Episode 9: Sustainability in the supply chain with David de Picciotto

Are businesses doing enough to make their supply chains more sustainable?

Find out more in this episode of Freight to the Point as Helena Wood is joined by David de Picciotto, CEO and Co-Founder of Pledge. Pledge provides tools and infrastructure to allow businesses to measure their carbon impact on their environment with a focus on the supply chain. This year, Zencargo and Pledge have worked together to offer businesses SKU visibility across shipments, and giving them an instant view on emissions in their supply chain.

This episode explores:

Why businesses should prioritise sustainability in their agendas
The business benefits of having a sustainable supply chain
The value of data when looking at supply chain emissions

Resources

Zencargo partners with Pledge – https://www.zencargo.com/resources/zencargo-partners-with-pledge/

How data can help you lower carbon emissions in your supply chain – https://www.zencargo.com/resources/how-data-can-help-you-lower-carbon-emissions-in-your-supply-chain/

Helena Wood Makes a lot of sense. You’re totally right in calling out supply chain, and supply chain and businesses as some of the guiltier parties in the global emissions crisis, naturally, given the scale of supply chain and given the nature of the industry. But I suppose from what you’ve seen, David, do you think supply chain leaders are doing enough to be sustainable?

I’ll give you maybe a more nuance response to that. I think overall, everybody in the industry will agree that sustainability is a topic. It’s a topic that’s on the agenda of every company. More often than not, it sits at the bottom of this agenda. And everybody agrees that in a couple of years, this will be pushed up the agenda. But for the customers we speak to, if we think specifically about Next Gen freight forwarders, or maybe larger companies, the item is definitely up the agenda already. Our goal here is to not only help create this urgency to push it up among the other companies, but then also make it as seamless and easy as possible for them to take action.

David de Picciotto Helena Wood And do you think it’s a perception that moving to being a more sustainable business is hard? Is that why it often falls lower in the agenda? Or do you think it’s often just overtaken by other priorities?

From discussing with varying customer sizes from very large enterprises, to even the small-scale freight forwarders who may be zero to 100 FTE, what we found is that there are two criteria amongst others that stand out. The first one is trust. If I launch a sustainability initiative, how do I make sure that I’m not greenwashing, or fall into the risk of greenwashing? That also comes from the fact that there’s not a lot of education today in the industry. So, how do you demonstrate trust? And in that context, for example, at Pledge, we demonstrate trust through an accreditation we’ve received for the calculation. And that we compute.

And then the second part that a business will ask themself is, how much resources will I need to invest to get set up. I already have a business to run. And there’s a lot of macroeconomic events which are disrupting the normal course of business. Will this suck more resources, be it time, money, or even maybe engineering resources or technical resources to implement a new product? This is why we’re building a modern platform which is easy to use, can help, in some cases, alleviate those concerns.

David de Picciotto Helena Wood That makes a lot of sense. What do you think we can do, maybe coming from the Pledge angle, or possibly collectively, to help these businesses prioritise sustainability? You’ve spoken about a platform. Are there other things that could make things easier?

I think if you look at the industry today, you mostly have the large companies who have launched sustainability initiatives alongside the next gen forwarders, who are also early adopters. Ultimately, the push is coming from the shippers. If you look at freight forwarders catering to the retail or FMCG industry, you may see a greater incentive to adopt sustainability tools or to launch sustainability initiatives.

I think we need to go step-by-step. But at the end of the day, it’s really driven by the shippers. Who, as I mentioned, have three main drivers for requesting supply chain visibility, which are reporting obligation, certain certification they’re applying to, like B Corp, or simply facing end clients, for example, consumer demand for greener supply chain.

David de Picciotto Helena Wood I think something that rings true in what you’re saying as well is, from a Zencargo perspective, we definitely see there’s variance between how different brands approach sustainability. And definitely on the frontline of consumer focus retail, there’s sensitivity to consumers who are, frankly, much more focused on sustainable choices nowadays, but who naturally still want their goods as quickly as possible and as cheaply as possible. I can completely understand why so many shippers at the moment are really feeling that pinch because it often, I think, feels like a give, take relationship with sustainability. Often sustainability, unfortunately, falls off the scale.

