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What are the correct environmental policies of                           Smaller companies feel more under threat from cost
companies and what actions are they taking?                              increases, partly because they have done least to meet
                                                                         legislation. European Community legislation is the main
                                                                         force influencing change.

                                                                         Only 19 per cent of companies have a specific "logistics-
                                                                         and-the-environment" policy and only 7 per cent have
                                                                         undertaken work in all of the five key areas surveyed.
Going Green:                                                             However, most companies have undertaken some work.
                                                                         For these companies, this work is primarily driven by
                                                                         legislation and the desire to reduce costs. There is
                                                                         considerable uncertainty about the commercial benefits
The Logistics                                                            of responding to many environmental concerns. A large
                                                                         proportion of companies therefore intend to wait until they
                                                                         are forced into action by legislation.

Dilemma                                                                  Under Pressure
                                                                         Extent of Environmental Pressure
                                                                         Companies are coming under increasing pressure to
                       Jan Szymankiewicz                                 accommodate environmental concerns in their business
                                                                         activities. The survey found that companies with larger
                                                                         turnovers are feeling the pressure more severely than
       Logistics Information Management, Vol. 6 No. 3, 1993, pp. 36-43
                                                                         smaller companies. Companies operating in the industrial
                      © MCB University Press, 0957-6053                  and fast moving consumer goods (FMCG) sectors feel
                                                                         under greater pressure than those in other sectors. The
                                                                         results are shown in Tables I and II which demonstrate
                                                                         the differences by turnover and by type of business.

                                                                         The majority of companies, some 70 per cent of
This survey of the members of The Institute of Logistics                 respondents, feel increased pressure. It is of interest to
and Distribution Management was conducted by P-E                         note that, of all the sectors experiencing environmental
International's logistics consultancy practice and its                   pressure, distribution companies are feeling it least. This
environmental consultancy business, David Bellamy                        is shown in Table I.
Associates. The vast majority of companies which
responded want to introduce less environmentally harmful                 There are several reasons for the large difference between
logistics activities. However, most feel constrained by the              distribution companies and the rest. The first is that, as
present business climate.                                                service providers, these companies are principally
                                                                         concerned with responding to customers' contract
In practical terms nearly all of the major contributions to              requirements. Any environmental concerns are likely to
environmental improvement already undertaken also have                   be those of the customers and will be influenced by the
a very significant cost reduction element. Over two-thirds
of those surveyed believe that environmental pressure will
increase and nine out of ten companies expect to adopt
environmentally aware policies within the nextfiveyears.                  Table     I.     Companies under Increasing Environmenta
                                                                                           Pressures, by Size of Company
Compared with industrial, retail and other companies,
distribution companies feel under less pressure to respond                 Size of company                  Percentage of
to environmental issues. Their main concern is to satisfy                  (£ millions)                      companies
the environmental and contractual needs of their clients.
Larger companies are responding more positively to                         0-5                                   50
increased environmental pressure by introducing innovative                 6-25                                  64
policies and training programmes. Waste and packaging
                                                                           26-100                                69
disposal is the major logistics environmental issue facing
industry today.                                                            101-250                               84
                                                                           >250                                  88
Over two-thirds of companies expect operating costs to                     All companies                         70
increase as a result of addressing environmental issues.
                                                                      GOING GREEN: THE LOGISTICS DILEMMA                       37

