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Logistics Rewired: Driving Fashion Forward for Good

Logistics Rewired_ Driving Fashion Forward for Good

Kathleen Hegyesi: Today's webinar, Logistics Rewired, Driving Fashion Forward for Good. Before we begin, let's cover a few housekeeping items. On your screen, you will see a sidebar to the right of the main stage. If at any time you need assistance during today's webinar, just message us in the help chat located on the sidebar. Throughout the webinar, you can ask questions on the Q & A tab. Your questions will only be visible to you and our Flexport team will do our best to answer as many questions as time allows during the webinar and with dedicated Q & A time at the end. A copy of the presentation slides will also be dropped in the chat, and an on demand version of this webinar will be available shortly after the webinar concludes and can be accessed using the same link that you are using now.

On a brief legal note, please keep in mind that all information provided in this session is based on the situation at this current time and may not be customized to your specific business requirements. We always recommend reaching out to a Flexport expert to discuss your particular situation, and my team is more than happy to be that resource for you.

So let's meet today's speakers. My name is Kathleen Hegyesi and I'll be moderating today's session. I lead flexport.org environmental programs. Flexport.org is a dedicated sustainability and social impact team within Flexport, which is a freight forwarder and logistics platform using modern software to make global trade easy for everyone.

Our team helps Flexport clients to mitigate greenhouse gas emissions from shipping with dedicated experts, tools and technology. Since we first started our programs in 2017, we worked with hundreds of companies, have calculated emissions from millions of shipments have offset over 250,000 tons of carbon. Talia on the line here helps to lead this work, so I'll pass it to her to introduce herself.

Talia Rudee: Thanks so much, Kathleen. Hi, everyone. My name is Talia Rudee. I am a Senior Program Associate on the flexport.org team. I have background in sustainability coming previously from a nonprofit called CDP or the carbon disclosure project, working with a lot of companies who work on their supply chain environmental disclosure, and I lead US client engagement for all of you who might be in the US and worked with Flexport, as well as our internal sustainability strategy at Flexport like working to set our science based target. So it would be great to meet all of you if you're engaging with Flexport and I'll hand it over to Annie.

Annie Agle: Hi Talia, hi Kathleen. My name is Annie Agle. I have the honor of heading up impact and sustainability at Cotopaxi. We are a benefit corporation that provides outdoor gear and apparel similar to Patagonia or North Face. We're the new kid on the block. And we've been working with Flexport I think now for four years. And they were our first foray into offsetting a portion of our admissions and they've been very helpful and helping us take action around that. And last year, we achieved carbon neutrality through the certification climate neutral. Excited to be here today.

Kathleen Hegyesi: Amazing. So excited for the conversation today. Thank you both for joining, and a quick preview of what we're going to be talking about today. So first, we'll talk about recent trends driving sustainable fashion and what we're seeing. Then we'll look at sustainability and practice. So what this really means for brands and how transportation comes into play. Then we'll follow some T-shirts as they go through the supply chain. We'll focus on transportation, how to measure, reduce and offset emissions. And then we'll wrap up with how to incorporate circularity into your actual products.

Finally, we'll leave time for key takeaways for every brand on the line plus Q & A at the end. So please remember to send in your questions along the way. We'd love to hear from all of you. And speaking of that, we'll actually kick this off with a poll. Questions will pop up for you in a moment. But we want to know if your company has corporate environmental sustainability initiatives. I'll read the questions off real quick.

So first, yes. A - we have public emissions reductions target we're talking about this. B-yes, we have internal targets or goals but they aren't quite public yet. C, we have green initiatives but no formal goals, it's kind of in progress. D- No but we have plans to start next year within the year we want to get going and finally, E- no plan initiatives quite yet.

So give you all a bit of that, and monitor here. Awesome, give you five more seconds to answer the poll.

Perfect. All right, we can go ahead and close the poll. Thank you all for voting, a nice bell curve distribution almost here. So we're seeing maybe a lot of green initiatives or plans to start in the coming year, which is great to see. We'll talk really tactically about things you can start right away to do this. Also some brands with public targets or internal goals, awesome, especially when you have those you know, you can focus on how to implement and what to do. And then the last bit of no initiatives will help you get started. It'll be easier than you think to implement those plans next year.

Great. Awesome. So let's start talking about high level trends. Talia, do you want to kick us off?

Stakeholders Are Seeking Sustainable Brands

Talia Rudee: Yeah, thanks so much, Kathleen. So as we start seeing increasing stakeholder requirements and requests for green initiatives, I know some of you are just getting started. And that's a great place to be because it really is more important than ever to work with sustainability and those green practices, especially in your supply chain. Because that's really where the majority of the impact lies for apparel and fashion brands.

So first and foremost, we're, as I know, some of you probably see that are starting these green initiatives. We're seeing consumers look more at sustainability practices. So there's numerous studies to show that this is that increasingly high numbers of consumers are factoring in sustainability into their purchasing. There's a strategy consultant study that showed 85% of people globally, say to have shifted their habits towards sustainable ones. And Vogue surveyed their readers, where 69% say sustainability is important when making their fashion decisions, which is up from 2020.

Also, regulations are really starting to keep up with consumers as well, which will be even more important for kind of advancing those initiatives. Some examples are the SAF fashion Sustainability and Accountability Act. This one is currently under committee review and the New York State Assembly. And it's the aim is to bring it to vote in late spring 2020. But really important to pay attention to. These are for companies who have over $100 million in revenue in New York, or, and also it requires disclosing environmental information, like emissions footprints, including requiring supply chain mapping and transparency.

