May 29, 2021

DHL Global Forwarding Initiates ‘Book-and-Claim’ Certificate

DHL
Sustainability
Netzero
ESG
ELISE LEISE
3 min
Joining United Airlines’ Eco-Skies Alliance program, DHL commits to reducing emissions and compressing its carbon footprint

By 2030, Deutsche Post DHL Group will invest €7 billion to cut its carbon emissions to under 29 million tons. To do so, the logistics expert just introduced a book-and-claim mechanism to help track Sustainable Aviation Fuel (SAF), which plays a critical role in decarbonising the airline industry. The higher an airline’s share of SAF, the lower its carbon emissions—in short, the metric tracks true carbon reduction regardless of the company’s size or scale of operations. 

Along with other Eco-Skies Alliance organisations, DHL will take steps to purchase a combined 12.87m litres of sustainable aviation fuel this year. Within the decade, the company intends to increase its blend of SAF to more than 30% of total fuel capacity, and by 2050, reduce all logistics-related emissions to zero. 

The Superiority of ‘Book-and-Claim’ Systems 

Currently, airlines must specially designate and separate their sustainable fuels in order to prove that they meet EU-ETS regulations. While the intentions behind such regulations are good, separate logistics cause environmental and economic harm, as well as being technically unnecessary. Book-and-claim systems, in contrast, remove the requirement for airlines to physically trace SAF fuel through the supply chain. Instead, companies can purchase certificates or credits—and focus their tracking efforts on areas that truly count. 

If companies such as DHL continue to implement book-and-trace mechanisms, we could see the barriers lowering for smaller and less capital-heavy airlines to follow suit. Similar to renewable energy certificates (REC) for green electricity, book-and-trace is poised to balance SAF fuel’s potential, administrative burdens, and EU-ETS requirements. 

DHL is already well on its way to achieving its ambitious goals. Compared to 2007, the company has already improved its CO2 efficiency by 35%. “When companies as large as DHL recognise the value in switching to SAF”, said Jan Krems, President of United Cargo, “we’re another step closer to establishing SAF as a long-term, permanent solution for aviation”.

Christoph Wolff, Head of Shaping the Future of Mobility at the World Economic Forum, added that DHL’s new book-and-claim mechanism will help push the industry forward. “We need frontrunners like United Airlines and DHL Global Forwarding to put concepts into practice”, he said, “so that [book-and-claim systems] can be validated and turned into a formal standard”. 

The Future of SAF-Fueled Flight 

In 2021, the Eco-Skies Alliance aims to eliminate approximately 31,000 tons of GHG emissions compared to conventional fuel. DHL is taking additional steps towards sustainability, such as giving preference to carriers with strong environmental performance through its GoGreen evaluation program. In addition, the company is trying to monitor how its fuels are produced, ensuring that they don’t interfere with local food production or violate human rights. 

Currently, DHL is trialling its book-and-claim mechanism with select customers, but later this year, the company will open up the system to all who want it. “We are very proud to take another step on our sustainability roadmap towards zero emissions”, said Tim Scharwath, CEO of DHL Global Forwarding, Freight. “Through this partnership, we will be able to show how a market mechanism for SAF can help airlines, freight forwarders, and shippers work together to accelerate the transition to a low-carbon, ultimately zero-carbon-emissions transport sector”. 

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Jun 15, 2021

Germany Adopts Revolutionary Supply Chain Human Rights Laws

ESG
DaimlerAG
supplychain
Germany
4 min
Supply chain legislation makes German multinational corporations legally responsible for human rights and environmental abuses across global supply chains

While the title states that Germany’s newly adopted that targets human rights abuse across global supply chains is “revolutionary” ─ which it is ─, it certainly shouldn’t be. But nonetheless, today, on June 11th, 2021, the German Parliament has ushered in a long-awaited shift to mandatory company compliance rules. After months of negotiation, the German lawmakers finally pushed it over the finish line within the final days of the current legislative period. The bill will see German multinational corporations held legally responsible for any human rights or environmental abuses found across their global supply chains. 

“The German government has taken a critical step to ensure that companies operate responsibly,” said Juliane Kippenberg, associate director, children's rights division, at Human Rights Watch. “Respect for human rights in global supply chains is not something that should be optional.”

This news comes at a time when global corporations are already being pushed towards environmental, social and governance (ESG) compliance, with a massive drive to reduce Scope 1, 2, and 3 carbon emissions from their supply chain operations and a concerted effort to avoid suppliers and manufacturers that do not meet the standards that industry-leading companies are now expected to meet. 

Who will the new law affect?

With Germany’s new legislation, organisations that fail to meet the rules and regulations could be forced to pay fines potentially equivalent to 2% of their annual global turnover. However, it isn’t applicable to all.

According to Reuters, under the act, companies above a certain size will be forced to establish set due diligence procedures that prevent the abuses; from 2023, only companies with more than 3,000 employees in Germany will be affected. From 2024, the rules will expand to companies with more than 1,000 employees. 

Statistics from within the country suggest that the first stage of this regulation rollout will affect 900 companies, while the second stage will put 4,800 companies under the spotlight. The bill will also enable the government to temporarily exclude from public tenders companies that receive fines in excess of €175,000. 

“Incalculable risks arise for companies,” said Joachim Lang, general manager at the Federation of German Industry. A word of warning from a respected leader, at a time when industry lobby groups and wholesale businesses fear that the new law increases bureaucracy and suggest that price rises may be inbound. 

The Take of German Giants

After looking at the incoming legislation, Daimler AG, known more commonly as the automotive giant Mercedes-Benz, a company which, should there happen to be any ESG-compliance issues along its multinational supply chain, would pay a hefty fee, is welcoming of the push for change but hesitant about certain aspects of the bill. 

“Daimler's position is: The respect for human rights is a central aspect of our sustainable business strategy. We, therefore, welcome the progress made on the Supply Chain Act. Although the regulations are very ambitious, the proposed legislation has a sound approach overall. It is based on internationally recognised human rights and on international agreements. And it gives companies more legal certainty in an area that has so far only been partially regulated.

Supply chains are not "chains" but rather exceedingly complex networks: Daimler alone has over 60,000 direct suppliers - and many more sub-suppliers. For this reason, we also consider the proposed risk-based gradual model to be sensible. The responsibility of the companies lies primarily in their own business area and with their direct suppliers. Companies must then take action in the deeper supply chain if there are concrete indications of human rights violations. Daimler AG already does that today. 

Even though we support the proposed legislation in principle, we consider some aspects to be critical, e.g. the planned fines of up to 2% of the average annual turnover. Instead of threats of sanctions, we consider concrete measures, which companies must take in the event of deficits, to be more expedient. In addition, certain wordings are still vague and leave room for interpretation. Terms such as, e.g. "fair standard of living" should be phrased precisely in order to create legal certainty. Furthermore, documentation and reporting requirements should not lead to unnecessary bureaucracy and should be harmonised with existing rules. On the one hand, this does not help the people on the ground, and on the other hand, it puts a burden on the companies – and the implementation can pose substantial challenges for smaller companies in particular.”

This law is arguably one of the most important developments in the supply chain space so far this year. But it must be remembered that changes do not and will not happen at the push of a button and that democratic principles should be applied to the discussion prior to enshrining legislation into tablature. Environmental and human rights advocacy is a hike, not a brisk walk around the park ─ so, for German companies, it’s time to get their boots on the ground and start assessing their global, interconnected supply chain operations. And, hopefully, they’ll set a stellar example for the rest of us.

 

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