Table     II.     Companies under Increasing Environmental         contractual arrangements. The second reason is that
                  Pressures, by Type of Business                   distribution companies have been exposed to many of
                                                                   these environmental pressures for the last 20 years.
 Type of business             Percentage of companies              Responding to these issues is therefore seen as "business
                                                                   as usual" rather than as a pressure. Third, the distribution
 Food and drink                            69                      arena is highly competitive and price sensitive. There are
 Other FMCG                                83                      therefore few easy options when seeking environmentally
 Consumer durables                         74                      benign operations.
 Industrial                                81
 Distribution                              53
                                                                   Sources of Environmental Pressure
 All companies                             70                      The clearest single source of environmental pressure on
                                                                   company operations is European Community legislation.
                                                                   Nearly twice as many companies feel that EC legislation
                                                                   is the driving force rather than UK legislation.
Table     III.    Sources of Environmental Pressure
                                                                   Respondents acknowledge that legislation is the main
                                                                   factor influencing their position on environmental matters
 Source                       Percentage of companies
                                                                   and that customer pressure, lobby group influences and
 EC legislation                            78                      employee concern rank well behind. Table III
 UK legislation                            47
                                                                   demonstrates the relative importance of the sources of
                                                                   environmental pressure.
 Customers                                 40
 Pressure groups                           20                      Tables IV and V examine these sources of pressure and
 Employees                                 18                      analyse them by company turnover and business sector.
                                                                   The picture they paint shows that company size and
                                                                   business sector have some bearing on the sources of
                                                                   pressure. For example, larger companies are more
                                                                   concerned with responding to pressures caused by EC
Table     IV.     Sources of Environmental Pressure by Size        legislation. Small companies on the other hand feel no
                  of Company
                                                                   pressure at all from either their employees or lobby
                   Percentage of companies, by turnover
                                (£ millions)
Source              0-5 6-25 26-100 101-250 >250                   Again it is intriguing that distribution operations rank lowest
                                                                   in terms of feeling pressure in three of the five areas. The
EC legislation       58     74       86         79    82           differences were most pronounced in the lack of pressure
UK legislation       33     49       43         47    59           from both customers and employers. This reflects the
Customers            17     44       46         42    35           distribution dilemma. How can a highly cost-conscious and
                            21                  32    18
                                                                   service-responsive industry, which is largely road based
Pressure groups       0              23
                                                                   like distribution, respond to increasing environmental
Employees             0     28       14         21    12

Table     V.     Sources of Environmental Pressure by Type of Business

                                                        Percentage of companies, by type of business
 Source                          Food and drink       Other FMCG           Consumer             Industrial      Distribution

 EC legislation                       76                   83                  84                   73              77
 UK legislation                       38                   44                  58                   54              43
 Customers                            48                   39                  37                   46              30
 Employees                            10                   22                  32                   27               7
 Pressure groups                      14                   28                  21                   31              13

Key Issues                                                       Most companies acknowledged that eventually they would
                                                                 have to go green but that they would do so only as a result
Respondents were asked to highlight what they feel are           of legislation and that the process could take five years.
the most important environmental issues facing them. Two         We asked companies about the timescale over which they
clear issues emerge. The first is the disposal of waste and      expected to adopt less environmentally-damaging measures.
packaging material which a quarter of respondents feel           One-third of companies have already implemented some
important. A quarter also feel that noise and emission levels    environmental policies and they expect to continue with
are the major issues challenging logistics operators.            further policies in the next few years. By 1997, over 90
                                                                 per cent of the surveyed companies anticipate having an
Other issues are the public perception of road freight,          environmental policy. We found that larger companies are
the use of precious fuel resources and road                      more likely to have developed policies already. The few
congestion.                                                      that believe that action will never be required tend to be
                                                                 small companies with turnovers under £5 million.
Table VI shows the full results and their relative importance.
                                                                 The response of companies falls into two categories. There
It is interesting to note that the cost of going green and       is the corporate response, with the introduction of group
the possibility of exploring alternative transport modes         initiatives and there is the response at the operational level
rank so low, particularly as 71 per cent of companies feel       where procedures are introduced to make operations less
that further environmental policies will increase costs (see     environmentally harmful. The latter covers a wide area of
Table VII). Legislation is likely to increase costs to all       activity and includes transport, warehousing and
companies and so will not adversely affect individual            administration operations.
companies, relative to their competitors. Thus, companies
expect costs to increase but do not perceive it to be a major
                                                                  Table          VII.    Companies Expecting Environmental
Here again there are some differences between sectors.                                   Policies to Increase Operating Costs, by Type
Industrial companies feel costs will increase to a greater                               of Business
extent than companies in consumer durables or
distribution.                                                                                                  Percentage
                                                                   Type of business                           of companies
However, an analysis by company turnover reveals that
                                                                    Food and drinks                                69
smaller companies expect to be hardest hit by increases
in cost brought about through environmental policies, as            Other FMCG                                     78
shown in Table VIII.                                                Consumer durables                              63
                                                                    Industrial                                     85
                                                                    Distribution                                   63
The Logistics Response
                                                                   All companies                                   71
We were keen to explore the response of logisticians to
this increased environmental pressure.

