Understanding Maersk’s Sustainability Transformation

Sustainability is more than reducing carbon emissions and sounding purposeful; it’s a deep-rooted, systemic change in the ways of doing business. Companies like Maersk, one of the largest logistics companies in the world, are not just changing the way they make products, they are changing the products themselves and launching industry-wide collaborations. 

Companies are under tremendous pressure from people across the world to account for the environmental and social impact of their business. Global investors are demanding action at scale because nothing else will do in the current state of climate emergency.  

In this desire to be sustainable, the logistics sector has generally been a laggard. Worryingly so, since the global economy rests on the ability to move things around. This massive ecosystem of moving goods and materials is enabled by the logistics sector, which consists of trucking, railways and shipping. Steeped in old world technologies and practices, the logistics sector has mostly been seen as part of support services and backend infrastructure. The transport sector is responsible for 23 per cent of global energy-related emissions. Shipping alone accounts for 3–4 per cent of global emissions. Even if companies want to decarbonize their supply chains, their efforts are largely dependent on third-party logistics providers like Maersk. Now, things are beginning to change. A combination of efforts to decarbonize, increased digitization and large scale collaborations are transforming business while increased protectionism by countries to global trade are resulting in newer challenges.  

A.P. Moller – Maersk is a transport and logistics business that employs over 85,000 people across operations in over 120 countries. In 2018, the Executive Board of Maersk approved a new company ambition for climate change: to have net-zero CO2 emissions from their operations by 2050. Over the last four years alone, Maersk  has invested $1 billion and engaged fifty-plus engineers each year in developing and deploying energy efficiency solutions. A major contribution will come from replacing older vessels with new and more efficient ones, taking advantage of the company’s continuous work to optimise hull dimensions, hull shapes, propulsion systems and auxiliary systems. Another significant contribution will come from further optimising the Maersk network in terms of both network operations and voyage execution. Over the next few years, the company will be able to reap the benefits from investments in connecting and digitising vessels as part of the Connected Vessels project. This will focus on upgrading data collection and reporting systems on shipping vessels, real-time, coordinated data for the routes sailed, reducing time spent in ports that will lead to lower fuel consumption, less time wasted and fewer delays.  These initiatives are expected to reduce fuel consumption corresponding to a removal of approximately 847,000 tonnes of carbon over five years. 

Efficiency gains cannot, however, are not the only solution, deeper impact can only be achieved through decarbonisation. The company is working on a range of collaborative efforts with several partners to drive the transformation of the shipping industry towards use of carbon-neutral fuels. Maersk has launched Eco Delivery a way of transportation that uses sustainable biofuel to provide immediate carbon reductions. One of the largest fashion and design groups in the world, H&M Group, has chosen Maersk ECO Delivery to reduce the company’s carbon footprint in transportation. The initiative uses sustainable biofuel to power selected Maersk-vessels and helps H&M to make progress towards its ambitious sustainability goals.1

Further, the company is slowly moving from managing internal CO2 emissions to the entire logistics system. Copenhagen Airports, Maersk, DSV Panalpina, DFDS, SAS and Ørsted have formed the first partnership of its kind to develop an industrial-scale production facility to produce sustainable fuels for road, maritime and air transport in the Copenhagen area. The project will produce green hydrogen based on offshore wind power as soon as 2023. This initiative is pathbreaking in sheer scale and ambition and will have multiple large scale impacts. At one level, it will certainly help reduce the emissions of all project partners, and the next level impact will be that the City of Copenhagen will also be able to achieve its targets for decarbonization by 2025. Further, the project is expected to create jobs and new value chains to reinforce Denmark’s role as a green energy leader.2 When the facility is fully scaled-up by 2030, the project could deliver more than 250,000 tons of sustainable fuel for buses, trucks, maritime vessels, and aeroplanes annually. The fully scaled facility can reduce annual carbon emissions by 850,000 tons.  

The past decade has seen companies make incremental efforts to fix sustainability issues. Which is not to say nothing got done. It did, but not at the scale that was needed. Today, the climate change movement is picking up strength. Led by activists, NGOs and scientists, several ground-level movements are taking shape and putting pressure on governments, companies and cities to take positive steps to reduce carbon emissions that are leading to climate change. Additionally, the spotlight is also on social risks, food, livelihoods, poverty and rising inequality which are some of the consequences of climate change that need to be addressed. Initiatives at scale, such as the ones Maersk is spearheading are the need of the hour.