26 Air Freight Transportation and Logistics

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1 This table shows a list of topics identified as relevant by different stakeholder groups. They can be considered as stakeholders suggestions or requests for topics to be monitored or disclosed by organizations. Additional information about the project can be found at Research/Pages/default.aspx 26 Air Freight Transportation and Logistics 31 topics Companies providing air freight transportation, courier and logistics services, including package and mail delivery and customs agents. Sustainability Economic Carbon offsetting Climate protection - strategy on climate protection and related action program '- transparency regarding carbon footprint of the company's entire fleet across all regions and subcontractors '- company-wide climate protection / emissions reduction targets '- carbon offsetting 262, 411 Financial The continued reliance of the transport and logistics industry on fossil fuels means that climate change features prominently in the debate about how the industry can develop in a sustainable way. For example, Sustainability s for Sectors: What do stakeholders want to know? Page 1 of 21

2 the transport sector causes around 13 per cent of global CO2 emissions. Approximately 75 per cent of these come from road traffic, with aviation and shipping each accounting for around ten per cent. Environmental Indirect economic impacts of products and services Energy efficiency initiatives Trade and communication Air traffic control The input provided within this form (all topics) refers to all transportation business groups (no ). The logistics and transportation sector facilitates the movement of goods both within national markets and across national borders. Therefore, this sector plays an important role in facilitating trade through the movement of goods and materials as well as facilitating communication between people. Organisations within this sector play a vital role in regional economic development, growth, and market efficiency. With the current unstable global security situation, there is also discussion within and around the sector regarding its role in proactively ensuring safety and security along its value chain. This is an important factor since customers expect companies to provide security for the goods carried on their behalf, to deliver the goods within service expectations, and to ensure that they arrive in an intact state. Efficiencies gained through improvements to operational practices. The Intergovernmental Panel on Climate Change estimates up to 18% of all aviation fuel is wasted as a result of inefficient infrastructure and operations. This equates to more than 100 million tonnes of carbon 261 Business Sustainability s for Sectors: What do stakeholders want to know? Page 2 of 21

3 dioxide per year. And much of it could be avoided. At every step of a plane s operations there are actions that can reduce its fuel burn and consequently its emissions. Airlines are saving fuel through more efficient procedures and weight reduction measures. These can range from ensuring the plane s engines are clean to developing and using alternative fuels. The International Air Transport Association s (IATA) green teams visit airlines to evaluate possible efficiencies and the result in savings have been between 2% and 15% at each airline. In the air The Intergovernmental Panel on Climate Change (IPCC) has indicated that air traffic management has influence over 6% -12% of aviation emissions mainly due to inefficiencies in the route network. Numerous projects have been started across the world to reduce these inefficiencies as far as possible for instance, creating a Single European Sky will reduce fuel burn by 10% per flight. AIRE and ASPIRE are two programmes aimed at increasing efficiency across the Atlantic and Pacific Oceans respectively. Individual air traffic control organisations are implementing measures to increase efficiency both en-route and in the congested airspace around many airports. Currently, many flights are not able to go directly from their take-off point to the destination, having to zig-zag around national borders, different air traffic control Sustainability s for Sectors: What do stakeholders want to know? Page 3 of 21

4 Aircraft and engine design organisations and around military airspace. Another vital infrastructure is the air traffic management system. The route a plane takes, the height it flies, and the weather it flies through, all affect the amount of fuel it burns and therefore the CO2 it emits. These factors are managed by air navigation service providers (ANSPs), the companies that provide air traffic control services. In Europe, the unification and simplification of national air traffic management into a Single European Sky would reduce circuitous flight paths. The Single European Sky is a step towards developing systems that manage air traffic on the basis of functional airspace blocks rather than national boundaries and, according to the European Commission, this better use of airspace will save upwards of 16 million tonnes of carbon emissions annually. In the context of transport, fuel economy is the energy efficiency of a particular vehicle, and is given as a ratio of distance travelled per unit of fuel consumed. In aviation, fuel efficiency correlates directly to the distance an aircraft can fly, the amount of payload it can carry and, importantly, better environmental performance. Aviation efficiency can be achieved through aircraft design, engine design, reducing weight on the air craft, aircraft navigation etc... 8 Business Unlike ground vehicles, which don t need to be optimised for efficiency to the same extent as aircraft because they can refuel often, long-distance aircraft must carry all their fuel with them. Fuel is expensive, Sustainability s for Sectors: What do stakeholders want to know? Page 4 of 21

