Creating Our Own ESG Story

By 2030, we aim to launch services that achieve net-zero emissions of greenhouse gas (GHG) and waste, including logistics materials. By 2050, all services provided to our customers will have net-zero emissions. These ambitious goals have been set by Yusen Logistics Co., Ltd. (hereinafter, YL), one of the NYK Group’s core companies, for the entire YL Group. Aiming to achieve the aforementioned goals, YL introduced the Yusen Logistics Group ESG (environmental, social, and governance) Story in April 2022. The ambitious initiatives outlined align with the broader policies set in the NYK Group ESG Story, released by NYK in February 2021.

The preparation of the YL Group ESG Story began in 2021. Driven by the global momentum toward decarbonization, the YL Group felt increasing pressure from international business partners who have strong interest in ESG matters to enhance transparency in their sustainability initiatives. In response to the steadily mounting pressure, the YL Group organized an in-house lecture on the Sustainable Development Goals (SDGs) and ESG matters, with the help of an external lecturer. YL Group held the lecture in cooperation with NYK, who was ahead of the field in the promotion of sustainability initiatives at the time within entire NYK Group. Yoko Yoshida, a member of the Corporate Sustainability Group (CSG) in YL, emerged as a key driver of the Group’s sustainability initiatives. Her involvement in planning the lecture in fact was her first introduction to SDGs, marking the beginning of the YL Group’s sustainability journey.

“About six months after the lecture, we formed a working group to develop our ESG story. Back then, we did not even have a dedicated structure like we have now. Members from environmental (E), social (S), and governance (G) departments were simply given with the task. Although we felt confident in our social and governance aspects, our environmental initiatives were not advanced by any standard - we were unsure where to begin.” said by Yoshida looking back to where it all started.
The working group benefited from the expertise and know-how of NYK, who had already begun advancing ESG management. Using the NYK Group ESG Story as a reference, the team worked diligently to craft a story with narrative and language unique to the YL Group.
Yoshida continues describing the growing importance of ESG.
“Around the time we announce the Yusen Logistics Group ESG Story, the Corporate Sustainability Group was established. We started as a really small group. But now we have since more than doubled in size. So, I feel personally that our group has grown in importance and is becoming a key part of the YL Group.”
This reflects the YL Group’s genuine commitment to sustainability.

Implementing Sustainability Initiatives

Serving as a logistics partner in the supply chain, the YL Group provides a wide range of solutions specializing in forwarding services (maritime and aviation transportation) and contract logistics, which encompass inventory management, distribution processing, and other related services. The YL Group boasts more than 25,000 employees, the largest workforce in the NYK Group, and operates in 46 countries and regions through 650 bases.

The YL Group has diverse personnel worldwide and this creates the question how they foster in-house awareness of sustainability among its global network, and turn it into sustainability actions.
Yoshida explains their approach.
“We realized that simply preparing and sharing materials on sustainability by CSG would be insufficient to spread awareness of sustainability throughout the YL Group. To effectively convey and ensure understanding of sustainability, we decided to create a video and include it in an e-learning course for all employees. Additionally, we established a mechanism to ensure the video would be viewed.”
The video was produced in Japanese and English, with subtitles available in 15 languages.

Knowledge and awareness of environmental and social issues vary across countries and regions.
Cedric’t Hart, who works with Yoshida on sustainability promotion at the CSG, elaborates their work.
“Part of our role is to make sure that we give employees the right level of knowledge and allow them also to participate in this journey to become more sustainable.”
When asked why they are engaged in sustainability initiatives, employees offer diverse answers based on their country or region. Some mentioned the prevention of global warming, while some others highlighted matching with customer expectations. Yoshida recognizes the varying level of awareness between Japan and the rest of the world, especially Europe, where sustainability awareness is high.
Despite the challenge, Yoshida finds it rewarding to close this gap and increase employee engagement.
“I simply tell people in Japan and other Asian countries that global sustainability standards are coming, and they need to get used to them. I want all employees to be proud working for the YL Group. While taking on sustainability initiatives can be challenging, it is also fun.”

E-learning has steadily increased understanding of the terms “ESG” and “sustainability”. A notable example is a decarbonization project involving all YL Group operating companies. Over 100 group employees are actively participating in the project, which aims to reduce Scope 1 and 2 GHG emissions.^*1 More than 300 ideas have been generated, including conversion of in-house electricity generation to solar power as well as investment in electric and hydrogen-fueled trucks.

Cedric recalls initiating the project.
“This was a project that we developed together with a consultant. In the implementation phase, we took a thorough approach proceeding from bottom-up rather than top-down. Participants were very highly motivated as the project gave them an opportunity to contribute to the creation of a sustainable society, which they had learned about through e-learning. People were enthusiastic and actively engaged in the work.”
The understanding of the importance of reducing GHG emissions by each participant has led to the implementation of specific initiatives within the entire YL Group and increased participant engagement.

Taking On the Challenge of Net-Zero Emissions

For the YL Group, which provides a wide range of services, other indirect GHG emissions (Scope 3 emissions) of their business activities account for a large share of the Group’s total GHG emissions. To truly embrace environmental sustainability, the YL Group must go beyond merely reducing GHG emitted directly from its own operations.

