A new financing model for the climate and shipping target Greenbiz

To avoid the worst consequences of climate change, companies must reduce their dependence on diesel-powered trucks to move goods – and they must act quickly. Transport is expected to be the largest source of new greenhouse gas emissions by 2050 and to be a major driver of hazardous air pollution, disproportionately concentrated in low-income and color communities. By committing to emission-free emissions, companies can pursue a more resilient and fair future.

An innovative new financing mechanism uses private and public funds to enable companies to accelerate the adoption of non-owned electric vehicles in their supply chain. This fills a critical gap: So far, companies have not been able to secure emission-free emissions when they do not own or use their own vehicles.

Through the financing model, companies use their collective purchasing power to enable airlines to provide delivery alternatives without emissions. Financiers provide the capital needed to purchase emission-free vehicles (ZEVs) and make them available for carriers to use, if needed with the help of an EV manager. Companies “sponsor” these ZEVs through payment plans and use guarantees and therefore provide pure shipping options in their supply chain.

This new approach is an opportunity for companies to accelerate the transition to 100 percent clean shipping, deal with the ESG risk for diesel trucks, make progress towards their climate goals and protect the health of the communities in which they operate. Because although the financing model can be used for vehicles based anywhere, the greatest benefit can be achieved by prioritizing depots in a ZED zone, where communities suffer from disproportionate health and fair effects of air pollution.

Diesel emissions increase high levels of pollution and damage to health in neighborhoods near port facilities and distribution centers – often color communities and communities facing economic injustices.

Without electrification of the fleet, it is thin to achieve climate and shipping goals

The online shop “boom” after the pandemic began a flood of home deliveries. Companies and transport companies expanded services and delivery networks to meet the requirements and caused the number of diesel-powered trucks on the road to skyrocket. Forecasts estimate that the last mile service will grow 12 percent annually until 2050, which increases the need for more trucks on the road.

Many companies have set ambitious climate targets and reducing delivery emissions will be an important component in meeting them. Companies have also set transport-specific goals. IKEA is committed to achieving this 100 percent zero emissions last mile delivery and to become climate positive. Unilever is committed to delivering zero emissions with a gradual integration of electric vehicles in its owned and leased fleets.

Most companies contract freight services through carriers rather than, or in addition to, owning their own fleets. In many cases, carriers optimize delivery by sending several items from different companies in the same truck. The logistics and costs make it almost impossible for companies to request that specific vehicles be used by carriers to make their deliveries. Which means that there is no way to secure zero-emission shipping without owning or renting a vehicle and handling shipping directly.

Unlock the environment, social and economic opportunities for your brand

Embracing a financing model for ZED Zone is an attractive business opportunity for all delivery-dependent companies. Here’s why:

  • Meet climate commitments. Emissions from transport are the fastest growing source of global greenhouse gas emissions and account for 25 percent of carbon dioxide emissions. Getting to zero means that the transport sector reverses that trend and quickly decolonises. As a delivery-dependent company, it is most important to prioritize your transport footprint. A ZED Zone financing model allows you to clean trucks in operation and supply chain and meet your climate goals.
  • Reduce air pollution and disproportionate health burdens. Diesel emissions increase high levels of pollution and damage to health in neighborhoods near port facilities and distribution centers – often color communities and communities facing economic injustices. A financing model for the ZED zone enables companies to focus and accelerate ZEV expansion in communities facing a disproportionate health burden from air pollution. And through that, a shipper or group of shippers can catalyze $ 1 million in air pollution by sponsoring just 15 electric delivery vehicles.
  • Maintain shareholders’ trust. Investors are increasingly pushing companies to take responsibility for and proactively deal with environmental and social risks. The ESG risks of fossil fuel trucks are clearer than ever as transport is the biggest source of climate pollution. For investors, this risk will manifest itself as unfavorable policies, lost revenue and increased costs for the portfolio companies. Through a financing model for ZED Zone, companies can show investors that they are actively working to minimize their risk, which proves to be a favorable investment opportunity.

Innovative technical solutions for achieving emission-free emissions are possible today.