September 22 2022 | 6 Min Read

Could clean tech innovations in supply chain and logistics improve a PEs profitability?

Posted By
Wendy Mackenzie
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Could clean tech innovations in supply chain and logistics improve a PEs profitability?
Private equity firms invested $27 billion in clean energy in 2021. This 74% jump in spending from 2020 shows the PE industry’s dedication to reducing carbon footprints and improving efficiency. And they’re laser-focused on supply chains.

The President of the American Investment Council, Drew Maloney, says the risks PE firms accept when promising projects embracing cleaner practices show their commitment to clean energy innovation. Their focus touches all levels of the supply chain, including production, distribution, and waste management, amongst others. Increasing investments in these areas will continue to lead to progressively cleaner processes.

The SEC’s recent proposition for publicly traded companies to report more detailed climate-related information is a step in the right direction. SEC Chair Gary Gensler believes that including this information will help investors make comparable and consistent decisions across their portfolios. The guidelines will hold companies accountable for how climate-related risks affect their business model, strategy, and financial performance. Also, requiring registrants to include process transition plans and benefits could help investors evaluate the environmental friendliness of the business they invest in.

Greenhouse gas (GHG) emissions, used to evaluate the cleanliness of a company’s practices, will be reported under three categories. Scope 1 and Scope 2 will record the direct GHG emissions and indirect emissions from electricity and non-renewable sources, respectively. The Scope 3 report will cover emissions from the company’s entire supply chain. These audited emission reports shall provide absolute values for the emission rate per product and unit of revenue, as well as the types of gases released and their sources.

The Real Implication of Scope 3 Emission Reports

Green ChainMost companies do not run a supply chain that is 100% locally contained. Interconnectivity adds levels of complexity in understanding how green an already-complex manufacturing process really is.

The first issue will be reporting consistency, as regional laws have different requirements for climate-related business concerns.
The second challenge is transparency throughout the entire chain – right down to the activities of suppliers at all levels. For example, compiling Scope 3 reports may be problematic where private suppliers are concerned and when no transportation management system or partner is in place to help.

Where does IL2000 come in?

The benefits of reducing carbon footprints throughout the supply chain are immense for businesses willing to make the investment. Going green is becoming more a necessity than an option as investors, consumer groups, and government agencies pay closer attention to the risks a company’s activities pose to the environment. Improved clean tech credentials now rank high on the list of decision-making factors. They will affect the performance of businesses and define top winners and losers.

Cogs bridging the gap

With almost 25 years of experience providing logistic and supply chain optimization solutions for companies across industries, IL2000 is perfectly positioned to bridge the gap between PE firms’ investment in clean tech supply chains and the logistics that keep those processes moving smoothly.

Partnering with IL2000 will provide deep insight into the processes along your supply chain while implementing profitable clean strategies. For publicly traded PEs, detailing your Scope 1, 2, and 3 reports will be more straightforward. Having end-to-end visibility allows you to include information from smaller companies in your supply chain that may not be required to declare this detailed information.

With both our visions blended into one, our optimization and customization of your supply chain would resonate with your ideals on clean tech and renewable energy. Here are ways we can lower your carbon footprint while improving profitability:

  • Perform a center of gravity study to determine the most optimized location for distribution hubs, thus reducing excess transportation costs and emissions.
  • Robust shipment planning to combine shipments and reduce the number of LTL transportation runs. Or better yet, put those multiple shipments together into one truckload. Think of it as a green carpool.
  •  Ensure proper documentation to avoid goods being returned, shipments diverted to a carrier hub to await proper documents, or failed delivery attempts during tight delivery windows or operating hours. Every unnecessary mile your cargo travels adds to your environmental impact.
  • By using our proprietary TMS tailored to your business needs, you can better plan and track shipments to avoid last-minute pick-ups incurring unplanned trips and extra fees.
  • We ensure freight is sent only with reputable carriers who also care about reducing their carbon footprint.
  • Overall, working with a 3PL makes supply chains more efficient, thus reducing excess carbon emissions and maximizing profit margins.

Why improve one business when your entire portfolio can benefit?

Consultant and clients in PE buildingThe benefits of clean tech and improved logistics processes shouldn’t be restricted to one company or industry alone. IL2000 is equipped with extensive experience across a wide range of industries and is poised to bring supply chain optimization to all the businesses in your PE portfolio.

Talk to an IL2000 consultant to optimize your portfolio for clean energy.

Topics: Supply Chain Management, 3PL, Private Equity

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