Facing material scarcity, massive demand in emerging markets and quickly evolving technologies, this generation’s transportation titans look to address their newest challenge/opportunity: corporate responsibility. And like recent MPI research into CSR suggests for the meeting sector, the new millennium’s transport CEOs face the specter of self- and market-based change or the possibility of government regulation.
With these and other issues in mind, several transportation executives joined Rio environmental secretary Suzana Kahn Ribeiro and Jogar Shah of nonprofit Carbon War Room in a frank discussion of their industry’s future on Feb. 14 during KPMG’s Business Perspective on Sustainably Growth: Preparing for Rio+20 event at the Sheraton New York Hotel and Towers. The conversation focused on transport trends, which will ultimately affect the lifeline of the meetings industry itself, from the health of air transit companies to the streamlining of shipping.
And transport businesses have a responsibility to be sustainable, according to Chris Schroeder, head of sustainable development for Qatar Air, which didn’t exist in 1997 but now boasts more than 100 planes (and 200 on order). Three years ago, the airline invested in an alternative fuel project. It supports Qatar’s biofuel development program.
To be a sustainable business, Schroeder says the company must have energy security, and move from a fuel taker to a fuel maker, independent of the vulnerable oil market. For Schroeder, government regulation isn’t the answer. He cites the E.U. carbon tax. The government’s intentions were good, he says, but its implementation was a mess—despite the fact that the aviation sector itself was first to tackle emission standards.
Schroeder says policymakers are restricting movement, and impeding progress that businesses can and are willing to make, since they wouldn’t stay in business otherwise. Scott Wicker, chief sustainability officer for UPS, says corporate responsibility just makes business sense; fuel and carbon efficiencies drive profits. In his mind, any regulations on industry must be global, like the companies they regulate.
Numerous standards impede business and create inefficiencies, and confuse consumers who can’t differentiate the competition. UPS has been a leader in efficiency and sustainability for years. Its “no left turn” policy was groundbreaking, and now driver clipboards leverage telematics that give each driver 200 data efficiency points. Drivers review their routes. They know when they braked too hard and when they drove efficiently. Supervisors use the points to help change driver habits and increase fuel savings. The company also uses rail transport and other intermodal shipping to create huge efficiency gains.
In late March, UPS joined U.S. President Barack Obama’s Clean Fleets Program (together with rival FedEx), pledging to help develop new green vehicle technologies and taking our ideas and sharing with smaller companies but getting all of these technologies to work to scale. It also boasts a partnership with the Environmental Protection Agency’s Smart Way program that tracks emissions. During times of disaster, UPS offers logistics expertise—after Haiti earthquake, a team organized supply shipments for the Red Cross. Wicker says all these measures ultimately help UPS customers.
The company’s next step is to encourage customers to take advantage of its programs, like carbon neutral shipping, which it offers without much consumer traction. Schroeder of Qatar Air sees this. The company offers voluntary carbon abatement for passengers, but he says it failed in the education campaign. When, the airline added a description to its onboard entertainment and magazine, conscription jumped form 2 percent to 12 percent.
Meanwhile GM has seen the rise of its efficiency since bankruptcy in 2009. It now sells more vehicles in China than it does in the U.S., says David Tulauskas, the company’s director of sustainability. Since that time, GM has recognized the need to play a greater role in sustainable mobility—especially in research and development.
It was the first auto company to complete Global Reporting Initiative guidelines, and now it looks to do so again. Tulauskas says the company is unifying under a holistic systems approach that requires collaboration with other transport and major cities. But regulation is also seen as a problem in the auto industry, which Tulauskas says has driven many manufacturers to over-engineering.
He points to the success of the Chevrolet Volt electric car, which GM delivered in 2010 despite bankruptcy. It not only provides efficiency, but also encourages and challenges consumers to drive more resourcefully. GM has also teamed with RelayRide, which helps car owners make extra cash off their idle wheels by renting them out to neighbors—mad, or genius business decision? Tulauskas even discusses the possibility of autonomous vehicles waiting take rail passengers the last mile to their destinations.
For business leaders like Blair Wimbush (corporate sustainability officer for rail operator Norfolk Southern Co.), profitability is part of the sustainable equation. Norfolk is reducing energy wherever it’s used—from something as simple as lights to its HVAC operations to its locomotives.
Several years ago, Norfolk adopted reforestation for carbon mitigation. It invests in a tree-growing project (6 million in the Mississippi delta) and the Longleaf Alliance. It recently launched a renewable fuel initiative that can pour directly into a diesel engine. Wimbrush says policymakers need to engage business to find cooperative answers.
Norfolk has instituted efficiencies on its own as part of sustainable objectives and smart business decisions. Dashboards calculate starts and stops and give real-time information that helps optimize fuel economy. New private-public partnerships have moved shipping lanes from the highways to the railways. The government pays a percentage of costs, and Norfolk delivers ROI through tunnels and lines that can shave miles off routes.
Schroeder of Qatar Air sees the benefit of working with government. After signing the U.N. Global Compact, the airline has been involved in sustainability roundtables with city governments, looking at direct and indirect ROI. He says the company invests in biofuels, not to save 1 percent in five years, but knowing the benefit in 10 years.
For these businesses it’s not so much anti-regulation, as it is self-regulation. When government does write policy, which at times it must, these leaders ask for industry input—and above all, global rules that create consistency across the supply chain. All this and more will be discussed at RIO+20: The U.N. Conference on Sustainable Development this June, a conference designed to secure political commitment for sustainable development, assess progress and gaps and address new and emerging challenges.
Outcomes from KPMG's Business Perspective on Sustainable Growth: Preparing for Rio+20 will be shared at Rio+20. Both events aim to craft a forward-looking agenda to focus on global green growth. KPMG International is hosting the event, in cooperation with the UN Global Compact, the World Business Council for Sustainable Development and the United Nations Environment Programme.