I suppose from what you’ve seen so far, David, what are the business benefits of having a sustainable supply chain? Are there any practical examples that you can share with us?

The most important one is that, it helps businesses gain a competitive advantage. And this is demonstrated three ways. One is, it helps them win new business. Because today, again, coming from the shipper’s angle, there’s an increasing amount of tenders where just to participate in a tender, you need to have a sustainability offering because this is something that the shipper will need for the reporting.

Second thing is, even with existing clients, and we’ve seen this with a few customers, it can help them increase share of wallet with existing shippers. If a shipper has a relationship with different forwarders, they may decide to shift 100% or an increasing percentage of their freight with a specific provider. Because again, they may have a reporting obligation and so they rather want to have consistent data across one provider that can provide them this emission shipment level of visibility.

Lastly is just about, overall business efficiency driver and also potentially helping the freight forwarder itself comply with upcoming regulation. As well as satisfying, maybe also an internal demand, which may come from employees who want to work for a company, which although it is active in a high-emitting industry, is doing its part in meeting climate demand,

David de Picciotto Helena Wood Which is important. It’s a really important point, that final thing around… I think we also see not only our consumers demanding nowadays, but our employees and the people that we work with, I would like to say myself included. We want to work with businesses and in businesses that are thinking about their emissions, that are thinking about the role they play in the wider environmental conversation.

Even within your own team, David, I imagine it must be quite motivating for the Pledge team to know that they’re really making a difference and they’re part of something bigger.

Yeah, I fully agree. I think, if you look at other sectors, probably being a climate company makes it much easier to hire new talent, especially when you look at the younger workforce that are seeking purpose in their day-to-day. That’s clearly also a competitive advantage.

David de Picciotto Helena Wood That makes a lot of sense. And I’m interested to then think about the relationship between a sustainability focus or being able to bring sustainability into your role for supply chain leaders. Often in this podcast, we talk about the role of the supply chain leader in a business.

Something that we at Zencargo really want to advocate for is, taking supply chain from the back office to the boardroom and really helping supply chain leaders earn a seat to the table. Because we know, and we can see with so many of our customers, that within businesses that optimise their supply chain, the outcomes and the fruits of those labours are felt across the business. Whether that might be in retail revenue, whether it might be in business growth, whether it might be in working capital management, there are so many areas of the business that can be impacted by this.

But I think often for someone who might be sitting, listening to us today, who’s operating in a business that maybe isn’t prioritising sustainability, because as you say, there are lots of macroeconomic factors they’re trying to deal with, are coming off the tail end of COVID, they probably have had a very busy and challenging two years. Do you have any practical advice for someone who would like to bring sustainability into their narrative, into their business’s field of focus, but to help them get there step-by-step?

I have a few thoughts. I think, as you’ve echoed, supply chain have a significant impact for both businesses and the environment. And as a result of that, leaders within this organisation are facing new, external through shippers and maybe regulators, but also internal, for employees, a demand for sustainability. And if we maybe take a step back and look at ourselves as consumers, we’ve been living in the world of just-in-time delivery, of when you press that button at the checkout of an e-commerce platform, you get the pair of shoe the next day. You do that without really thinking about the environmental impact, but it definitely has a massive impact.

I think for bringing sustainability initiatives, for example, if a shipper is presented at the quoting stage, different shipping options, and you can maybe now with tools like Pledge surface, what is the greenest route to take, although it may take a little bit longer. For example, if you switch your mode of transport from air to sea, surfacing these insights can help drive action. Not only you then be able to satisfy your external stakeholder demand, but also to raise awareness internally, amongst your employees. That’s one example.

And then another practical example that we’ve come across, actually, we talked to a logistics company, to a sales leader within that organisation, for whom sustainability wasn’t in the agenda. The person took the call with us. We’ve explained them how this is becoming increasingly important for shippers and how, through tools like Pledge, they could help gain a competitive advantage and eventually win new tenders. That person decided to trial our product. And then as a result of that, landed a new client.

This was a light bulb moment for the boardroom, for the leadership team, to put now a stronger emphasis on that, because they realise that they can actually also win new business.

David de Picciotto Helena Wood That’s a pretty powerful case study for you guys, and for anyone that’s listening, because I’d love to give you the spotlight to talk about this. Could you give us, maybe, a working case study or a working example of what using Pledge looks like within a business who are focusing on the sustainability data in their supply chain?

