circular economy practices: Companies can reuse and recycle materials by implementing reverse logistics processes like product take-back programs and remanufacturing. This saves energy but also significantly reduces greenhouse gas emissions
The logistics sector in India is worth INR 11 lakh crore and is expected to grow by 7%, and its goal is to reduce carbon emissions in the supply chain industry. Collaboration among all stakeholders across different levels is necessary to make this vision a reality. Here are some approaches that can be adopted to achieve this goal:
- Green Policies and Incentives: Various regulatory and industrial bodies must establish supportive policies and incentives that encourage sustainable practices. This involves promoting renewable energy adoption, offering tax benefits for eco-friendly initiatives, and enforcing emission regulations within organisations
- Collaboration and Transparency: Fostering collaboration among all stakeholders, such as manufacturers, logistics providers, suppliers, and customers, to collectively address carbon emissions. By sharing best practices, exchanging knowledge, and being open, the industry can identify opportunities for improvement and implement sustainable solutions across the entire supply chain
Although these approaches are helpful, a little push from the government can encourage companies to comply with sustainability standards and explore new innovative solutions for their supply chains.
Carbon pricing would be critical in reducing carbon emissions by 80% by 2050. India’s Energy Conservation (Amendment) Act 2022 recognises the importance of carbon pricing and aims to develop a carbon market or an Emissions Trading System (ETS). Policy on the carbon tax of non-green fuels will also help shift the share from coal to renewable energy sources.
The Indian Government has also mandated that the top 1000 companies based on market capitalisation adhere to the BRSR (Business Responsibility and Sustainability Reporting) guidelines for reporting their business practices and sustainability efforts. This is an improvement from the previous guidelines called BRR (Business Responsibility Reporting). This move demonstrates a commitment towards more extensive and updated reporting standards for corporate social responsibility and sustainable business practices in India. The report must provide information on the carbon emissions generated by these companies, including appropriate metrics, calculation methodologies, strategies adopted and initiatives taken, and progress made over time to reduce their carbon footprint.
The logistics industry will continue to play a vital role in creating a sustainable future. Companies can contribute to a greener and more resilient supply chain landscape by taking the lead and implementing innovative initiatives. Through collaboration, investment in eco-friendly practices, and active engagement with government policies. By working together, businesses and the government can shape a sustainable logistics landscape that meets economic needs while preserving our planet for the present and future generations.
Views expressed above are the author’s own.
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