 Table      VI.     Major Logistics Environmental Issues          Table          VIII.   Companies Expecting Environmental
                                                                                         Policies to Increase Operating Costs, by
                                           Percentage of                                 Size of Company
  Issues                                    companies
                                                                   Size of company                            Percentage of
  Waste and packaging disposal                  25                 (£ millions)                                companies
  Noise and emission levels                     23
                                                                   0-5                                             75
  Public perception of HGVs                      15
                                                                   6-25                                            85
  Fuel resources and utilization                 12
                                                                   26-100                                          60
  Road congestion and vehicle
  utilization                                    11                 101-250                                        68

  Costs of environmental measures                5                  >250                                           65

  Modal selection                                2                 All companies                                   71
                                                                        GOING GREEN: THE LOGISTICS DILEMMA                   39

Corporate Response                                                   Tables IX and X show the response of companies to the
We wished to determine the framework within which                    increased environmental pressure at the policy level.
distribution managers pay attention to the environment.
Their personal desire to establish environmentally benign            The key findings in the area of policy are as follows:
distribution channels is apparent. Yet the commercial                   •   Larger companies are much more likely to have
framework within which they can take action presents them                   undertaken policy work than other companies.
with a dilemma. In the main there tends to be little in the
way of a policy framework other than one of cost reduction              •   Companies with a turnover in excess of £250 million
for them within which to work.                                              are more likely to have introduced written policy
                                                                            statements, assigned staff to specific environmental
                                                                            responsibility and introduced environmental training.
Companies were asked if they had any policies concerning
environmental issues. One-third of respondents have no                  •   Companies with a turnover greater than £100 million
specific policy. Of the remaining two-thirds only a few, just               are more likely to have conducted environmental
7 per cent, had a policy on all the five areas surveyed,                    audits than smaller companies.
  (1) company-wide policies;                                         Operational Response
                                                                     We now examine what practical actions companies are
   (2) specific logistics policies;                                  taking to reduce the impact of their logistics operations
   (3) training policies;                                            on the environment. This is considered under the following
   (4) environmental audits;
                                                                        •   transport control;
  (5) individuals with environment responsibilities.
                                                                        •   fuel efficiency;
Only 19 per cent of the companies have a specific logistics             •   emission control;
environmental policy. There do not appear to be many
                                                                        •   warehousing;
obvious connections between either business sector or
company size and the existence of an environmentally                    •   office and administration;
conscious logistics policy.                                             •   packaging.

 Table        IX.     CompanieswithSpecific Environmental Policies, by Size of Company

                                                      Percentage of companies with policy, by turnover (£ millions)
  Policy                                      0-5            6-25        26-100        101-250        >250            All

  Company                                     25                36          40            63             76           46
  Logistics                                    8                23          14            21             24           19
  Training                                    25                31          37            32             65           37
  Audits                                      25                23          31            63             53           36
  Responsibilities                            50                38          20            42             88           50

 Table        X.     Companies with Specific Environmental Policies, by Type of Business

                                                       Percentage of companies with policy, by type of business
                                           Food and        Other       Consumer
  Policy                                     drink         FMCG         durables    Industrial    Distribution        All