Sure. I think Zencargo is a great example. If you think about Zencargo, the way we’ve worked together is that, Zencargo has access to all the relevant shipment data on behalf of their customer.

What they’re doing is, they’re integrating the Pledge calculator and offsetting solution to provide a detailed, granular calculation output on a shipment-by-shipment level, and then surfacing these insights for the shippers in the Zencargo dashboard. And then through that process then, you’ll be able to understand where the hotspots are among these emissions, how they’re distributed across, maybe, different mode of transport, across, maybe, carriage.

And then finally, be able to offset residual emissions that may result from these transports, on top of, over time driving reduction measures to reduce these emissions, based on the insights generated.

David de Picciotto Helena Wood It’s a great work through. And I think we know a lot of examples, David, of businesses that are using this. If I think of a particular example, as a Zencargo customer, I know this is a business who’s very focused on sustainability within their decision making, and everything within their ethos as a business, and having access to the data, to identify hotspots and then also to take calculated risks. I think this is the reality for supply chain leaders. Sometimes air freight isn’t necessary evil. If we want to move goods very quickly, sometimes they need to go on a plane.

But if you’ve got much better insight as to what’s going on across your whole supply chain and you’re optimising, let’s say maybe 80 to 90% of it by making sensible decisions, using great data, you can then make much more educated decisions about when and where you’re willing to possibly forgo the most sustainable choice, perhaps in favour of meeting consumer demand or filling your warehouse, when it’s starting to get low.

I wonder if we can change tact and start talking a little bit about offsetting, and talking also about what comes next. I’d love to hear, David, from your expertise, what do you think the future might look like for shippers who start to gain visibility and awareness of the sustainability of their supply chain, maybe optimise their supply chain based on that data and that understanding, and then come to think about what to do next. There’s always going to be emissions related to supply chain. And businesses may or may not choose to look at offsetting as a way to counter those emissions. What are your recommendations or your thoughts?

To set the context, when you think about a sustainability journey, which ultimately is driven not only by collective pressure, but also will increasingly so be driven by regulations, there’s essentially a three-step journey. The first one is that, you need to measure your emission. Because you can’t hit your industry targets and reducing emissions, if you don’t start measuring them. So really, the first step is about understanding the data that’s available. If you have data gaps, how can you get that missing data to then build this first picture of your emission?

The second step is about then, reducing these emissions. What initiative do you have in place, be it for the use of more fuel-efficient routes, different mode of transport, even potentially biofuel as a sustainable aviation fuel? How can you start reducing these emissions and doing it over a long period of time with a clear strategy?

And then finally, because in transportation, the best way to not emit is to not execute the shipment, you will likely always have some form of residual emission, even if you use electric vehicle or others. And this is where potentially offsetting can then help you hit your net zero targets. And when we think about offsetting, there’s generally two categories that we can think of.

One is nature-based solutions, such as what people would typically think about is tree planting or forest preservation. And then you have another bucket, which has emerged in recent years, of science-based removals. Essentially, technologies that, at scale, can suck huge quantities of carbon out of the atmosphere. And this is also the latter part on which we’re putting a lot of focus on at Pledge.

Helena Wood That’s really interesting. I think you’re totally right. I would imagine many people, when they think of offsetting, immediately go to tree planting. But knowing that there are so many other options available… And I’m going to make a hypothetical guess here which may be totally wrong… possibly more scalable solutions within that scientific field, there’s hopefully a lot more scope for businesses to think about how they can contribute to offsetting even those residual emissions.

Yes. And specifically on that point, I think it’s, again, a question of trust and transparency because no business wants to… Or at least the premise is that no one wants to… intentionally greenwash. So, how can you give the confidence that the offsetting projects you’re investing in, or the technologies you’re investing in, are supporting the benefits that they claim?

David de Picciotto Helena Wood I’m really pleased you brought that up because I was actually about to ask about it, which is… Something that comes up a lot, though many businesses and many individuals within businesses are incredibly well-intended around making sustainable choices and working towards sustainability, not only let’s talk about their supply chain, but it might even be in the day-to-day operation of their business, their travel policies, how they think about how they run their office, and greenwashing comes up.