5 heavy and takes up a great deal of storage room. Its weight can limit the range of an aircraft and it needs to be stored in tanks which affect the wing size and the payload able to be carried. The Beginner s Guide explores how manufacturers are designing engines and aircraft to use less fuel, how the air traffic control system works and how governments and the industry are working together to make it more efficient and how airports are putting in place a number of energy reduction measures. Intermodality and route planning Enviro.aero has been established by the commercial aviation industry body, the Air Transport Action Group (ATAG) The logistics and transportation sector facilitates the movement of goods both within national markets and across national borders. Therefore, this sector plays an important role in facilitating trade through the movement of goods and materials as well as facilitating communication between people. L&TSS (LT3): Description of policies and programmes on the management of environmental impacts, including: - Initiatives on sustainable transportation (e.g. hybrid vehicles) - Modal shift (i.e. shifting to different modes of transport to reduce the overall environmental impacts and transport costs) - Route planning Sustainability s for Sectors: What do stakeholders want to know? Page 5 of 21

6 Ability to connect, and the connections between, modes of transportation Environmentally, as a major consumer of fossil fuels, logistics and transportation companies are expected to minimise the impact of the resultant emissions which are known to contribute to climate change and urban air pollution. Examples of initiatives used to address these issues include plans to develop and utilise alternative fuel vehicles and promote modal shift. Capturing information about organisations climate change and pollution mitigation initiatives within a sustainability report provides stakeholders with a framework to understand the specific initiatives being implemented by companies, as well as the challenges these companies face. 153 Financial L&TSS (LT4): Description of initiatives to use renewable energy sources and to increase energy efficiency. In describing initiatives to increase energy efficiency, reporting organisations should explain how they are benchmarking their energy efficiency to assess improvements. Development of sustainable transport solutions Efficiency measures (e.g. optimising routes, capacity utilisation and speed and using intermodal solutions / combining efficient modes of transport).(joint) development projects for telematics, intelligent traffic 411 Financial Sustainability s for Sectors: What do stakeholders want to know? Page 6 of 21

7 control systems,... Vehicle design (lightweight vehicles, aerodynamic adaptations such as winglets on aircraft wings or streamlined ships). Use of renewable / alternative fuels (for example based on waste or algae) and targets for promoted use of such fuels. Alternative drive systems. One important component of a comprehensive climate strategy is increasing transport efficiency in order to cut fuel consumption and thus reduce greenhouse gas emissions. Further, alternative fuels and drive systems form a further key element of sustainable transport solutions. Problems with land consumption, poor carbon balance and competition with food crops mean that there is no future in conventional first-generation biofuels. Energy efficiency of end products Mobile and nonmobile sources The input provided within this form (all topics) refers to all transportation business groups (no ). ### Airlines have ambitious targets for the use of biokerosene, as since January 2012 they have been included in the EU ETS. Some airlines are already testing biofuels on regular routes. However, there are still no convincing plans for meeting the huge demand for biokerosene with an acceptable sustainability profile. Environmentally, as a major consumer of fossil fuels, logistics and transportation companies are expected to minimise the impact of the resultant emissions which are known to contribute to climate change and urban air pollution. Examples of initiatives used to address these Sustainability s for Sectors: What do stakeholders want to know? Page 7 of 21

