Analyst Insight: As supply chain management prioritizes sustainability, companies must adopt innovative strategies such as vetting warehouses for sustainability, optimizing transportation, implementing circular economy practices, and prioritizing data collection and transparency. These efforts not only reduce environmental impact, but can also drive long-term cost savings and resilience.

Following  are five practical steps to building a sustainable supply chain, while maintaining a high level of service and staying ahead of the competition.

Carefully vet warehouse locations and lease agreements. Proximity to major hubs and access to highways, railways and ports reduce carbon emissions from long-distance freight and support transportation efficiency. Beyond location, logistics providers can help companies advocate for sustainable infrastructure in lease agreements. By prioritizing warehouses with environmental credentials like Leadership in Energy and Environmental Design (LEED) or the Building Research Establishment Environmental Assessment Method (BREEAM), environmental impact can be significantly lowered.

Energy-aligned lease agreements also establish the commitment of both landlord and tenant to share sustainability goals. Logistics providers can further champion their customers’ efforts in this area by using data to highlight cost-savings benefits and collaborating with industry groups to influence best practices. 

Incorporate sustainable warehouse solutions. Once the warehouse location is selected, companies can enhance their operational efficiency and reduce environmental impact through smart facility management and implementation of innovative solutions. Regularly assess energy consumption and waste management to identify areas for improvement, and provide insights on how to optimize resources. Sustainable warehouses often incorporate energy-saving features such as solar panels, energy-efficient lighting, and temperature controls. Supply chain providers can also retrofit existing buildings with LED lighting (with 80% to 90% estimated energy efficiency compared with conventional lighting), install smart HVAC systems, and introduce electric vehicle material-handling equipment.

New warehouse developments should follow LEED standards, ensuring that CO₂ emissions are minimized from day one. Certifications such as LEED or BREEAM are increasingly prioritized for their commitment to sustainability. Governments may even offer financial incentives such as tax breaks, grants or rebates for businesses adopting sustainable building practices and renewable energy solutions. Implementation of waste reduction and recycling practices such as composting and minimizing packaging waste also aligns with sustainability goals, while cutting operational costs.

Optimize transportation efficiency. This is another lever to pull to improve sustainability in the supply chain. Options such as sustainable marine fuel (SMF) and sustainable aviation fuel (SAF), derived primarily from recycled oils, can reduce greenhouse gas emissions by at least 75%. Additionally, by optimizing freight routes to avoid unnecessary movements, and using lower carbon forms of transportation like electric trucks, companies can reduce energy consumption and emissions.

It’s imperative to carefully vet contractors and vendors, and select those who prioritize sustainability, and align with the business’s carbon-reduction goals. Regular audits and strong relationships with eco-conscious suppliers are key parts of transforming transportation operations. Forecasting technology can be also deployed to optimize cargo loads.

Implement circular economy practices. This approach keeps materials in use for as long as possible. Practices such as refurbishing returned goods, recycling materials, and upcycling byproducts into new items reduce resource dependency and enhance sustainability. In the same vein, organizations must take responsibility for the entire product lifecycle by integrating sustainability into product design, ensuring that materials can be repurposed or disposed of with intentionality.

Sustainable packaging is a key component of this system. By reducing packaging waste, and promoting the use of recyclable and biodegradable materials, businesses can align their values with the growing demand for more sustainable solutions in supply chains. E-commerce companies are increasingly shipping products in packaging that can be reused for returns, or even repurposed within the customer’s home.

Prioritize ESG data collection and transparency. Regulatory compliance and the achievement of corporate sustainability goals rely heavily on accurate and transparent ESG data. Without it, companies can’t track their progress or remain compliant with emerging regulations. You can’t move what you don’t measure, and prioritizing data-driven reporting systems mitigates the risk of litigation, helps meet stakeholder expectations and enhances brand reputation. As environmental regulations around carbon emissions and sustainability evolve, staying ahead of the curve is essential. Utilize online tools that calculate carbon emissions and air pollution associated with supply chain activities, to provide transparency and develop practical, statistically based solutions for emissions reductions.

The need for emphasizing data must be communicated to all suppliers and other supply-chain partners. Updates in regulations and trends make it crucial for companies to constantly monitor state, federal and global ESG requirements.

With the transport and logistics industry responsible for _11% of the world’s CO₂ emissions, it’s critical to incorporate strategies today that will help protect the environment tomorrow. The benefits of these five strategies go beyond even sustainability, as they provide cost savings, support compliance and positively contribute to overall brand reputation. While there’s no silver bullet, businesses that prioritize a multi-faceted sustainable supply chain strategy will be better positioned to make more meaningful steps to mitigate climate change in 2025 and beyond.