  Company                                     45             61             42            65             23           46
  Logistics                                   10             17             32            27             13           19
  Training                                    24             50             63            50             13           37
  Audits                                      31             33             47            50             23           36
  Responsibilities                            38             56             58            62             43           50

Transport Control                                                   Table      XII.    Companies Having Specific Fuel Efficiency
Policies relating to the life of vehicles are important to far                         Related Policies
more companies than are other aspects of transport which
impact on the environment. The policies which are adopted                                          Percentage of companies
by many companies tend to be in areas in which there are
                                                                                                    For at least   For all
potential cost savings. Areas such as minimizing noise              Policy                         some vehicles vehicles
pollution and avoiding travelling through residential districts,
which may have cost penalties, are less likely to have been         Preventive maintenance               96            91
implemented.                                                        Correct vehicle/load
                                                                    selection                            87            69
The policies set out in Table XI are concerned with road            Route rationalization                81            52
transport and this mode of transport is dominant. Less than
5 per cent of respondents use rail for more than 5 per cent         Backloads                            68            28
of their traffic. Fewer than 20 per cent of respondents have        Aerodynamic body kits                67            14
a process for considering anything other than road                  Driver training                      64            46
transport.                                                          Speed limiters                       51            14
                                                                    Reduce unladen weight                39            18
Fuel Efficiency                                                     Fuel additives                       33            13
Fuel usually accounts for about 20 per cent of the operating
cost of a large commercial vehicle. Consequently                    Driver incentives                    26            17
distribution managers have long been keen on obtaining
the best levels of fuel consumption. Vehicle technology is
itself improving and leading to lower fuel consumption.
Increasingly vehicles are being advertised on their fuel
efficiency as much as their power.                                 Emission Control
                                                                   The emission of noxious substances through vehicle
Transport managers use a wide variety of techniques to             exhausts has been a hazard since the development of
improve fuel efficiency (see Table XII). Preventive                the internal combustion engine. Indeed, there remains
maintenance optimizes efficiency. Correct vehicle selection,       considerable debate over the relative environmental
efficient routeing and minimization of empty running are           impact of diesel and petrol engines and catalytic converters.
all obvious ways of reducing transport costs. Attaching body       Catalytic converters, for example, reduce the noxious
kits which increase aerodynamic efficiency of vehicles have        gases but increase the emission of carbon dioxide.
a proven if limited benefit and are employed by many               This then contributes further to the greenhouse effect.
companies. Driver training ranks next. The use of                  However, transport is not the main contributor of these
incentives to encourage driver fuel efficiency is employed         gases.
by nearly a quarter of companies.
                                                                   Regular engine maintenance was accepted by most
For the future most companies are giving active                    respondents as having some benefit on fuel consumption
consideration to speed limiters, which will in any case soon       (see Table XIII). The introduction of catalytic converters
be compulsory for all HGVs, and driver incentive schemes           was also adopted by nearly 60 per cent of respondents.
based on fuel efficiency.                                          Measures such as using fuel additives which reduce waxing,

 Table       XI.    Companies Having Specific Transport             Table      XIII.   Companies Having Specific Emission
                    Policies                                                           Reduction Policies

                                            Percentage                                             Percentage of companies
   Policy                                  of companies                                             For at least   For all
                                                                     Policy                        some vehicles vehicles
  Life of vehicles                              81
  Minimize travel distance                      69                   Regular engine tuning               87            71
  Minimize travel time                          67                   Low asbestos brakes                 68            26
  Avoid congestion                              62                   Catalytic converters                59             6
  Minimize noise pollution                      38                   Fuel additives                      33            13
  Avoid peak hours                              33                   Low sulphur diesel                  25             7
  Avoid residential travel                      30                   Vapour recovery units                8             1
                                                                  GOING GREEN: THE LOGISTICS DILEMMA                    41

