As the world looks to build more sustainable and resilient supply chains, ESG Mena speaks to Frank Clary, VP – Sustainability, Agility, about stimulating green investment regionally, the evolving green hydrogen landscape, tackling Scope 3 emissions and workforce wellbeing.
In Agility’s MEA Sustainability Scorecard, Qatar, UAE, Morocco and Saudi Arabia were found to rank high on green investment, but there’s still a big funding gap to reach SDGs. How does the region stimulate further growth in the green investment space?
SDGs are long-term strategic issues for all countries, and they are reliant upon prosperity from economic growth. SDGs cannot be achieved without prosperity. The region should focus on economic growth and education to ensure that it is able to stimulate green investments that will result in the adoption or development of the latest green technologies across industries. Education is a critical requirement for economic growth, and it’s the linchpin for all SDGs.
The region should also focus on trade policy to ensure that green investments will enable people to be empowered to engage in international and local trade using cleaner technologies. Beyond that, our scorecard report showed that while governments are sharply focused on their own green initiatives and spending, businesses are more cautious.
We’d like to see Gulf policymakers do more to bring businesses off the sidelines with policies that drive more aggressive investment and lower the risks for business through partnerships and other means.
And on the green transportation front, where is the industry in terms of infrastructure, incentives, public engagement, and OEMs, and what are the main challenges that must be overcome?
The cargo transportation industry is willing to switch to greener transportation, but it’s complicated. Cost is the biggest barrier to overcome. Cost includes total cost of vehicle ownership, including operational costs that must be assumed when switching to electric or other vehicles.
Clean technologies for last-mile and medium-duty trucking are here now, but they can be more expensive than conventional vehicles. Still, the last-mile and medium-duty challenges will likely be solved the earliest.
The biggest challenge is long haul and heavy haul trucking. There are substantial cost and operational barriers to overcome. Vehicle performance is a big issue that impacts utilisation and asset availability. Recharging or hydrogen fuel infrastructure costs are daunting, and electricity grid capacity is not sufficient to assume the trucking energy requirements.
Many OEMs are starting to produce heavy-duty zero-emissions trucks, but uptake will be driven by regulation, total cost of ownership and customer experience (i.e. does the freight customer get the cargo on time, in good condition and at an affordable price?)
What about rail developments and preparedness across the GCC countries?
With regard to rail, yes, much of the region is ready for rail. Rail is a very efficient way to transport high cargo volumes. It provides end consumers with lower transportation costs.
And how is the situation evolving with regard to ramping up green hydrogen in the industry? What’s the tipping point, and what about blue hydrogen?
A lot of governments are making significant investments in hydrogen for trucking and other transportation energy, but it will take a long time for us to know if it will pay off or not.
Hydrogen is currently very expensive to produce, and even more expensive to manage. It has complex transportation and storage requirements. Most hydrogen currently comes from gas reformation, and it’s expensive and energy-intensive to produce.
It will take decades to get to blue hydrogen.
It will also take decades for emerging and pioneer markets to be able to adopt and use hydrogen at scale in transportation. And underlying all of this is the fact that hydrogen is a few disruptive battery innovations away from being made obsolete.
Hydrogen remains a wild card. The tipping point will be when hydrogen is cheaper than conventional fuels or battery electric. If that happens, it will be adopted at scale.
Tell me about how Agility is tackling Scope 3 emissions.
Our two largest companies have adopted net zero goals, including Scope 3. However, Scope 3 must be understood as the most complicated emissions source to understand and manage. One organisation’s Scope 3 emissions are another organisation’s Scope 1 or 2 emissions.
The whole notion of collecting data on Scope 3 emissions is relatively new because it means reaching into another organisation – most often a partner or supplier – for diverse and complicated information that must be validated for accuracy, and which may or may not be collected in a standard, easily usable or shareable format. Companies have set long-term net zero goals in the 2045-2050 timeframe. This is appropriate given the complexities of Scope 3 emissions and the practical realities around managing them. These companies are just beginning the process of understanding and quantifying their Scope 3 emissions.
It will take some time for them to take steps to reduce them, but they are working against established goals.
On the S of ESG, how is Agility working on capacity building across its various hubs & teams, and what’s the strategy and guidelines regarding the wellbeing of its workforce?
We have a number of policies related to things like ethics, health & safety, fair labour and human rights, environment, etc. At the Group level, we’ve made commitments under the UN Global Compact, the Women’s Empowerment Principles (WEP) and other voluntary initiatives.
Our largest subsidiaries are also UN Global Compact signatories, and they have also made WEP and other similar commitments through their industry organisations and associations.
Underlying these capacity-building mechanisms are the previously mentioned policies. Our subsidiary organisations must operate within the parameters of these policies and Group commitments, but they have latitude as to how they will implement the requirements.
This is because our companies operate in many different industries and geographies, and it’s best for them to implement within their unique business contexts.
We regularly measure and report about our progress, and we continuously improve on our policies to ensure we are keeping up with changing requirements.
In some cases, we provided shared resources to help our controlled businesses implement policy and commitment requirements.
And we’re building on the foundations that made us regional leaders in the past, particularly with regard to the early establishment of fair labour safeguards, but also in the environment, health and safety, and business ethics.