8 issues include plans to develop and utilise alternative fuel vehicles and promote modal shift. Capturing information about organisations climate change and pollution mitigation initiatives within a sustainability report provides stakeholders with a framework to understand the specific initiatives being implemented by companies, as well as the challenges these companies face. Renewable/alter native energy sources Biofuel use Commentary for the L&T Sector to RG & L&TSS (EN3): Reporting organizations should provide: 1) Breakdown of energy use according to mobile (e.g., air, sea, road, rail) and non-mobile (e.g., office, warehouses) sources; and provide a further breakdown of energy use by each mobile source identified; 2) Type of energy source used; and 3) In addition to the absolute data, the energy use reported broken down within mobile sources should be normalised using units such as: - per cubic meter km - per ton km - per delivery item; or - per unit km (e.g., TEU-km for container freight). Energy consumption, total 153 Financial KLM s official introduction of cooking-oil based biofuels for regular commercial services between Paris and Amsterdam marks an unequivocal step in its 389 Financial Sustainability s for Sectors: What do stakeholders want to know? Page 8 of 21

9 commitment to renewable energies. The move is symbolic of the shift in the sector as it continues to target two goals: 1/ cutting GHG emissions ahead of the increasingly tight regulations facing airlines; and 2/ reducing its energy bill. Given the ongoing controversy over biofuels and the fact that they are in limited supply, there are clearly issues surrounding the capacity of biofuels to supplant traditional fuels for the automotive sector, and of kerosene in the aerospace industry. It is hard to see how the crops traditionally used in the production of fuels for road transport (rape seed, corn, palm oil and sugar cane) could be employed to manufacture bio-kerosene. Not only are these segments already under strain, they are also highly controversial given their contribution to food shortages and price volatility, their negative carbon profile and their role in deforestation. In the face of this opposition, some airlines have committed to not using biofuels that could impact on crops designed to meet food requirements. This looks like a pre-requisite to ensure the acceptability of this new industry. The emergence of a third-generation biofuel based on seaweed, and in compliance with sustainability criteria, could be a solution to ethical considerations and airlines quantitative needs. Total, however, sees no potential in this field, at least in the short run. In June, the European Commission, Airbus, some airlines (including Air France, British Airways and Lufthansa) and biofuel producers launched the Biofuel Flightpath Sustainability s for Sectors: What do stakeholders want to know? Page 9 of 21

10 Environmental impact management initiative, which is aimed at promoting the commercialisation of green aircraft in Europe. The aim is to produce 2m tonnes of biofuels on a sustainable basis for the aviation industry in But these sustainability criteria will need to be detailed quickly and be resolutely restricting if they are to fend off criticism. Under this European initiative, it is aimed to use 40% sustainable and low-carbon fuels by 2050 and 10% biofuels by Thus, the 10% bio-kerosene, plus the conventional biofuels provided for under European regulations (mandatory blending targets) cannot be produced from the same crops and will have to use non-food sources. Although European regulations include a series of sustainability criteria in their targets, we do not believe these are sufficiently restrictive (minimum reduction of 35% of CO2 emissions relative to conventional fuel for 2015, 50% for 2017 and 60% in 2018) for the aviation industry to add production capacity without it resulting in additional opposition. The logistics and transportation sector facilitates the movement of goods both within national markets and across national borders. Therefore, this sector plays an important role in facilitating trade through the movement of goods and materials as well as facilitating communication between people. L&TSS (LT3): Description of policies and programmes on the management of environmental impacts, including: - Initiatives on sustainable transportation (e.g. hybrid vehicles) Sustainability s for Sectors: What do stakeholders want to know? Page 10 of 21

11 Emissions to air Management and reduction strategies, from road transport - Modal shift (i.e. shifting to different modes of transport to reduce the overall environmental impacts and transport costs) - Route planning Climate protection - strategy on climate protection and related action program '- transparency regarding carbon footprint of the company's entire fleet across all regions and subcontractors '- company-wide climate protection / emissions reduction targets '- carbon offsetting 262, 411 Financial The continued reliance of the transport and logistics industry on fossil fuels means that climate change features prominently in the debate about how the industry can develop in a sustainable way. For example, the transport sector causes around 13 per cent of global CO2 emissions. Approximately 75 per cent of these come from road traffic, with aviation and shipping each accounting for around ten per cent. The input provided within this form (all topics) refers to all transportation business groups (no ). Environmentally, as a major consumer of fossil fuels, logistics and transportation companies are expected to minimise the impact of the resultant emissions which are known to contribute to climate change and urban air Sustainability s for Sectors: What do stakeholders want to know? Page 11 of 21

