The transportation procurement community is in an excellent position to impact efforts to seek ways to reduce greenhouse gas emissions. It all comes down to learning how to identify and prioritize emissions-reducing products and materials.
So, let’s step back for a second and consider the concept of a circular economy.
A person with a keen sense of his/her ecological impact would certainly understand the value of using items as long as possible before having to replace them. It preserves natural resources. It preserves energy resources. It keeps materials out of landfills while reducing the use of greenhouse gases. The benefit is easy to understand on an individual basis. When you think about it on an economy-wide basis, though, the impact starts to feel powerful. An entire economy based on such practices – keeping materials and products in circulation for as long as possible – would be tremendously beneficial to the environment.
This is known as a circular economy. And while it’s not practical to expect a 100% circular economy in the immediate future, there is much we can do to move in that direction right now. The transportation procurement community is in an excellent position to lead the way. A circular economy could, at least theoretically, get closer to net-zero emissions, which is defined as near-zero greenhouse gas emissions, with what few emissions are left being reabsorbed by the atmosphere, the oceans, the forests and other such natural forces.
People like this idea in the abstract, but they don’t like a lot of the things that would be necessary to get us there.
We can’t recycle cars, for example, nor can we build them out of 100% biodegradable materials. We can improve the biodegradable nature of many packaging materials, but we’re nowhere near being able to make plastic or steel biodegrade quickly. Yet there are many products available now that can help reduce emissions and there would be a great deal more if demand called for it. When procurement professionals in transportation insist on buying products and materials that help drive emissions down, the supplier community will take notice.
The time is right for this to happen, especially with so much of the corporate world embracing the concept of environment, social and governance (ESG) principles instead of the more traditional emphasis on shareholder value. The emphasis on ESG has already seeped into many corporations.
As a result, the logical next step is to look at what comes into companies from the outside, and that’s where the procurement professionals operate. Many are already expanding their emphasis from things like service cost and product quality to ESG and emissions reduction.
But procurement professionals need support in order to pull this off. Specifically, they need training and data. Lots of data.
This starts with information about vendors, so purchasers can recognize which ones are prioritizing ESG and reduction of emissions in the development of their own products, including the kinds of materials they use, the way they use them and the processes by which they are made, packaged and shipped.
Companies in the transportation space need to learn a lot about how all this works. Most are probably not familiar with terms like tank-to-wheel, which refers to a subrange in the energy chain of a vehicle that extends from the point at which energy is absorbed to the point of discharge. They will need to learn about that, along with terms like well-to-wheel, which considers the greenhouse gas emissions generated during the full lifecycle of a vehicle.
If you don’t know the right questions to ask, you can’t get the answers you need.
A more circular economy led by procurement policies will also require support from upper management because there may be times when a procurement professional has to pay a little more to achieve emissions reduction benefits. That cuts against the more traditional procurement imperative to cut costs and achieve savings wherever possible – often while also asking their vendors to enhance service.
When procurement professionals take the lead in pursuing a circular economy, they’re changing that equation in the pursuit of a more global return on investment. Over time, more products and materials will become consistent with reduced emissions and ESG principles, and this will become easier to do.
The best way to move in that direction is for procurement professionals to insist on it now. The transportation industry can impact this priority in a significant way, and procurement is the best place for that effort to kick off.