Like many global companies, sporting goods retailer Amer Sports, which counts Salomon and Wilson among its marquee brands, was looking to improve its sustainability initiatives. The firm turned to its logistics operation in search of greenhouse gas emissions savings.
GXO Logistics took the mission to heart and introduced an innovative packaging solution. The Small Order Automated Packaging machine took 3D measurements of each item and cut cardboard boxes to fit exactly, reducing cardboard usage by 15%. Installed in Amer Sport’s Saint-Vulbas, France, distribution center, the unit’s precise measurements reduce the amount of cardboard needed for shipping and allow last-mile delivery vehicles to pack more boxes into each vehicle, driving down cost per delivery and reducing vehicle-related emissions. It also reinforces the corners of each box, further reducing damage in transit and leading to fewer carbon-intensive returns.
It is estimated that in 2018, more than 165 billion packages were shipped in the U.S., with the cardboard used in those shipments equaling roughly 1 billion trees. But more precise measuring of boxes is just one example of how contract logistics provider GXO is working to reduce the environmental impact of logistics.
With over 900 warehouses in 28 countries, creating a comprehensive sustainability plan can be difficult, but that is what GXO has done, getting to work on the project last fall just after its spinoff from XPO Logistics (NYSE: XPO).
Watch: Meagan Fitzsimmons discusses GXO’s ESG efforts
GXO Logistics Inc. (NYSE: GXO) has earned an AA rating from MSCI, a global environmental, social and governance firm that ranks companies based on their ESG initiatives and results. In 2021, GXO set five environmental goals:
- 80% global operations using LED lighting by 2025.
- 80% global landfill diversion rate by 2025.
- 30% GHG emissions reduction by 2030 versus 2019 baseline.
- 50% renewable energy in global operations by 2030.
- 100% carbon neutral by 2040.
Meagan Fitzsimmons, chief compliance and ESG officer for GXO, told Modern Shipper the five goals are just a start.
“It’s an ongoing process still,” she said. “We came out with these five goals because they were key goals for us and our stakeholders. It’s certainly not the end of the road.”
Fitzsimmons said the company has engaged key stakeholders to complete GXO’s first materiality assessment and to articulate the ESG priorities, outlined in its first ESG report, released last month.
“We are now in the process of developing an ESG scorecard for greater accountability and to focus our resources where they will be most impactful,” Fitzsimmons wrote in the ESG report.
Automation’s role in sustainability
While much sustainability attention is paid to efforts that are easily measured, such as vehicle emissions, Fitzsimmons said that automation offers many environmental benefits. With more than 200 million square feet of warehouse space, finding ways to improve efficiency is key to driving value for GXO clients and continuing to grow revenue (the company had $7.9 billion in revenue in 2021). Adding robots improves worker productivity between 4x and 6x, and the company is able to increase shipments 5x, it said. Overall labor efficiency improves between 5% and 7% when machine learning is applied.
These are areas that can drive increased sustainability and are often overlooked by companies.
In 2021, 37% of GXO-owned or leased facilities globally were ISO 14001-certified and its logistics center in Trecate, Italy, will become the first LEED v4 Platinum-certified warehouse in the EU. Global scope 1 and 2 emissions have decreased by 13,624 metric tons CO2e since 2019 and emissions intensity has decreased 16.7 metric tons CO2e per million dollars of revenue, or 26%, since 2019, it said.
Inside warehouses, 47% of floor space in the U.S. and Europe uses energy-efficient LED lighting.
In the case of GXO’s ESG goals, Fitzsimmons said many of them dovetail with customer initiatives.
“It’s very much a partnership and what’s very exciting with many of the customers we have is we work in lockstep with them,” she said. “We work with many of the biggest companies in the world and they have their own sustainability initiatives. I understand from our customer team that every conversation they have has some element of ESG in it.”
Fitzsimmons said there are certain efforts, such as reducing box sizes, installing lighting or reducing waste that provide demonstrable examples of sustainability, but for GXO, it is also about building an engaged workforce.
Driving employee engagement
“We are really finding that yes, we are focused a lot on technology automation and innovation … but it is really allowing our employees to work more collaboratively and be engaged,” she noted. “It’s really about increasing that productivity and decreasing the time it takes to get that good to the person’s home.
“The engagement piece is hugely important,” Fitzsimmons continued. “It’s getting people engaged. It’s diversity, inclusion and belonging. That is how we put it at GXO. It all feeds into employee engagement.”
In e-commerce, warehouse space is precious, but so is the ability to get items to the end consumer quickly. GXO offers GXO Direct, which has its own sustainability component. The offering allows shippers to take space in a multiuser warehouse, which allows them to move goods closer to the customer and reduce vehicle emissions while speeding delivery time.
Automation also plays a key role in the reverse logistics operation. Globally, nearly 35% of online orders are returned and 25% of those are sent to landfills, GXO said in its report. In the Netherlands, Xerox has utilized GXO’s approach to reuse or recycle 90% of its returns and in France, a GXO facility in Satolas-et-Bonce has been able to repurpose polystyrene packaging, turning 134 cubic meters of the plastic into reusable plastic and reducing carbon emissions by 54%.
Reducing landfill waste
One of the goals GXO set was to reduce landfill waste by 80% by 2025. As of the measuring of data for this report, GXO was at 79% waste reduction, far ahead of its initial target. Fitzsimmons said some sites are near zero waste thanks to recycling and reuse programs. Others still have progress to make.
“We’re certainly focused on continuous improvement, so we are not going to get to 80 and stop,” she said. “We have had more success in some locations than others.”
In the report, GXO CEO Malcolm Wilson said the opportunity exists for GXO to have a positive impact on the environment.
“Our fresh beginning brings a rare opportunity — and responsibility — to create a strategy around what matters most to our employees, customers, investors and communities. That means harnessing technology to not only improve profitability and performance, but also minimize our environmental impact, create a safe, welcoming workplace and do business the right way,” he wrote.
Fitzsimmons said that moving forward, GXO views ESG as a journey that not only includes increased automation but also employee engagement to develop solutions and efficiencies that offer more subtle environmental impacts that add up to big impacts.
“We are at the start of our journey, we are not even a year old. I think it is a strong start,” Fitzsimmons said. “We are continuing to put new goals, new strategies and new road maps together to reach new [sustainable heights].”