Interview Tom Schalenbourg – Sustainable Development Director – Toyota Material Handling Europe

1. In terms of sustainability, what are the most urgent issues facing logistics and intralogistics?

Sustainability needs to be a top priority, which is actually the case for all B2B businesses. Whether we’re talking about an investor, a supplier, a customer or a consumer, the challenge lies in the ability of the company to embed sustainability in its business strategy.

There are two main questions your customers will ask:

1) How are you going to help us achieve our sustainability objectives?

If you sell a product that makes a significant contribution to your customer’s energy consumption, and thus to their carbon emissions, you’ll wind up on the priority list of the customer’s Net Zero project manager. Their first priority is often to significantly reduce carbon emissions within their own operations by 2030. A growing number of companies link long-term bonuses for senior management to the achievement of these objectives. Some companies apply the same principle to safety and productivity.

2) Are you a sustainable supplier? In other words, they want to know what initiatives you’re pursuing in this area.

The second question is important because of mutual dependence. After all, your customers are screened by independent bodies with regard to the progress they have made in reducing their carbon footprint across an entire life cycle, from raw materials extraction to production to the end of the product’s life. If they don’t perform, this has adverse consequences for your own performance.

It’s also important to remember that sustainability is a pretty broad concept, which goes further than just the environmental aspect. Many years ago, John Elkington introduced the three Ps: People, Planet, Profit. At the most recent G20 summit, the last P was changed to Prosperity. Toyota uses these three concepts as the pillars of its sustainability policy. The key is to keep all three in balance, so we don’t exhaust the earth’s resources. Employees who work for a company that cares about people are more motivated to care for the planet. Customers who set a good example in terms of transparency around sustainability find it easier to encourage suppliers to follow their example. ‘Lead by example’ is the guiding principle here.

Finally, the situation in Ukraine has once again shown us the importance of taking steps towards independence with regard to energy and other resources.

2. What role should governments play in the conversion to a sustainable future?

Well, we live in Europe, which is already the most ambitious continent in terms of sustainability. There’s a good reason why we’re aiming to become the first climate-neutral continent. Just look at the EU Green Deal from the European Commission, which among other things is aiming for net zero greenhouse gas emissions by 2050. In addition, a series of adjustments to climate, energy, transport and tax policies have been proposed to achieve a net 55% reduction in greenhouse gas emissions by 2030 compared with 1990 levels. To that end more than 50 new guidelines and regulations have emerged, which will also have an impact on logistics.

As well as the moral aspect, there’s also a geopolitical motivation. As I said earlier, we want to reduce our dependence on other regions and become self-sufficient. Accordingly, the second pillar of the EU Green Deal is to develop a fully circular economy in Europe.

Of course, steps must also be taken at the national level, and that’s now happening faster than we think. In response to the crisis in Ukraine, the German government announced that its energy supply will be fully sustainable by 2035, instead of 2050 as originally planned.

Alongside the role played by governments, companies can encourage each other to genuinely tackle sustainability, particularly through the mutual dependence I mentioned earlier. From 2024, KPIs in quality programmes will no longer be created solely as long-term goals, they’ll become annual KPIs that will drive business activity. Other companies will require transparency, so they can clearly see whether or not you are successful. And that in turn will determine whether companies engage in economic relations with each other. In addition, from 2022 financial service providers will be legally required to reserve their best interest rates for the most sustainable companies and products under the EU Taxonomy Regulation.

3. How is Toyota Material Handling going with sustainability? Has your organisation set quantifiable objectives for itself?

As a subsidiary of Toyota Industries Corporation, our company practically has sustainability in its DNA. The company developed its first five-year plan for sustainability way back in 1993; back then, the emphasis was on the environment. In any event, we’ve always had a focus on high-quality business operations, including elements such as respectful business relationships, collaboration and the Kaizen (‘continuous improvement’) philosophy.

