DHL Group accelerates its roadmap to decarbonisation
ACCELERATING SUSTAINABLE BUSINESS 2021-2030 HIGHLIGHTS:
Science-based target for carbon reduction: <29m tonnes by 2030
€7bn invested in green technologies by 2030
30% ESG-related targets in the Corporate Board’s annual bonus
At the next Annual General Meeting, to be held on May 6, 20201, DHL Group’s Board of Management and Supervisory Board will be proposing to shareholders that the remuneration system for the Board of Management be more closely aligned with sustainable business development.
The group signals a clear commitment to maintaining sustainability as a top business priority by looking to consider the achievement of ESG targets when calculating the remuneration of the Board of Management.
"As the world's largest logistics company, it is our responsibility to lead the way and guide the logistics industry into a sustainable future. We are turning our yellow Group into a green company and making an important contribution to our planet and society," says Frank Appel, CEO of Deutsche Post DHL Group. "I am convinced that by focusing even more on our ESG goals, we will remain the first choice for customers, employees and investors - and thus lay the foundations for long-term economic success."
In 2017 the DHL Group became the first logistics company in the world to set a target of reducing its greenhouse gas emissions to net-zero by 2050 and offers numerous innovative solutions to make supply chains more sustainable and help its customers achieve their environmental goals. Sustainability remains a fundamental component of the corporate strategy and culture.
"Covid-19 has once again reinforced the major megatrends of our time: globalisation, digitalisation, e-commerce and sustainability - the four drivers of our 'Strategy 2025'. Of these topics, sustainability is the most pressing challenge. With our sustainability roadmap, we are stepping up our efforts and explicitly promoting the Sustainable Development Goals of the United Nations,” Appel said.
Invested in sustainability
In 2020, the group’s emissions were 33 million metric tons.
Committed to ambitious CO2 reduction targets, DHL Group is part of the Science-Based Target Initiative. It estimates that without the measures being put into place through the new sustainability roadmap, emissions would hit approximately 46 million tons in 2030.
Appel says, "Sustainable, clean fuel alternatives are elementary for climate-neutral logistics in a globalised world. In air transport, in particular, these could help reduce CO2 emissions. That's why we will engage even more intensively in initiatives and strengthen cross-industry exchange to develop a global strategy and standards here. One thing is certain: Only by joining forces - across countries and sectors - will we achieve truly sustainable progress in all areas."
Despite the expected continued strong growth in global logistics activities, the company has now made a commitment to reducing annual group emissions to under 29 million tons by 2030.
- By 2030 the DHL group plans to invest about 7 billion euros in climate-neutral logistics solutions.
- The group is continuing to drive forward the electrification of its vehicle fleet For short distances and the last mile.
- The group aims for 60 per cent of global delivery vehicles for last-mile delivery to be electrically powered (up from 18 per cent it had in 2020), which means more than 80,000 e-vehicles will be on the road.
- As electric vehicles are not considered an alternative solution for longer routes for the foreseeable future, especially that which entails air transport, the DHL Group is pushing for the development and use of fuels produced from renewable energies.
- At least 30 per cent of fuel requirements in aviation and line haul are to be covered by sustainable fuels by 2030
- The group is investing in environment-friendly properties such as office space, mail and parcel centres, and logistics warehouses, and all new buildings are being constructed will be climate-neutral.
Under social responsibility, the DHL Group promotes diversity and ensures they maintain “employee satisfaction at a high level.
- The proportion of female executives in management is expected to increase from 23.2 per cent today to at least 30 per cent by 2025.
- The proportion of female executives in management is supposed to increase from 23.2 per cent today to at least 30 per cent by 2025.
- The group has set itself the goal of maintaining the approval rating in the "employee engagement" category in the annual global employee survey at a consistently high level of above 80.
- The Group commits to invest 1 per cent of its net profits annually in its social impact programs and initiatives.
"Our motivated, diverse workforce is the key to excellent service quality and high customer satisfaction. Satisfied customers are the basis for economic success. This is another reason why we are convinced that it is worth actively promoting equal opportunities", says Thomas Ogilvie, Chief Human Resources Officer and Labor Director at Deutsche Post DHL Group.
Deutsche Post DHL Group also intends to further expand its social contribution to society in the coming years.
In the event of a disaster, the disaster response program provides emergency logistical assistance quickly and free of charge. The Group also continues to expand their program, which looks to improve young people’s employability living in socially disadvantaged circumstances due to poverty, loss of loved ones, or fleeing from disaster by preparing them with the necessary skills to successfully transition to the world of work.
To ensure it aligns its supplier base with corporate objectives, the group has updated it’s Code of Conduct for Suppliers, aligning rules and standards more closely with the sustainability criteria. A new policy statement on human rights has also been introduced.
" As a market leader, we are a role model for responsible and ethical business practices and fair behaviour. is an integral part of Strategy 2025, and all relevant KPIs are therefore integrated into the management of the Group and its regular reporting ", says Melanie Kreis, Chief Financial Officer of Deutsche Post DHL Group.
Germany Adopts Revolutionary Supply Chain Human Rights Laws
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.