12 pollution. Examples of initiatives used to address these issues include plans to develop and utilise alternative fuel vehicles and promote modal shift. Capturing information about organisations climate change and pollution mitigation initiatives within a sustainability report provides stakeholders with a framework to understand the specific initiatives being implemented by companies, as well as the challenges these companies face. Emissions to air - Fine particulates, soot, NO x and SO 2 Engine combustion L&TSS (LT5): Description of initiatives to control urban air emissions in relation to road transport (e.g., use of alternative fuels, frequency of vehicle maintenance, driving styles, etc.). Total CO 2, NO x, SO x, VOC emissions in million tonnes 153 Financial Emissions to air 1. Greenhouse Gases 2. Acid Rain, Eutrophication and Smog Precursors 3. Dust and Particles 4. Ozone Depleting Substances 5. Volatile Organic Compounds 6. Metal emissions to air Air pollution and noise relevant data on especially outside the domestic market, including those of subcontractors '- technical solutions to reduce harmful waste gases and 109 Mediating Institution 411 Financial Sustainability s for Sectors: What do stakeholders want to know? Page 12 of 21

13 fleet modernisation '- noise prevention measures Traffic noise presents a health risk to local residents that is often underestimated. In addition, combustion engines pollute the air with fine particulates, soot, nitrogen oxide and sulphur dioxide. However, it is actually ocean transport, despite its energy-efficiency, that turns out to be a particularly bad air polluter, as the cheap but highly toxic bunker oil it uses, with its very high sulphur levels, causes acid rain and air pollution, particularly along coasts. Emissions to air - GHG emissions Entire fleet across all regions and subcontractors The input provided within this form (all topics) refers to all transportation business groups (no ). Climate protection - strategy on climate protection and related action - transparency regarding carbon footprint of the company's entire fleet across all regions and subcontractors '- company-wide climate protection / emissions reduction targets '- carbon offsetting 262, 411 Financial The continued reliance of the transport and logistics industry on fossil fuels means that climate change features prominently in the debate about how the industry can develop in a sustainable way. For example, the transport sector causes around 13 per cent of global Sustainability s for Sectors: What do stakeholders want to know? Page 13 of 21

14 CO2 emissions. Approximately 75 per cent of these come from road traffic, with aviation and shipping each accounting for around ten per cent. The input provided within this form (all topics) refers to all transportation business groups (no ). Mobile and nonmobile sources Environmentally, as a major consumer of fossil fuels, logistics and transportation companies are expected to minimise the impact of the resultant emissions which are known to contribute to climate change and urban air pollution. Examples of initiatives used to address these issues include plans to develop and utilise alternative fuel vehicles and promote modal shift. Capturing information about organisations climate change and pollution mitigation initiatives within a sustainability report provides stakeholders with a framework to understand the specific initiatives being implemented by companies, as well as the challenges these companies face. Commentary for the L&T Sector to L&TSS (EN8): Reporting organizations should provide a breakdown of GHG emissions according to mobile (e.g., air, sea, road, rail) and non-mobile (e.g., office, warehouses) sources; and provide a further breakdown of energy use by mobile source identified. Noise Aircraft Responsible management of local pollution such as noise is considered an essential issue for this sector s license to operate. Companies using aircrafts for express deliveries, as well as companies operating on motorways, expose local communities to a high degree of noise. The main 479 Business Sustainability s for Sectors: What do stakeholders want to know? Page 14 of 21