improve cleaning and cetane levels and may improve fuel         Distribution managers are, in the present climate, more
consumption by up to 2 per cent are not widely employed.        concerned with obtaining tangible operational savings. Just
The use of low sulphur fuel is also a matter of debate.         over half the respondents have introduced energy efficient
Current fuel sources represent a broad spread of sulphur        lighting, heating and battery recharging schemes. The
content from 0.07 per cent to 0.3 per cent. While there         difficulty here is that direct energy consumption typically
is an overall trend towards suppliers reducing sulphur          accounts for only between 2 and 4 per cent of the total
content, the projected reduction in maximum sulphur level       cost of operating a warehouse. It is often the case that
is thought to be beyond the capacity of present production      other cost considerations such as productivity levels take
plants. Moreover, whilst it may reduce emissions, low           up most of management's time.
sulphur fuel is thought to have a detrimental effect on
vehicle injection systems, again posing a dilemma for           New warehouses are, however, increasingly being designed
transport management.                                           to be less environmentally harmful. Nearly all companies
                                                                consider energy conservation and efficiency in warehouse
Warehousing                                                     design and almost as many consider noise avoidance
The lifespan of a warehouse is typically much longer than       procedures. Overall the companies try to use environ-
the lifespan of a vehicle. While changes in the environmental   mentally sound materials in their fixtures and fittings.-
impact of vehicles can be achieved over relatively short
periods of time, the same cannot be said about the large        Office and Administration
amount of old warehousing still being used.                     Office and administration procedures tend to generate a
                                                                large amount of paperwork. Nearly 70 per cent of the
                                                                survey respondents have a policy of either reducing or
                                                                recycling this paper. Other procedures are, however, less

 Managers are concerned
                                                                 Table     XV. Percentage of Companies Having Specific
with obtaining operational                                                         Policies in the Office
         savings                                                                                     Percentage of
                                                                  Policy                          companies with policy

Many general environmental aspects of warehousing are             Paper reduction/recycling                 69
covered by existing health and safety legislation and             Environmentally sound
most companies use this as their main policy framework            cleaning materials                        46
(see Table XIV). Environmental policies concerned with            Green purchasing policy                   41
the running of existing warehouses are more important             Environmentally friendly
than those related to upgrading, location and design. This        fixtures/fittings                         35
is not surprising as it reflects the fact that far more           Recycling of toner
companies operate warehouses than regularly upgrade or            cartridges/ribbons                        18

 Table      XIV.    Companies Having Specific Warehousing
                                                                 Table     XVI.     Companies Having Specific Packaging
                                      Percentage of
   Policy                          companies with policy
                                                                  Policy                                 of companies
  Health and safety                          84
  Warehouse maintenance                      57
                                                                  Minimization                                   70
  Warehouse management                       54
  Warehouse upgrading                        45                   Choice of materials                            62
  Warehouse location                         39                   Re-use                                         56
  Warehouse                                                       Recyclability                                  54
  design/construction                        35                   Returnability                                  37

