Environmental, Social and Governance (ESG) standards are a key concern for all businesses in 2024. Environmental factors refer to how your operations interact with the natural world, Social addresses how you treat your workforce, and Governance concerns ethics and accountability. Logistics, with its far-reaching networks, fuel-intensive transportation and connections with a variety of industries, is particularly influential – and affected – in the rising tide of ESG considerations.
The moral imperative of caring about people, the planet, and the future, goes without saying. In this blog, we explain some key other reasons you should be taking a structured, audit-based approach to your ESG – assessing your current impact to help you thrive.
Secure tomorrow’s workforce
The distribution and logistics industry is facing a skills shortage, as older workers retire out of professions like truck driving and mechanics. For example, in a recent Logistics UK survey, 95 per cent of respondents noted a continued challenge in filling vacancies for mechanics. Many businesses are looking to recruit and train younger workers, developing both a new talent pipeline and a digitally-savvy skills base. Initiatives like the UK Government’s Generation Logistics are designed to attract a whole new army of young people to the industry.
However, these workers are much more likely to demand impressive ESG credentials, backed up by rigorous proof. A 2023 study by Deloitte revealed that 40 per cent of Gen Z and millennials have changed jobs due to climate concerns, or plan to do so in the future. They are also hyperaware of “greenwashing”, with 3 in 10 Gen Zs considering whether a company’s sustainability efforts match their marketing claims. Having a clearly audited ESG strategy and reporting will help win the trust of this socially and environmentally conscious, and evidence-focused, talent market.
Ensure regulatory compliance
Regulatory requirements surrounding environmental and social facets are becoming more stringent, nudging companies to beef up reporting and disclosure processes. Existing measures likely to affect logistics companies include ultra-low emissions zones, crucial for road freight, and a single-use plastics ban, fundamental for packagers and wholesalers. Firms must be on top of these rules, as non-compliance can lead to fines and damage reputations.
2024 will also see a host of new measures come into force and changes to the playing field; a new “anti-greenwashing” rule coming into play, the EU’s Sustainable Finance Disclosure Regulation (SFRD) facing a review, and recent Government promises to regulate providers of ESG ratings. Businesses must have their house in order regarding ESG measurements and statistics, in order to adapt to the new status quo.
Reduce risk
ESG is not just a nice to have. It relates to three of the most unpredictable, and potentially disruptive, elements of business: the environment, people and rules and regulations. These are all areas where the consequences of any issue can result in lost profits and considerable reputational damage. Proactive ESG strategies can help reduce the risk of difficulties in these areas. For example, a proactive gender equal pay initiative is likely to identify and take steps towards addressing any discrepancies, before they reach a critical level and result in complaints and lawsuits.
A robust ESG strategy helps to identify and mitigate future risks associated with climate change, labour disputes, and more. Businesses that fail to commit to thorough ESG assessment could find themselves blindsided by events that could have been predicted and prepared for.
From talent acquisition and retention to risk mitigation and regulatory compliance, the case for sustainable operations is clearer and more compelling than ever. By treating ESG not as an add-on but as an integral part of business strategy, companies can secure their future in a volatile and rapidly changing world.