In regard to forwarding service, the YL Group has already been providing net-zero emission services. In 2021, before announcing its ESG story, the Group began participating in program that promotes the use of sustainable aviation fuel (SAF),^*2 directly reducing aviation GHG emissions. In April 2022, the Group also launched carbon offset service for maritime shipping. Currently, YL Group is developing solutions leveraging digital technologies. By 2030, the Group will begin providing net-zero emission services covering customers’ entire supply chain, including procurement, production, sales, consumption and utilization, and the disposal and return of goods. Additionally, to establish a road map aligned with its 2050 environmental goals, the YL Group will enhance the visibility of GHG emissions from its warehouses, vehicles, and offices, as well as from their services provides. The Group will also work with business partners to formulate and implement annual reduction plans.

Pursuing Ambitious Initiatives in Air Freight Forwarding Service

The YL Group is actively accelerating initiatives in its air freight forwarding service. In 2022, the Group became the first Asian forwarder to participate in United Airline’s program to promote usage of SAF. In April of the following year, the Group launched the "Yusen Book-and-Claim", a transportation service that uses SAF. This service enables customers to use the YL Group’s SAF credit inventory by concluding a usage agreement. In addition, the Group also began offering own certificates for SAF since January 2024. All these initiatives have set a strong base towards reducing Scope 3 GHG emissions.

Although the Group’s progress may seem smooth, it has been achieved through continuous trial and error. Kevin Chia is the head of the Trade Management & Procurement Team involved in the service launch, reflects on their journey.
“When we began researching SAF around 2020, our approach was very exploratory. We knew that our competitors in the industry had some kinds of solutions. But since there was no published material, we went around looking for information in many different places. We even picked up material from social media. Then we pieced together what we knew with outside input, and managed to create the service.”

Customer understanding of decarbonization is crucial for success. With this in mind, Kevin enlisted the help of sales managers in preparing explanatory materials and proposals for the solutions offered to customers. In addition, the YL Group used e-learning to promote and spread knowledge and understanding of SAF internally. These efforts have paid off. The Group had exchange with more than 20 major customers and concluded service contracts with some of them. Furthermore, the Group is working to enhance GHG emission visibility for their air freight forwarding service.
Kevin is eager to forge ahead creating larger customer awareness with the Group’s new service. “I want to work with our sales managers to explain these services to customers in detail and gain their understanding and to market our services more widely.”

The YL Group is committed to ensuring that each employee has a sustainability-focused mindset and that each business unit implements sustainability initiatives. The Group is steadily moving forward with these efforts, which are indispensable to achieving its 2050 environmental goals.

Rapidly Expanding in Collaboration Initiatives

In achieving its environmental goals, the YL Group must also work with customers to reduce Scope 3 emissions. Decarbonization is a pressing task. Both YL Group and its customers cannot achieve decarbonization without collaboration with each other.

Cedric explains the increasing importance of co-creation with customers.
“Together with our customers, we have established two common goals: contribution to society through the development of environment-friendly logistics and the realization of a sustainable future. With these goals in mind, we have begun co-creation initiatives. In recent years, for example, we have been pursuing collaborative initiatives that reduce GHG emissions while sharing costs. These initiatives include collaborations with a food manufacturer and a furniture manufacturer to purchase electric trucks and fuel cell trucks. This type of co-creation was almost non-existent just a few years ago but is now rapidly increasing.”
In addition, he notes significant rise in these initiatives.
“We are sometimes invited to customers’ sustainability briefings and other meetings to explain our long-term initiatives for sustainability, and customers really appreciate this. In the past year, customers have been inviting us to collaborate with them more and more. For this reason, I believe that initiatives that we work with customers to create sustainable growth will only continue to grow.”

As the extent of co-creation initiatives continues to broaden, the YL Group’s range of service is expected to develop further.
Kevin shares the future of sustainable air freight forwarding services.
“The goals of the forwarding business are likely to cover a wider range of issues. Going forward, we will look into a variety of different things, such as warehouse modernization, reduction of single-use plastics, and collaborations that offer our customers green solutions.”
Cedric added emphasizing the significant potential for further collaborations.
“For me, I still see plenty of room for finding additional ways of co-creating with customers. So, I think I would like to spend more time developing customer-facing initiatives on sustainability.”

As a supply chain logistics company, the YL Group is boldly pursuing net-zero emissions by taking a comprehensive view of customers’ entire supply chain. Consequently, the Group’s future services, co-creation initiatives, and innovations are highly anticipated.

(Interview April 22, 2024)

• *1 Scope
  Scope refers to the emissions categories established by the GHG Protocol, an international standard for calculating and disclosing GHG emissions. A company’s direct emissions are categorized as Scope 1. Indirect emissions from energy sources purchased or used by a company that provides electricity, heat, steam, and other resources are categorized as Scope 2. Emissions from other companies related to a company’s activities are categorized as Scope 3.
• *2 SAF
  Sustainable aviation fuel is produced from sustainable resources such as waste oil and plants. Using SAF results in a reduction in GHG emissions compared to conventional jet fuel.