15 Management and abatement resources indicators for assessing performance in this area include monitoring noise incident, time flight allocation, and acoustic barriers. Companies such as ADP and Deutsche Post have quantified targets for limiting their impact on local areas. Air pollution and noise - relevant data on vehicles, especially outside the domestic market, including those of subcontractors '- technical solutions to reduce harmful waste gases and fleet modernisation '- noise prevention measures 411 Financial Traffic noise presents a health risk to local residents that is often underestimated. In addition, combustion engines pollute the air with fine particulates, soot, nitrogen oxide and sulphur dioxide. However, it is actually ocean transport, despite its energy-efficiency, that turns out to be a particularly bad air polluter, as the cheap but highly toxic bunker oil it uses, with its very high sulphur levels, causes acid rain and air pollution, particularly along coasts. Social Employment Continuity of employment The input provided within this form (all topics) refers to all transportation business groups (no ). L&TSS (LT7): Description of policies and programmes for noise management/abatement. On the social side, this sector employs a large number of workers around the world and faces challenges in labour use practices. Sustainability s for Sectors: What do stakeholders want to know? Page 15 of 21

16 Working conditions Contractors and self-employed drivers L&TSS (LT17): Describe measures in place to provide income security and employment continuity for workers employed/contracted repeatedly but not continuously. Note: This indicator is intended for shipping and road transport industries. On the social side, this sector employs a large number of workers around the world and faces challenges in labour use practices. The use of subcontractors as well as workers extended driving hours and time away from home are a few examples that have been identified as key issues that require measurement since these issues have potential implications for road safety, familial stress, and job security. Rest hours, rest facilities and leave L&TSS (LA1): Reporting organisations should separate figures on drivers, including the percentage of selfemployed drivers. Report the percentage of those with exclusive contracts and/or contracts that may exclude them from working for other organizations. On the social side, this sector employs a large number of workers around the world and faces challenges in labour use practices. The use of subcontractors as well as workers extended driving hours and time away from home are a few examples that have been identified as key issues that require measurement since these issues have potential implications for road safety, familial stress, and job security. L&T (LT9): Description of policies and programmes to determine working hours and rest hours, rest facilities, and leave for those driving and operating fleets. Sustainability s for Sectors: What do stakeholders want to know? Page 16 of 21

17 Road safety Employees and subcontractors On the social side, this sector employs a large number of workers around the world and faces challenges in labour use practices. The use of subcontractors as well as workers extended driving hours and time away from home are a few examples that have been identified as key issues that require measurement since these issues have potential implications for road safety, familial stress, and job security. Biosecurity Goods safety and security Potentially harmful organisms L&TSS (LT12): Number of road fatalities of drivers or third parties per million kilometers driven. Biosecurity is also an issue associated with the business activities of this sector, however, it is difficult to develop measures applicable specifically to individuals companies as they do not have direct control over the issue, compared to, for example, fuel efficiency of their fleets. Although there is no specific biosecurity indicator included in the Supplement, companies may wish to report on how they are managing impacts on biodiversity associated with their operations, especially with regards to the spreading of invasive organisms potentially harmful to humans and the environment. With the current unstable global security situation, there is also discussion within and around the sector regarding its role in proactively ensuring safety and security along its value chain. This is an important factor since customers expect companies to provide security for the goods carried on their behalf, to deliver the goods within service expectations, and to ensure that they arrive in an intact state. Sustainability s for Sectors: What do stakeholders want to know? Page 17 of 21

18 Other Hazardous goods transport Ship safety Fleet composition Labeling, storage, handling Trucks, vessels, airlines, rail cars, rail carriages L&TSS (EN16): Reporting organizations should report on incidents of and fines for non-compliance regarding the labeling, storage, handling, and transportation of hazardous goods. L&TSS (LT13): List the incidents when ships have been detained by port inspectors, including the following details: Name of the vessel and International Maritime Organisation (IMO) number; Port of detention; Reason for detention; and Duration of detention (include dates). Utilisation of total fleet of trucks, of vessels, of airlines, of rail cars/ rail carriages Reporting on the fleet characteristics is important to get an overview of the environmental impacts associated with the organization's fleet operations. 153 Financial Humanitarian assistance L&TSS (LT2): Breakdown of fleet composition. A unique aspect of this sector is in the ability of companies to apply their core competencies to provide humanitarian assistance in times of crisis in a way that is not possible for other sectors. Core competencies such as the ability to mobilise global air fleet capacity, logistical distribution expertise, and strong distribution networks allow these organisations to reach communities in disaster zones with vital supplies. Sustainability s for Sectors: What do stakeholders want to know? Page 18 of 21

