Environmental, Social, and Governance (ESG) business strategies have been a major talking point for several years. As consumers become more aware of how a business impacts the world it operates in — both positively and negatively — they are more willing to vote with their wallets and shop at places that align with their values.
There are a near-limitless number of ways to approach an ESG strategy and several different tactics businesses can incorporate into one. At WIN, we’ve found that one of those tactics is too often overlooked: reverse logistics.
The reverse logistics aspect of the supply chain is often thought of through a lens of minimizing costs and maximizing efficiencies. That’s true, but a well-executed reverse logistics plan can also have several environmental benefits. Positioned and communicated effectively, these benefits can bolster a company’s ESG efforts.
The Environmental Benefits of Reverse Logistics
Waste Reduction and Recycling
Initiative: Implement programs for product returns, recycling, and proper disposal of end-of-life products.
How to talk about it: No one likes the idea of landfills. The reality is, though, that’s exactly where many returned products will end up. However, if your business has policies and programs in place for refurbishing and recycling them when possible, you’ll be significantly reducing the amount of waste you and your customers generate. To communicate this, keep track of the amount of material that’s avoided the dump and add it to any ESG reports or marketing material. You can do this by the number of products or use a more creative metric like total product weight or value.
Energy Conservation
Initiative: Optimize transportation routes for returns to reduce fuel consumption and greenhouse gas emissions.
How to talk about it: Gas-powered semi-trucks and delivery vans are still the primary ways in which goods get from your warehouse to your customer’s front door. All of these vehicles produce carbon dioxide and other toxic fumes while also consuming fuel. It will be some time before we move to predominately electric fleets, and even then, those have their own issues. By optimizing the routes your trucks take — or reducing them through the use of a third-party logistics partner — you are reducing the amount of greenhouse gasses released into the atmosphere. The average truck traveling 120,000 miles in a year emits 223 tons of C02. So every little bit helps.
Sustainable Practices
Initiative: Use sustainable materials in products and packaging that can be easily recycled or refurbished.
How to talk about it: While it is beneficial for businesses to purchase and recycle packaging where possible, this is more about empowering your customers. People who care about the environment want to recycle and likely have their own recycling bin in the house and a separate dumpster outside. Providing material that isn’t recyclable will actively create a negative experience.
To position yourself as an environmentally friendly brand, feel free to go a step further and use specially printed packaging calling out that it is recyclable.
Reinvesting Savings
Initiatives: Identify any savings generated from reverse logistics strategies and earmark a percentage of them for reinvestment in other ESG-related programs.
How to Talk About It: Optimizing transportation routes can save on gas costs as well as wear and tear on vehicles. Partnering with a 3PL can save money on shipping and storage costs. There is even recyclable shipping material that may be less expensive than what you are currently using.
Reducing spending is an excellent (tax-free) way to improve your company’s overall bottom line. Smart leaders, though, will find ways to reinvest those savings to continue to grow their organization. If ESG is a priority, the first thing to consider is designating a percentage of those savings to back into efforts to improve the community. This could be anything that aligns with your business’ mission and brand. The simplest thing to do is choose a nonprofit organization and donate to them, creating a partnership you both can talk about while making an impact. If you choose to use those funds for an in-house program, make sure your customers know it’s being funded by money that they helped you save.
People Need to Know
One of the most powerful aspects of a reverse logistics program is its ability to support both your bottom line and your ESG efforts. With the right plan in place, you can reduce emissions, use green packaging, and limit your carbon footprint, and save money at each step along the way.