MODE ESG FAQs

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ESG FAQ

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Environmental, Social, & Governance (ESG): Frequently Asked Questions

About MODE Global ESG

As the world progresses toward sustainability, MODE believes our freight agents play an essential role in transforming our industry into an efficient, sustainable and beneficial part of the global supply chain network. By solving modern day-to-day shipping challenges, MODE’s freight agents can make a lasting impact on our sector and on the planet through sustainability and ESG-led initiatives. ESG and sustainability essential components of the modern way of doing business, and they can provide businesses in all industries and sectors with a competitive advantage. Companies that embed ESG throughout their organization have happier employees and enhanced investor interest, and they can expand their customer base and avail themselves of more business opportunities. More than ever, ESG has become central to customers and providers in the logistics sector, and freight agents have the perfect opportunity to tackle these changing demands and transform the logistics sector.

Here is a quick guide for freight agents to better understand ESG, including why it matters and how they can collaborate with MODE to build an efficient and sustainable logistics sector. © 2022 MODE Global, LLC. MODE PUBLIC

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1. What is ESG? How does it relate to the logistics sector?

ESG stands for Environmental, Social and Governance and addresses non-financial performance indicators that include environmental sustainability, ethical business practices and corporate integrity.

Relevant considerations include managing a company’s carbon footprint and impact, and ensuring the company has systems in place to ensure accountability. While purposely approaching these indicators from a non-financial perspective, ESG can nonetheless have a profound impact on a company’s financial performance, including its long-term financial performance.

An ESG approach requires companies to measure their environmental and social impact; adjust their goals and operations to make quantifiable progress toward sustainability; and good corporate citizens.

ESG provides a framework for companies to pursue and achieve sustainability.

Here is how each element of ESG relates to our industry: •

Environmental criteria focus on how the practices and activities of the company impact nature and the environment, and how environmental risks such as climate change may impact the company’s operations. This includes the total carbon emissions from our processes and operations (Scope 1, 2 and 3), the types of vehicles used for transport, such as hybrid, electric or diesel, and the amount of waste generated from our packaging of goods during transport. Because our industry has a massive environmental footprint, small changes, such as backhauling and using paper wraps, instead of plastic, can make a significant difference on our impact.

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Social standards examine how the company deals with agents, and suppliers, as well as the company’s impact on the communities where it operates. Social standards also look inward at a company’s own workforce, including fair wages, working conditions, the right to bargain collectively, combatting human trafficking, and upholding internationally recognized human rights by eliminating discrimination and fostering diversity, equity and inclusion (DEI) in the workplace at all levels.

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Governance focuses on corporate integrity as an important aspect of building more successful, sustainable and responsible companies. Governance includes pay equity, financial transparency and diverse management (including oversight by executive leadership, board members and investors).

Governance ensures corporate integrity by establishing and implementing policies and practices to eliminate and avoid ethically questionable behavior at all levels. As with the other ESG components, good corporate governance inevitably has a positive impact on a company’s financial performance as well.

Robust ESG policies build on themselves, allowing companies to achieve long-term, sustainable growth that generates increasing financial returns and produces non-financial benefits for the company and external stakeholders.

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2. Why does ESG matter in the logistics sector?

In the U.S., shippers, carriers and logistics companies have historically used oil and other fossil fuels as their primary energy source for the movement of goods. This energy use has a significant operational and environmental cost. Fossil fuels produce harmful emissions, including carbon dioxide, black carbon, nitrogen oxides (NOx) and particulate matter (PM). Carbon dioxide and black carbon are greenhouse gases (GHG) and major contributors to climate change, while NOx and PM are harmful to public health, especially in communities that surround ports, railyards and freight hubs.

By adopting an ESG perspective, shippers, carriers and logistics companies can identify ways to reduce their environmental and social impact, and save money, while empowering the people and communities that depend on them. More and more companies, like MODE Global, are helping customers with consolidating loads, switching to intermodal, using cleaner fuels and improving supply chain visibility to build a more efficient and sustainable transportation network. This not only lowers cost and environmental footprint, but also improves health and safety and motivates employees to work in organizations that are conscious of their impact and sustainability. It boosts employee morale and builds companies that are resilient to change and adversity, while attracting investors, employees and customers.

3. What are the most common ESG and sustainable practices being used in the logistics sector today?

Many companies in the logistics sector already recognize the need to focus on ESG, and they have responded by adopting the following practices to improve their efficiency and reduce their impact: •

Switching to more efficient and environmentally friendly vehicles, such as hybrids and electric vehicles.

More companies are investing in fleet renovation to have an efficient and ideal fleet that performs the logistics task with the lowest GHG emissions. More and more companies in the sector are pledging carbon neutrality and adopting net-zero targets to reduce their carbon footprint and contribute to meeting the science-based emissions target from the Paris Agreement and the IPCC to keep global temperature increase below 2°C above pre-industrial temperatures. Meeting these targets is possible through effective through carbon management initiatives across all operations, including the adoption of electric or hybrid vehicles for transport.

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Using data and software to balance loads and calculate the company’s carbon footprint Sophisticated software can calculate the carbon footprint of a fleet over a specified time periods, enabling better decision making for planning transport routes, including timing, and loads for greater efficiency and sustainability.

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Considering fuel economy when planning routes This has a dual benefit – it helps reduce costs and emissions. With the rising cost of fuel, the logistics sector is expected to bear much of the economic brunt of expensive transportation fuels, but by enforcing a strategy to reduce fuel consumption and increase fuel efficiency, companies will be able to reduce costs and their environmental footprint.

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By adopting route optimization In the logistics sector, businesses make the most of route optimization by using route planning software to optimize delivery routes, using the most efficient routes available. In simpler words, this strategy helps route the most cost and time efficient route to get from point A to point B.

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Within warehouses, implementing automation, design and location planning By having a carefully planned out warehouse, logistics companies can maximize their workflow efficiency, improve health and safety, remove unnecessary steps within the warehouse process and optimize the warehouse for efficient material handling, order picking, storage processes, and accommodating personnel and vehicle movement. By continuously collecting and assessing their actual facility processes in the warehouse, companies can improve their processes, which in turn saves energy, reduces emissions and improves efficiency throughout the journey of a package.

4. What does MODE Global do to excel at ESG and Sustainability?

Over the past few years, MODE Global has made considerable changes in its operations to become a leader in sustainability. MODE has established itself at the forefront in intermodal, less-than-truckload (LTL) and backhauling not only to optimize client transportation using the power of technology, but also to provide customers with energy and resource-efficient options for transporting their products. MODE consolidates multiple shipments into fewer truckloads to maximize fuel economy and lower emissions.

Since 2011, MODE Global has also participated in EPA’s SmartWay partnership program, which helps companies advance supply chain sustainability by measuring, benchmarking and improving freight transportation efficiency. Further, we have engaged an independent third-party to assess our carbon footprint and plans to use that information to help craft our emissions reduction strategy.

Beyond environmental sustainability efforts, MODE Global has also created an ESG policy that not only protects the environment and reduces energy costs, but also aims to create a sustainable and resilient business that enhances economic growth, social inclusion and environmental protection.

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