widespread. "Green" purchasing and recycling policies            goods businesses have developed faster than other
tend to be used by less than half the responding companies       business sectors.
(Table XV).
                                                                 In practical terms, nearly all the major contributions to
Packaging                                                        environmental improvement that have already been
Three in every four of the surveyed companies are involved       undertaken also have a very significant cost reduction
in the packaging/repackaging of goods.                           element, and this is likely to have been the main driver.
                                                                 These include vehicle life policies and the minimization
The disposal of waste and packaging was highlighted above        of time and distance on the road. Policies which may have
(Table VI) as the single most important environmental            cost penalties, such as reducing pollution and avoiding
concern, cited by a quarter of all respondents. Most             residential travel, are much less likely to have been
companies have a policy which covers some of the various         implemented.
elements of packaging (see Table XVI). The most common
policy is one of minimizing packaging levels. Other              Three out of four of the companies in the survey are
companies have policies which cover the choice of                involved in the packaging of goods. For these companies
materials and the re-use and recycling of packaging.             the environmental impact of packaging is important, but
Companies which do not currently have a policy are               the emphasis here is also on those areas where this can
actively exploring the areas of packaging minimization and       be coupled with reductions in cost, such as packaging
the returnability of packaging.                                  minimization and the use of alternative materials. Aspects
                                                                 which may require additional expenditure, such as
                                                                 returnability, are much less common. Nevertheless, waste
Conclusions                                                      and packaging disposal is seen by respondents as the major
The results of this survey have confirmed that                   logistics environmental issue facing them today.
environmental issues will be one of the most significant
factors affecting logistics during the 1990s and beyond.
The environment has come a long way from being a matter
of peripheral interest and it is now recognized as being
a major pressure on costs and performance.
                                                                   The need to respond to
                                                                 environmental pressures is
In many areas of logistics this awareness has not been
effectively translated into action. In this respect the survey   expected to increase
has confirmed the findings of a David Bellamy Associates'
Research Report Industry Goes Green compiled in 1991.
This earlier survey concluded that whilst industrial             Over two-thirds of companies are coming under increasing
managers are environmentally aware, only a minority felt         environmental pressure, and this pressure increases with
able to take positive action in a business context and that      size of business. Legislation, primarily from the European
the ability to take positive action was the main distinction     Community but also from the United Kingdom
between the leaders and the laggards on the environment.         Government, is likely to be the most significant driving
                                                                 force. Customers, employees and pressure groups are
Our current survey of ILDM members shows that the                seen to be less important in this regard. The timescale
development of logistics environmental policies has been         for the development of more environmentally-aware
slow, and action, where taken, has been in those areas           policies is likely to quicken with over 90 per cent of
which promise cost reduction rather than increased cost.         companies expecting to implement such policies in the
The need to respond more rapidly to increasing                   next five years and 35 per cent expecting to take action
environmental pressures is expected to increase. This            within the next year.
response will be driven by legislation rather than by the
requirements of customers, pressure groups and                   Over two-thirds of companies expect costs to increase
employees. Over two-thirds of companies expect these             as the result of introducing new policies. Industrial
pressures to increase operational costs.                         businesses are the most pessimistic in this regard while
                                                                 distribution companies believe the cost impacts will be
Less than half of the companies have written environ-            less significant.
mental policy statements and fewer than one in five have
a specific logistics environmental policy. Even among the        In the field of logistics, managers are in an excellent
largest companies, only one in four has a logistics              position to take positive action to improve their
environmental policy. Industrial products and consumer           environmental performance. However, action should not
                                                                    GOING GREEN: THE LOGISTICS DILEMMA                  43

be restricted to those areas where cost savings may be
immediately apparent. Legislation will force many changes
                                                                   Table       Al.    Companies by Turnover (£ millions)
in the way companies package and transport products.
                                                                    Turnover                               Percentage
Innovative solutions will be required to comply effectively
with new laws and environmental implications will be                <5                                        10
required to be integrated into all business decisions.              5-24                                      32
The ability to be proactive and to improve performance
in areas such as packaging will determine which                     25-99                                     29
companies will prosper in the demanding economic                    100-249                                   15
climate of today.                                                   >250                                      14

Appendix: Survey Background
All members of the Institute of Logistics and Distribution
Management were sent a questionnaire in the middle of 1992.
This questionnaire asked members to describe their current         Table       All.   Companies by Business Sector
company's environmental policies, to describe their personal
and corporate goals towards the environment, to comment on          Business sector                        Percentage
the sources of environmental pressure and to predict their own
company's response.                                                 Food and drinks                           24
In all, the respondents to the survey are responsible for 40,000    Other FMCG                                15
commercial vehicles, 32,000 company cars, and 1,700                 Consumer durables                         15
warehouse operations. The majority use road as their main
mode of transport. Road accounts for 88 per cent of all their       Industrial                                21
movements with rail at 2 per cent, air at 4 per cent with the       Distribution                              25
remainder composed of sea and other means.

Jan Szymankiewicz is Managing Director of Logistics Consulting Services, P-E International plc, Surrey, UK.

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