"IN THE FUTURE, CSR WILL NO LONGER MEAN DOING WELL AND THEN DOING GOOD, BUT DOING WELL BY DOING GOOD."
Christof Ehrhart
In a world where natural resources are becoming scarce, social issues are on the rise, and reputation has become a key factor for business, corporate social responsibility (CSR) is a popular catchphrase. Considered greenwashing by some and idealism by others, CSR has in recent years evolved from a defensive policy for companies to give back to society through philanthropic engagement into a pragmatic business strategy driving innovation, brand differentiation, and long-term return on investment. Well-managed CSR can create sustainable social value and reduce a company's negative environmental impact for example, while supporting its business objectives, reducing operating costs, and enhancing relationships with key stakeholders and customers. And although CSR is not going to prevent demographic change or reverse the greenhouse effect, companies can, by being responsible, benefit both themselves and society. "Looking to the future, we need a purpose-driven, principle-based approach to CSR, in which business seeks to identify and tackle the root causes of our present unsustainability and irresponsibility, typically through innovating business models, revolutionizing their processes, products, and services, and lobbying for progressive national and international policies," explains Wayne Visser, founder of the knowledge incubator CSR International. In other words, the future belongs to companies that create shared value, as Michael Porter and Mark Kramer, founders of the non-profit consultancy Foundation Strategy Group (FSG), would say. Traditional corporate engagement with society has been rooted in a trade-off mentality fueled by the idea that businesses should contribute to social and environmental causes to bolster their reputation. But creating shared value (CSV) is not about trade-offs. Instead of looking at societal engagement and environmental issues as a cost of doing business, CSV - or transformative CSR - is about developing a competitive advantage. "As such, the driver is corporate strategy - not reputation," says Valerie Bockstette, Director at FSG. "Engagement is not seen as a costly redistribution of profit but rather as an investment with a return expectation. It is not about a CSR department managing an array of projects developed to meet stakeholder expectations or garner a nice headline, but about the entire business innovating to address societal challenges."
Deutsche Post DHL's disaster management program GoHelp is an initiative very close to the heart of everyone involved, and the basis for a longstanding public-private partnership (PPP) with the United Nations. Using its core competence in logistics, its global network, and the know-how of its employees, DHL focuses on all phases of disaster management - preparedness, response, and recovery. The company works with the UN Development Program (UNDP) to prepare airports for disaster response through its program Get Airports Ready for Disaster (GARD), and with the Office for the Coordination of Humanitarian Affairs (UNOCHA) by providing Disaster Response Teams (DRTs) after natural catastrophes. "Working directly with the United Nations is the best way to deliver on short notice," says Christof Ehrhart. "Our strategic partnership is not about giving money, but about bringing in our expertise in the right way to develop knowledge and build sustainable partnership networks."
Studies show that companies with responsible business practices tend to demonstrate a better financial performance than less sustainable competitors. An analysis by the University of Cologne shows that investments in companies rated best-in-class according to their environmental, social, and governance practices, tend to outperform companies rated lower on sustainability by up to 8 percent. "With the limitation of resources and a change in values, companies have to revise unsustainable business models and live up to their responsibility," says Christof Ehrhart, Head of Corporate Communications and Corporate Responsibility at Deutsche Post DHL. "In the past, it may have been enough to adhere to codes and laws. Nowadays though you need additional activities to help solve social and environmental issues. In the future, it will no longer mean doing well and then doing good, but doing well by doing good." Accordingly, CSR experts predict that, as social and environmental problems become increasingly complex, companies will have to move beyond global standards such as the UN Global Compact or ISO 14001 and develop products and processes which meet demands creatively and sustainably. One example is M-Pesa, developed by Vodafone to allow the world's unbanked to perform basic financial transactions with cell phones. At the same time, offering less ethical products and services will no longer be an option. Wal-Mart, for example, voluntarily limits the company to the use of organic cotton, forcing its customers to do the same. Progressive companies will also be required to demonstrate full life-cycle management of their products, in particular committing to zero waste, CO2 neutrality, and water-neutral production, with mandated take-back schemes for most products. Thus Nike has started to reduce its environmental impact by applying "considered design" principles, such as substantially reducing the amount of toxic solvent adhesives that factory workers and waterways have to cope with. Over 130 Unilever factories worldwide send zero waste to landfill, while at the same time saving money to invest in the business. But dealing with all these challenges is not something companies will have to do alone. Cross-sector partnerships will be at the heart of future CSR approaches. No single player will have all the solutions, so companies bring their core competencies to the party on a local and global level. In the wake of climate change, a main concern for business is streamlining processes for supply chain decarbonization - something sought not only by investors, but also by increasingly carbon-conscious consumers. They are forcing retailers and distributors to re-examine their sourcing decisions, and this challenges logistics providers to reduce their environmental impact while creating individual yet scalable solutions for their customers. "After all, logistics is responsible for 12 to 14 percent of the global carbon footprint," says Ehrhart. "Not surprisingly, the majority of customers ask for measures of sustainability, which is why the logistics industry sees its responsibility as an opportunity."
