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DHL ‘walks the talk’ with ESG targets

Author: ICAEW Insights

Published: 03 Mar 2023

The global logistics company has been celebrated for its ability to cement clear environmental goals. ICAEW Insights explores the company’s potential to make real change in a high-impact sector.

Deutsche Post DHL Group (DP DHL) has recently been able to define clear targets for 2030, relating to sustainable fuel, electrification and carbon neutral design. As a result, it was announced as a climate leader at the 2022 Finance for the Future Awards.

The judges granted this award after DP DHL recognised the opportunity its organisation has to effect real change in a high-impact sector; the board committed to ‘walking the talk’ when it comes to setting environmental, social and governance (ESG) targets.

In 2021, the company produced 39 million tonnes of carbon dioxide equivalent (CO2e). It has set a target to reduce greenhouse gas emissions to below 29 million tonnes CO2e by 2030. It also intends to increase the use of sustainable fuels in air, ocean and road freight, have 60% of its fleet made up of electric vehicles, and ensure that all new DHL buildings are climate neutral.

This emissions target is in line with the Paris Agreement and was validated and approved through the Science-Based Targets initiative (SBTi) in October, 2022.

Melanie Kreis, Chief Financial Officer for Deutsche Post DHL Group, says finance has an important role to play in the area of sustainability: “If you are serious about change, then you need to define targets, you need to track them – and we as a finance organisation are uniquely positioned to do just that.

“We already report and consolidate financial KPIs across five operating businesses in 220 countries and territories, and we are doing the same now for non-financials/ESG KPIs over our financial reporting systems,” she says.

Developing the targets is a cross-functional feast

Deutsche Post DHL Group’s sustainability targets were developed by a cross-functional team involving the operations, HR, finance, governance and procurement teams.

“We are in the middle of a big transformation of our industry that touches upon all business aspects,” says Bettina Paschke, VP ESG Accounting, Reporting and Controlling at DHL Express. “It poses a huge challenge, which we tackle across the functions as a team.

“The lion’s share of our emissions are caused by our global aviation network and hence the procurement of sustainable aviation fuel (SAF) is key to decarbonising our operations. In March 2022, we announced the cooperation with Neste and BP to receive over 800 million litres of sustainable aviation fuel by 2026. The close collaboration between operations, procurement and finance enabled us to announce one of the largest agreements in the industry, which is half way to achieve our ambition of 10% SAF-share in 2026,” she explains.

“Given the nature of our business, decarbonisation as part of the ‘environment pillar’ is key. But it is as important to run our business in compliance with local laws and legislation, and to provide a safe, inclusive and engaging working environment across the 220 countries and territories we operate in,” Paschke adds.

Board member remuneration encourages action

ESG targets are integrated into management board remuneration to provide an incentive for progress: 30% of the variable payment scheme is linked to ESG – 10% to each pillar of environment, social and governance.

Joe Joseph, DHL Express CFO, explains that the finance function plays a pivotal role in establishing and implementing reliable processes and controls for all ESG KPIs: “We are responsible for measuring and reporting on these non-financial objectives and targets with the same reliability and quality as we do every day for our financial measurements. These ESG KPIs are being audited and included in regular external reporting, eg Deutsche Post DHL Group’s annual report.

“Finance will be relied upon to help steer the business to continuously improve on its sustainability agenda, just as we help drive improvements in yield, productivity and the like,” he says.

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