Logistics and being sustainable (Investment Board)

Logistics and being sustainable (Investment Board)
Logistics and being sustainable (Investment Board)
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The Erste AM Investment Board gives a structured form to the ongoing and responsive dialogue with and among sustainability research agencies. The Board offers the chance to integrate in-house and external research. It also discusses rating details, the ESG’s assessment of the IPOs of new issuers and sustainability issues in general.

 

Some time ago the job as a post man was quite a honourable one. Nowadays, the delivery sector is far less likely to be the basis of such musical gems. An ever-growing army of postmen rush from door to door to deliver packages.

Up to 80% of the deliverers are no longer employed by the actual postal services, but by sub-contractors. They get their jobs through tenders. According to our research partners, the lowest price nearly always wins. Hardly any logistics companies demand any form of environmental standards, and only a few pioneers manage to assert their ideas of working conditions at their sub-contractors.

Guidelines not strict enough

All that despite the fact that these working conditions are the most important sustainability risk in logistics. The job of a deliverer and in logistics centres is hard, and the conditions often leave a lot to be desired – a combination of low pay and often unpaid, excessive working hours. And in peak times such as Christmas, the pressure is even higher. If mistakes are made or accidents happen, they tend to result in punishments rather than procedural adjustments. Even Deutsche Post, the ESG industry leader among our research partners, has its weakest spots in this area. PostNL, the Dutch post office, is one of the few companies that reports on accidents of its sub-contractors.

The guidelines of the customers in the environmental area are stricter. Training and telematics promote fuel conservation among drivers. UPS delivery vans are only allowed to turn right (in countries with right-hand traffic) as this is apparently more efficient overall. To what extent infringements (that occur due to time pressure) carry sanctions is not known. But the trend goes towards a rising degree of electrification of the transport fleets anyway. Together with intensified automation, for example due to autonomous driving and robotics, it offers the biggest leverage for the reorganisation of the sector.

Listed online retailers receive bad rating

For changes in the industry to happen, big data also plays a major role. The large online retailers and logistics companies hold detailed profiles of their customers and recipients. This harbours enormous opportunities for both sectors, but at the same time significant risk in the field of data and privacy protection. Most postal companies do not like to talk about the practice of trading addresses, and in the online business, data protection is not top priority either. Hardly any company is certified according to ISO 27001, the norm for data protection. Amazon too, has limited its efforts on its cloud computing business (provision of IT infrastructure, storage space etc.) while the online trade is still left out.

This is hardly surprising. Whereas our research partners have managed to identify a few pioneers in the logistics sector, the entire listed online trading gets a bad report. As one analyst put it succinctly, “The sector changes too quickly to ask far-reaching questions about its sustainability.”

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