DP DHL recognizes and embraces its responsibility to make a positive contribution to society and the environment.
The sector has accordingly started targeting substantial reductions in CO2 emissions and transportation costs, making meaningful changes in operational efficiency and new technology. One lever is the deployment of green vehicles in urban areas, while aerodynamic technologies, such as those supported by the USEPA SmartWay program, are seen in fleets throughout the business. Other measures include optimizing network logistics, implementing green building technologies, and sustainable packaging initiatives. Cross-sector partnerships are being formed to develop sustainable warehouse designs or strategies for reducing waste levels. Green logistics is a trend. According to DHL's Green Trends Survey it is already important to more than 60 percent of logistics customers, while a majority of end customers is willing to pay premium prices. Not surprisingly, CO2-neutral services are one of the fastest growing products in the business. DHL, for example, through its GoGreen program, contributes to climate protection projects for every GOGREEN parcel delivered by Deutsche Post DHL worldwide. "To offer credible green logistics, you need to calculate exactly how big the carbon footprint of each delivery is, and you need the proper tools and methods to do it," explains Ehrhart. "We believe that it will be necessary to quantify distinct emissions for a sustainable reporting as well as in fulfilling the extremely high expectations of a postmodern economy." And how much does that cost? "At Deutsche Post DHL Corporate Responsibility is intrinsically embedded in our company strategy, which makes it impossible to identify a specific cost of CO2 neutralization," says Ehrhart. That's transformative CSR at work. - Tong-Jin Smith
Container ships are big - and they're about to get bigger. Ten ultra-large vessels will join the world's fleet this year. But is the extra capacity really needed in today's volatile economy? And what is super slow steaming? By the end of 2013, the largest container ship in the world will be Maersk's Triple E. The three Es stand for economy of scale, energy-efficient, and environmentally improved. Ten of these ships will be launched in 2013, and another ten by 2015. They will be 400 meters long and 59 meters wide. To put that in perspective, imagine a building 20 stories high, as wide as an eight-lane highway, and almost as long as the Empire State Building. One of these behemoths could carry over 746 million bananas - enough for every single person in Europe to have one. A train loaded with all 14,770 containers from one of these ships would be 88 kilometers long.
Impressive numbers, but they come with a few caveats. The size of the ships will limit the routes. With a draft of 14.5 meters, they will be too big to use any port in the Americas or pass through the Panama Canal. And once the mammoth container ships do dock, the question is then how to deal with the monsters.
CHALLENGING PORT INFRASTRUCTURELarger ships have better economies of scale, which helps bring down overall transportation costs. However, they could create operational and infrastructure challenges on the landside. If port operators don't improve their infrastructure and intermodal connections, Triple E vessels will not be able to call at them - and this would have far-reaching consequences for global flow of goods.
For now, the ultra-large container ships will be used on the Asia-to-Europe route involving Chinese ports such as Shanghai, Ningbo, and Hong Kong, already fitted with the cranes and moorings needed to cope with the massive ships. In Europe, the ships could dock at Rotterdam or Felixstowe. In Germany, Wilhelmshaven and Bremerhaven could handle loading and off-loading, and Hamburg is increasing capacity.
It is a drastic shift. Moving from a delivery time of just a few days to an average of 25 days from China to Europe is not an easy transition. With air freight, a customer knows the exact time his goods are going to arrive. With ocean freight, a storm out at sea can knock a ship off schedule by days. Many customers looking to cut costs are willing to make the switch. What they ask for in return is predictability and reliability. Ironically, slow steaming can actually help.
SLOW STEAMING CREATES SAVINGSSuper-slow steaming means bringing the speed down from around 20 to 15 knots. This creates savings for carriers, but can damage the engines of older vessels. The new big ships can cruise at lower speeds without damaging their engines. Slow steaming is also more environmentally friendly, reducing CO2 emissions by more than 50 percent per container.
But whether or not ocean freight's fu-ture is green, the bottom line remains. Andreas Bödeker, Head of Global Ocean Freight at DHL Global Forwarding, foresees continued rate volatility. He predicts that with the advent of the big ships in 2013, demand and supply will start to even out by the end of the year. In any case, it is not the size of the ship that counts, but the service. - Gaby Pinkner