In Europe, we started working to make structural improvements in the area of sustainability in 2012. We teamed up with Ecovadis, an independent service provider that measures and assesses companies’ efforts in the area of sustainability. They make it easier for companies to compare their suppliers’ performance according to four themes: ‘The Environment’, ‘Labour and human rights’, ‘Ethics’ and ‘Sustainable procurement’. Their method is now the most highly regarded standard around the world, due in part to their practical scorecards. Ecovadis started by establishing a baseline so we could monitor our progress. In ten years, our score has gone from Bronze to Platinum, the highest possible score. This puts Toyota Material Handling in the top 1% of companies worldwide in the ‘machines for general use’ sector.

As well as our positive scores on the Ecovadis platform, we’ve also achieved other milestones. In the first ten years of our strategic approach to sustainability, we fully achieved 50% of the objectives we had set. These included:

• Achieving ISO 45001 certification for health and safety in all of our factories, resulting in a reduction in serious accidents.
• Our factory in Sweden was the first in the entire sector to achieve the Net Zero standard for emissions.
• The introduction of lithium-ion technology in our trucks, reducing our customers’ electricity consumption by up to 25%.

There are other areas where we’re close to achieving our objective. One example is a 35% reduction in our absolute CO₂ emissions. We’re already up to 29%, in spite of a 50% increase in business activity over the same period.

We’ve set ambitious goals for the next ten years too. In alignment with the EU, we’re aiming for a 55% reduction in carbon emissions by 2031. The Net Zero by 2050 objective is also ambitious. To that end, we’ve been working with the Science-Based Targets initiative, which helps companies achieve objectives such as those set down at the Paris climate summit, in a well-founded, scientific manner.

Finally, we are especially proud of our sustainability reports which we produce each year. The aim of these reports is to answer questions from our stakeholders. Complete transparency is a big part of our activities, so anyone can download the reports from our website.

4. What obstacles or challenges will have to be addressed before your objectives can be achieved? Are there certain points in the supply chain where this is extra difficult (order picking, transport, the last mile, suppliers, etc.)? Could specific innovations play a role in this process?

Around ten percent of our emissions come from component suppliers, and five percent from logistics service providers. Just as it is for our customers, our biggest challenge in this regard is obtaining and consolidating data from our suppliers in a way that satisfies the new legal obligations for us and our customers. For carbon emissions, hazardous substances and minerals from conflict areas, there will soon be an obligation in terms of transparency for our trucks and for individual spare parts.

5. In what ways are your employees involved in these processes?

As I mentioned earlier, everything starts with our staff, and ‘People’ is one of the three pillars of our sustainability policy. The wellbeing, continuous development and experience of our staff are top priorities. We’re proud that Ecovadis has ranked us in the top 1% out of 90,000 suppliers worldwide (under the “Labour practices” theme) for this measure as well. We invest in the health and safety of our staff, and encourage everyone to keep working on their personal development through continuing education and training courses.

At least once a year, we organise a European activity to get all our staff personally involved in our sustainability approach. In the run-up to 18 September 2021, our CEO and 800 staff in 10 countries took part in “World Cleanup Day”. During work hours, they picked up rubbish in the streets surrounding our local offices or in nearby nature reserves.

6. In what ways can we see the theme of sustainability reflected in your products and services? How will your customers notice your efforts?

Eighty percent of our emissions are the result of customers who use our products, and more than ninety percent of trucks sold are electric. Encouraging our customers to switch to electricity from renewable sources is our greatest lever for reducing emissions. In 2021, we ourselves switched to 100% renewable electricity in all 21 European countries in which we operate. We wanted to demonstrate to our customers that switching to renewable electricity is both technically and financially feasible.

We’re also working to continuously improve the energy efficiency of our electric forklifts and warehouse machines. Lithium-ion batteries make it possible to improve energy efficiency by up to 30%, depending on the application. We’re also continuing to develop models with a fuel-powered motor, because of the possibility that they could be run on third-generation biodiesel, for example, which is the cleanest biodiesel so far.

Naturally, we look beyond the trucks themselves. We help our customers to work in a way that is both safer and cleaner. We consider this our social responsibility. We also help prevent work-related injuries and create a safety culture through programmes for forklift drivers and warehouse workers. Because sustainability is about much more than just our carbon emissions.