Economic View

On how ESG practices in the UAE are affecting the logistics sector

In what ways does the push for environmental sustainability affect logistics forwarding companies?

AMADOU DIALLO: Net-zero targets impact forwarders in two ways. First, forwarding logistics is inextricably tied to the performance of freight transport. As a result, forwarders must understand how environmental concerns and the push for lower carbon emissions and green mobility will affect their cost structures and shape customer expectations. We see clients increasingly demanding ways to reduce their carbon emissions. 

As part of our response to this trend, in March 2022 we expanded the scope of our GoGreen Plus Service – which allows for the reduction of CO2 emissions through the use of sustainable marine and sustainable aviation fuels – to apply to air freight in addition to ocean freight. This should contribute to the UAE’s strategic plans to achieve net-zero emissions by 2050.
Second, forwarders have a role to play in supporting corporate and government entities in advancing specific environmental solutions. For example, the Dubai Roads and Transport Authority’s plans for electric mobility and the rapid adoption of electric vehicles (EVs) pose new challenges for the country’s environmental ambitions. One of those is the handling and logistics of EV batteries, which DHL will address through its EV and battery logistics centre in Dubai South.
To what extent can environmental, social and governance (ESG) principles be leveraged to build competitive strategies?

DIALLO: ESG considerations are not only a matter of responsible corporate behaviour, but also a crucial aspect of the performance of a business. ESG should be part of boards’ analyses before making decisions and be viewed as costs and opportunities. In the context of the measures required by the net-zero target for 2050, each unit at Deutsche Post DHL Group evaluates sustainability matters in terms of profit and loss. Leaders must understand that a business case has to be made for ESG principles to be implemented in a consistent manner. 

Our experience demonstrates that the assumption that being green is a burden is wrong, and there are commercial opportunities to unlock. Indeed, being greener can actually lead to savings and competitive advantages as customers have sustainability targets of their own to meet. Beyond that, a firm commitment to sustainability is fundamental in attracting the right talent, given the priorities and values of younger generations. A similar reasoning applies to diversity and inclusion. For example, the Women in Leadership programme – which started at DHL in Dubai and is being expanded to additional markets such as Saudi Arabia and Nigeria – has helped to promote female inclusion in managerial roles, increasing customer satisfaction and improving decision-making.

How can the UAE logistics sector contribute to economic development in Africa?

DIALLO: The UAE, and Dubai in particular, is well positioned to enable economic development in Africa. Global forwarders can help African nations alleviate the bottlenecks they experience in reaching European, North American and Asia markets, in addition to engaging with governments to share expertise and ideas about Customs management improvement. 

Cooperation between global logistics players and the World Trade Organisation has highlighted how these obstacles hinder African prosperity. In this regard, owing to its developed infrastructure, services and geographic location, Dubai constitutes a gateway for trade centres serving Africa. With an open and multicultural society, and a high level of comfort for expats, Dubai also attracts the type of talent that can create solutions and manage operations with a deep understanding of outbound and inbound markets.