that connect different modes of transport to improve cross-border processes to facilitate effective supply chains at national, regional and global levels.
Logistics master plans must carefully include plans that assure resilience and sustainability. This also looks at inbuilt flexibilities, that offer options and alternative routes for cost effective movement of cargo. The master plans therefore includes designing logistics networks that is resilient to disruptions( e. g. weather changes), is sustainable and can address urban congestions caused by cargo movement and transportation.
Green financing can be described as the practice of channelling financial resources( investments, loans, insurance) towards environmentally friendly projects and initiatives to support the transition to a low-carbon, resource-efficient economy. In the context of logistics, green financing is integrated into master planning to fund the design, development, and implementation of sustainable logistics infrastructure and practices. These includes green transportation, warehousing, and waste management, to reduce environmental impact and enhance long-term profitability and competitiveness.
Green financing provides capital for investing in green infrastructure, technology, and practices, with financial institutions offering products like green bonds, insurance green project underwriting and sustainabilitylinked loans to incentivize and support environmentally friendly projects.
Green financing supports the design, development and construction of sustainable infrastructure. This includes energy-efficient warehouses, smart storage centres and multi-modal transportation networks. Specific finance products like green bonds and green project underwriting are now being deployed to fund green buildings and renewable energy systems. Technology adoption on the other hand is covered through funding directed to scaling green technologies across the supply chains. Examples of green technology integration in logistics master planning include acquisition of electric or alternative fuel fleet, AI driven route optimisation software and deployment of advanced tracking systems that enhance system transparency and reduce emissions, all supported by data.
Financial institutions have a role to play to incentivise flow of funding for green initiatives in the supply chain. This can be executed through financial products designed for customers who execute sustainable practices. The products have preferential interest rates and covenants targeted to driving sustainable supply chains. Green financing is increasingly becoming a tool used to attract investments that mitigate the risks related to climate. Preferential financing not only enhances corporate responsibility but enhances brand reputation too. Investment funding is a foundation of logistics master planning. Green financing supports enhancement of circular economies and mitigates the risks of environmental foot prints created by logistics. Some of the areas covered include funding eco-friendly packaging of products, waste management, recycling, remanufacturing and reverse logistics.
The green financing products used include green bonds, sustainability linked loans, green private equity and venture capital. The products are designed with strategic sustainability practice targets for companies to pursue. This therefore creates a direct financial motivation for environment action by the companies.
The impact of green financing on logistics master planning is still evolving. However, evidence can be seen from growing green infrastructure investment, incentives flowing into sustainable green practices, growth in green innovation, and carefully designed environment risk mitigation that is targeted to growing strategic competitiveness and reputation. Examples of green infrastructure include eco-efficient installations, such as smart storage centres, renewable energy installations( e. g., solar panels for warehouses), and electric vehicle( EV) fleets complete with their charging stations.
The growth of green financing has faced challenges. These range from cost, unstandardised definitions and data, information asymmetry, and regulatory uncertainty. The investment required for new green technology and infrastructure can be prohibitive. In other instances, companies are required to upgrade existing infrastructure, e. g. changing existing fleet and production processes to go green. This may lead to longer time taken to effectively embrace green practices in logistics.
As the shift to green initiatives takes shape, there are gaps in data that is relevant to track performance and risks decision making. This hinders transparency and objectivity in evaluating data sets for effective decision making. Efforts to standardise environmental audits against agreed upon procedures on green initiatives is evolving to cure this challenge.
There are insufficient or non-existent policy frameworks to support creation of longterm green projects. This brings regulatory uncertainty over green practices in logistics. There is scope for defining regulatory frameworks to achieve certainty.
All is not lost. There are examples of countries that have adopted green practices in logistics master planning. Saudi Green Initiative( SGI) was launched in 2021. This national initiative covers logistics master planning, green financing, electronic and digitised customs processes. Creation of logistics hubs in Rwanda have considered integrating green infrastructure and initiatives to support reduction of emissions in logistics. Climate change laws have been designed and that space is growing to keep in tandem with the need to mitigate against climate risks.
CPA Michael Maithya Nzule is a specialist in Finance & Strategy, with extensive experience in the Logistics Industry, FMCG industry and Corporate Strategy advisory services in Eastern Africa. Michael holds an MBA in Accounting and a Bachelor of Commerce( Accounting Option Hons) from the University of Nairobi. You can commune with him via email at: Mikemaithyanz @ gmail. com.