Green logistics

The term "green logistics" refers to the efforts to evaluate and minimize the ecological impact of logistics activities, understood as the totality of actions (such as transport, storage, packaging, and waste disposal) supported by products on their way from their point of origin, or the raw material source, through the production system to their final point of consumption or sale. Although core logistics activities have always been important to economic development, they are increasingly seen as a key factor in the evaluation of business performance. Also, organizing logistics in a manner that increases profitability is not the only objective anymore; increasingly, their wider environmental and social costs are being taken into greater consideration, with the purpose of creating value through an even distribution of economic and environmental efficiency.

Brief History

There was very little concern about the harmful effects of freight transport prior to the 1950s, for the most part, as the environment’s capacity to absorb waste was then considered infinite. However, transport by truck grew substantially and brought with it a number of concerns, including air quality and safety. During the 1960s and 1970s, the predominant focus remained on the local environmental impacts, with little or no reference to the global atmospheric consequences of logistical activity. The concept of green logistics originated in the mid-1980s, when the dispersion of acid rain across North America caused by sulfur emissions and the depletion of the ozone layer from chlorofluorocarbons showed that logistics and similar activities could have a large-scale impact on the environment.

In order to solve the problem, several developed countries brought forward the concept of green logistics and started to use it to describe logistics systems and approaches that make use of advanced technology and equipment to minimize environmental damage during procedures. Most of the early research was triggered by a public agenda as emerging environmental pressure groups demanded government intervention to mitigate the damaging effects of freight transport. At the same time, public agencies found new ways and means to improve their awareness and address the problems. As the private sector has grown, business has also gradually seen the need to implement environmental strategies, particularly in their logistics activities. Logistics has exerted ever-increasing pressure on the environment, as global production has grown and thus so has the need for logistics management. Thanks to the boom in the information economy, new ideas for logistics management and new technologies have emerged.

Since the early 1990s, when the green movement began to infiltrate all areas globally, governments, business, and academia increasingly concentrated on the topic of green logistics. As the concept spread throughout the twenty-first century, so did the potential for implementation and growth. For example, the concept of reverse logistics focuses on how a product or elements of that product, like packaging, can return through the supply chain. A similar concept is the circular supply chain, where organizations and companies reclaim as much of the product as possible, recognizing potentials for recycle and end-of-life product uses. Electronic or e-transportation, along with e-vehicles, have also become an important part of green logistics for many companies working toward more sustainable supply chains.

Overview

Green logistics enable all stakeholders to analyze the results of their actions and their impact on the environment, the main purpose being to organize the activities in a supply chain such that the needs of the recipient are met at a minimum of cost to the environment. Initially, costs were defined in purely monetary terms; however, costs gradually came to be perceived as the external costs of logistics in relation with climate change, soil degradation, waste disposal and recycling, air pollution, accidents, noise, or traffic congestion. Many companies choose to adopt green logistics not only because they are important considerations in light of growing industrialization but because these practices can give them a competitive advantage, given that customers are increasingly asking for companies to respect environmental principles.

The ecological risks or problems in logistics determine the degree to which a company’s supply chain must confront the problem of resource preservation of energy or raw materials. A supply chain may be affected by diverse components in this context, the main factors of impact being the stakeholders of the organization and the variable costs of energy and commodities. Among the most important stakeholders are the state and its national and international laws and regulations; the customers who are manifesting a growing awareness and need for ecological products and services; and employees who are asking to work in more environmentally and socially responsible companies. The society, with its intensive demands for corporate social responsibility, and the companies themselves, managing their own motivations and interests, play important roles as stakeholders as well. Of particular significance, there is also the pressure exercised by lenders, insurers, and investors, the main indications of this being the new forms of investment in the capital market. An example is the Dow Jones Sustainability Index, which follows the stock performance of the companies in terms of economic, social, and environmental factors. The extent of a company’s ecological concern is therefore the product of all these complex and constantly changing factors.

Green logistics offers a diversity of new or verified measures in order to protect the environment, these actions being attributed to various degrees of maturity, scope, range, capital spending, or resource issues and expectancies. In accordance with the holistic approach of green logistics, the following are starting areas where measures should be implemented in order to ensure environmental protection and resource conservation: product design and manufacturing, distribution modalities and warehousing, packaging, and waste disposal (involving reverse logistics). Green logistics is rapidly gaining importance with customers and businesses being increasingly aware of ecological issues. At the same time, there is a growing demand for international regulation to be introduced and applied to all aspects of business, including supply chains.

Bibliography

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