It comes up because, I think, a lot of businesses are very nervous about their well-intentioned actions being misinterpreted, or people poking holes in other parts of a business. Because, of course, there’s such a complex web of all the different ways in which our actions, the way we run our businesses, the choices we make in our business, contribute to the sustainability footprint of our companies and us as individuals.

What would you say to someone who is really nervous about that fear of being pointed out for greenwashing, and almost unable to act because of that anxiety?

As a software company, we try to support our claims and what we do with data. So, it’s about obtaining granular data on the actual climate output that a certain project has yielded. You have increasingly a new wave of software that is emerging in technologies, which enable to accurately measure the climate benefits of certain offsetting projects. Our goal is to essentially surface these insights, so to make the connection with these technologies, and then to surface these insights about these projects.

David de Picciotto Helena Wood I think that’s a really powerful answer. Data certainly helps unlock a lot of things. It’s a huge defense if you’re nervous about how something might be interpreted, to always be able to show your workings, as it were, with your data.

David, one final question for you, before we move on to our quickfire round. This is something we ask everyone that we speak to on the podcast. I’d love to hear your vision for the future of supply chain, but specifically because of your expertise in the context of this conversation, I’d love to hear your vision for the future of the relationship between supply chain and sustainability.

I think in one line it would be that, every shipment will be climate aware, and hopefully, climate conscious. This means, not only having the visibility over the footprint, a given movement has generated, and even down to the business itself, that’s executing this movement. Then the climate conscious part comes in, where the business that is executing this operation has then taken measures to reduce these emissions and then eventually offset them.

David de Picciotto Helena Wood Let’s hope we can get there. I wonder how long it will take?

Probably a couple of years.

David de Picciotto Helena Wood Only a couple of years. I might hold you to that. I’d love to come back and do this podcast in two years time, and I really hope we’re measurably closer.

Don’t quote me on this.

David de Picciotto Helena Wood David, I hope you’re sitting comfortably. It is time for our quickfire question round. We go through this with all of our guests on the podcast. First question for you, David.

Having seen so much of the supply chain industry through your experience with Pledge, is there any business or company that you’d really like to get under the bonnet with and work on their sustainability?

Maersk, Kuehne + Nagel, given the size of their business.

David de Picciotto Helena Wood That would be a lot of fun. Which industry would you love Pledge to start working with next?

I think a natural expansion would be, going from supply chain transportation to then other mode of transport. You could think about business or personal travel, or even if you start thinking about ride hailing or even last-mile delivery. And these are all similar use cases than supply chain transportation. Because at the end of the day, it’s a movement from A to B, transporting cargo or passenger via different mode, be it road, rail, air or sea, in most instances.

David de Picciotto Helena Wood Perfect. One last question, what’s the number one lesson that your exposure to the supply chain space has taught you?

It is heavily under-digitised, highly inefficient and very fragmented, but things are moving very quickly. This is why it is a very exciting industry to work in.

David de Picciotto Helena Wood It’s a pretty good summary. I definitely feel the same way. I think it’s got a lot of scope for some really interesting transformation. Super. David, thank you so much for joining us today on Freight to the Point. We’ve so enjoyed hearing from you and hearing more about Pledge.

Thanks for having me.

David de Picciotto Helena Wood Not at all, it’s been great fun. And thank you also to all of our listeners who have tuned in for this week’s episode. Don’t forget to like, review and subscribe to our podcast. And if you have any feedback on today’s episode, would like to get in touch with David to learn more about Pledge, or have any questions, please do get in touch with us. You can find us on LinkedIn.

One final reminder from us is that, we are also hosting Navigate, our virtual supply chain summit. It’s on the 7th of July at two o’clock, British summertime. It’s one of the quarterly conferences that we run, which is all about inviting leaders in the supply chain space to talk about what’s going on in the industry, their predictions for the future, and how you can handle today’s market. This time is going to be focused on freight excellence and visibility. We can’t wait to see you at Navigate on the 7th of July. Sign up for our link. And for today, from Freight to the Point, and thank you so much, David, and thank you to our listeners.

Episode 9:
Sustainability in the supply chain with David de Picciotto

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Episode 9:Sustainability in the supply chain with David de Picciotto