19 Traffic congestion management Transport safety Driver fatigue prevention L&TSS (LT15): Provision of logistics and transportation core competences to deliver humanitarian needs locally and globally measured in terms of: e.g., tons carrying capacity, person months; expenditure, value (fair market terms), and in kind contributions in disaster preparedness and response. L&TSS (LT6): Description of policies and programmes implemented to manage the impacts of traffic congestion (e.g., promoting off-peak distribution, new inner city transport modes, percentage of delivery by modes of alternative transportation). Note: Impact refers to environmental, economic, and social dimensions. Transport safety Implementation programmes for compliance with domestic and international. Prevention and emergency measures. Prevention of fatigue. Meaningful sets of data on road traffic accident rates / incidents. Measures to prevent robberies and terrorist attacks. Accidents involving freight vehicles can have serious consequences for passengers, freight and the environment, especially when hazardous materials are being transported. An important safety-related issue is that of the prevention of fatigue, which is seen as one of the main causes of accidents and is exacerbated by staffing cuts and pressure to meet deadlines. Further, robberies and terrorist attacks increasingly threaten the safety of transport routes. 411 Financial Sustainability s for Sectors: What do stakeholders want to know? Page 19 of 21

20 Transport security Risk of robbery and terrorist attack The input provided within this form (all topics) refers to all transportation business groups (no ). Transport safety Implementation programmes for compliance with domestic and international. Prevention and emergency measures. Prevention of fatigue. Meaningful sets of data on road traffic accident rates / incidents. Measures to prevent robberies and terrorist attacks. 411 Financial Accidents involving freight vehicles can have serious consequences for passengers, freight and the environment, especially when hazardous materials are being transported. An important safety-related issue is that of the prevention of fatigue, which is seen as one of the main causes of accidents and is exacerbated by staffing cuts and pressure to meet deadlines. Further, robberies and terrorist attacks increasingly threaten the safety of transport routes. The input provided within this form (all topics) refers to all transportation business groups (no ). * GRI Sector Guidance Pilot Version 1 All references can be found at Sustainability s for Sectors: What do stakeholders want to know? Page 20 of 21

21 References All references can be found at 8 Air Transport Action Group (ATAG), Beginners Guide to Aviation Efficiency, Department for Environment, Food & Rural Affairs (DEFRA), Environmental Key Performance Indicators: Reporting Guidelines for UK Businesses, European Federation of Financial Analysts Societies (EFFAS) and Society of Investment Professionals in Germany (DVFA), KPIs for ESG - A Guideline for the Integration of ESG into Financial Analysis and Corporate Valuation, Frankfurt am Main: EFFAS. 208* Global Reporting Initiative (GRI), Logistics and Transportation Sector Supplement, Pilot Version Intergovernmental Panel on Climate Change (IPCC), IPCC Special Report, Aviation and the Global Atmosphere, Geneva: Intergovernmental Panel on Climate Change (IPCC). Intergovernmental Panel on Climate Change (IPCC), Climate Change 2007: Synthesis Report, Geneva: Intergovernmental Panel on Climate Change (IPCC). 389 Natixis, Strategy Note Equity Research - Strategy/SRI: Monthly review June 2011, Paris: Natixis. 411 OEKOM, Industry Focus, Transport & Logistics, Munich: OEKOM. 479 Société Générale, SRI: Beyond Integration, from satellite to core, Paris: Société Générale. * GRI Sector Guidance Pilot version Resource available on request and/or for a fee. Sustainability s for Sectors: What do stakeholders want to know? Page 21 of 21