MATERIAL TOPICS FOR REPORTING IMPORTANCE OF SUSTAINABILITY

Greenhouse Gas Emissions and Energy Management

You should first focus on Scope 1 and 2 emissions, as they constitute the most actionable part of your total emissions. Scope 1 emissions are the direct GHG emissions from your fleet, cargo-handling or warehousing operations whereas Scope 2 emissions are indirect GHG emissions from the generation of electricity used by warehouses or office buildings. Your Scope 1 and 2 emissions are also what most customers are most concerned with as they work to achieve their decarbonisation goals and Net Zero targets.

a) SCOPE 1 EMISSIONS

There are various sources of Scope 1 emissions across the logistics value chain.

For Transportation activities, vehicles used have differing emissions intensity.

For Cargo-handling and Warehousing activities, fuel-combusting equipment used such as diesel cranes and forklifts generate greenhouse gas emissions.

b) SCOPE 2 EMISSIONS AND ENERGY MANAGEMENT

Warehousing activities generate Scope 2 emissions through energy consumption, with the degree of energy consumption varying depending on the type of warehouse used.

Cooling typically represents the largest source of energy consumption in air-conditioned or cold storage warehouses

Figure 6. Breakdown of typical energy consumption in an air-conditioned warehouse


Source: Aggregated solution provider’s estimates based on client installations

Waste

Industry waste constituted 75 percent of Singapore’s total solid waste in 2022, making up 5.53 million tones. Waste is a pressing issue as Singapore’s only landfill is estimated to fill up by 2035, and one of its priority waste streams is packaging waste. Waste can be generated in your operations, for instance, shrink wrapping in the warehouse, or generated by upstream suppliers that ship packaging materials with their items to your company.

While logistics companies have no control over the primary packaging of a product, they have some level of control over the secondary and tertiary packaging waste. Logistics companies generate secondary waste when they re-pack for customers, and dispose of the supplier’s packaging to repack the goods in a different quantity or combination, using new packaging in the process. For logistics companies in eCommerce, huge quantities of protective packaging are used for their customers’ goods. Tertiary packaging is typically created when companies use shrink wrapping to bundle carton boxes together, which might be lifted by forklifts to be stored on shelves in the warehouse.

For cargo-handling companies, waste is produced in the form of engine oil and metal scraps generated during maintenance.

Employee Engagement

Employee engagement encompasses various aspects related to how a company engages, supports, and fosters a positive work environment for its employees, such that employees are motivated and actively involved in achieving the company’s objectives.

The logistics sector is presently facing a short supply of labour, with many companies having difficulties attracting a younger pool of employees. For companies in transportation, there are also concerns about maintaining a consistent pool of drivers. Employee engagement is hence especially vital to attract and retain staff. In addition, when moving the company towards sustainability, it is important that all employees are on board. For instance, when implementing new sustainable operating models, transport fleet operators, drivers and warehouse operators have to be educated about the rationale for the change, so that there is employee buy-in for sustainable transformation to occur.

Employee Health and Safety

Establishing a healthy and safe work environment that is free of injuries is recognised as a human right and addressed in intergovernmental organisations such as the International Labour Organization (ILO), Organisation for Economic Co-operation and Development (OECD), and the World Health Organization (WHO).

Ensuring the health and safety of employees is critical in the logistics sector, firstly due to compliance reasons. If there are injuries or fatalities during the course of work, the company may be held legally liable. In warehousing especially, during peak seasons, companies operate around the clock. Employers have to ensure that staff are not overworked according to MOM guidelines, or risk legal penalties. Logistics companies have also expressed that the issue of health and safety is crucial in retaining their workforce, as employees are only willing to work in safe conditions. In the cold chain space, employees will only be able to work if the company provides them with adequate personal protection equipment and rotates their cold shifts.

When thinking of adopting sustainability solutions, the employee point of view must be considered and addressed. For instance, there is a concern among drivers that EVs have a higher risk of fires. This concern, while not unfounded should be contextualised to the drivers that the probability of fire incidents happening is extremely low at 0.02 percent.

Data Security

Data Security is defined by the Sustainability Accounting Standards Board (SASB) as the “management of risks related to the collection, retention and use of sensitive and/or proprietary customer or user data”. It includes social issues that might arise due to data breaches in which personally identifiable information and other user or customer data may be exposed.

This issue is of high priority in the logistics sector, given the importance of data in making operational decisions. Data Security is especially relevant for logistics companies serving eCommerce customers, as they are concerned about the security of payment transactions. More consumers are aware of their privacy rights, resulting in increased scrutiny of a company’s data breaches and data governance frameworks.

Additionally, with increased digitalisation and connectivity of the ecosystem, the surface area for cyberattacks has become greater. This has implications for sustainability solutions that are digital in nature, such as route optimisation and demand planning software, as there will be a need to ensure that the data within the software is secure. If the data were to be leaked, trust would be lost from customers and other stakeholders. On another level, if physical-digital systems were to be hacked (e.g., warehouse robots, autonomous vehicles), the risks to operational disruption and even staff safety could be immense.