So as your business is growing, that's super important. There's also the EU carbon border tax, which is set to start in January 2026. And this is a duty on imports from Europe. So especially with transportation, there's more regulations popping up there. As you're growing as well, the SEC has some disclosure requirements for any, that are being proposed right now, for any public company and this is especially related to supply chain emissions as part of this, and this proposal just came out this month.

So with all that being said, doing the right thing for the environment, as a fashion brand is something that you can start doing right away, regardless of hearing more from consumers and regulation, but staying ahead of those, so consumers will really start to notice that and it will enable you to stay ahead and everything that I just mentioned.

Kathleen Hegyesi: Absolutely. Thanks Talia. You know, one of the things we talk about on our team is this exciting shift in conversations from why you should do this to in the past year. So how to do it. It's just more and more of a norm, which is the change that we all want to see in the sustainability industry.

So let's then talk about sustainability and practice and what it means it day to day. Annie, I know Cotopaxi is all about gear for good. And you're truly known for sustainability and everything that you do. What would you say are the most component most important components and focus areas that you think about for environmental sustainability in supply chains?

Sustainable Supply Chain Management

Annie Agle: Sure, I mean, the first thing of note is to understand that as a fashion company, 90 to 95% of your environmental impacts occur within the supply chain. So if you're not considering the supply chain, you're not considering where the most relevant impacts are. It's also important to know that most of those impacts are occurring in global south where waste management systems, electricity grids, etc tend to be weaker and more under invested in even though a lot of global north pit brands depend very deeply on them. And that doesn't just produce sustainability challenges or issues of injustice. It also produces issues of logistics complexities that can become business issues, as we've seen in COVID-19.

And so in Cotopaxi, we really try to think very holistically about sustainability mapping. Everything from how we design products where we source them from, what materials are we using, how we're getting them from place to place, using people like Flexport as partners, and then also what their final life cycle is. So we think very holistically about these terms. That said, I know it can be hard to dive into these issues, and I think it's important to recognize that what we've always done done very deeply in terms of our material performance. And so our most, our highest performing line, the Del Dia Line, uses scrap materials, which are the cut offs from other fashion and outdoor brands. So they're actually carbon neutral. Flexport was the first company that really allowed us to start offsetting our logistics, which personally, I just didn't have access to measurements. And I think that this is an important thing to consider as you start your company journeys. You're not alone, there are partners in this field. And the future of capitalism needs to be collaborative, you are not going to get there alone, especially when it comes to the supply chain, you are not an independent actor in supply chains, you are dependent upon supplier and logistics providers. So just a for plug for Flexport and allowing us to start there and it was the first step towards our carbon neutrality, which we achieved last year.

GHG Emissions Are Generated Throughout a Product’s Lifecycle

Talia Rudee: Thanks so much, Annie. And yeah, that's exactly why we partner with people like you and our programs seem to be impactful for really managing those missions. So as part of any company's journey, like Annie mentioned, being super holistic, you really must, first and foremost understand the full scope of your business.

So just setting some context for that here. And this really should mean, getting the full picture of your greenhouse gas emissions, which are generated from the production, transportation use and sale of apparel, like Annie said, very holistic looking when you're looking at supply chain. And that's really being the supply chain is super critical. And apparel, as we've already said a few times, but we'll always hammer that point home.

So if you're thinking about your emissions reporting or reduction, there are many components of a product's lifecycle to focus on each are within different scopes. So if you're new to the world of sustainability, I'll define these otherwise, it might be a bit of a refresher. But there are three scopes in greenhouse gas emissions, that scope one, two, and three. And as you saw with some of those upcoming regulations, scope three, or the supply chain missions are super important, but difficult to measure. And so next please.

Transportation Can be a Significant Portion of Your Total Footprint

We are focusing on all aspects of transportation today, since you're here with Flexport. And this is really sometimes overlooked, since it's difficult to decarbonize. And I saw that a lot with my previous work. These are really known as hard to abate emissions very hard to abate industry. And, and just to kind of put that in context. If International Ocean Freight alone was a country, it would be the sixth largest polluter in the world.

So there's a lot of impact out there. But like I said, it is over, overlooked. So this does make it really an area right for improvement, which is why we bought so many tools and solutions for this purpose.

Why Are We Talking About Transportation Today?

So at Flexport.org we work with hundreds of brands like Cotopaxi, all in many in sustainable fashion and Ecommerce, but also other verticals. And what we've learned from companies is that there's a huge need for tools. Like I said, it's really difficult to measure these emissions. And these tools are needed for accurately measuring those scope three.

So we've seen three main challenges that companies have managing transportation. First and foremost, is really just getting started. So having that guidance that can this can really sometimes be the biggest challenge when starting a sustainability journey. And there isn't, there really isn't exactly a playbook to follow there. Second is the complexity. So scope three emissions are often the biggest impact, but also the biggest challenge. Like I said, I'll keep hammering that home. And really, it's because you don't have direct control over those supply chain emissions and your partner's practices.

So our team really works hard to make those things easier, so you can focus on some bigger sustainability problem solving. And finally, we know that tackling accurate emissions is super daunting since there are others partners, we've heard from brands working with sustainable fashion and all this other verticals so that they're working with multiple spreadsheets and spend a lot of time really trying to navigate that data. So we'll walk through some solutions and advice to tackle these challenges and help your sustainability goals really thrive.

Kathleen Hegyesi: Thanks, Talia. So this this next section here, let's get really tactical right. As we just heard from Talia, one of the most common challenges we hear is just knowing where to start and some general guidance and playbooks. So I'd love to hear from both of you for advice for mitigating greenhouse gas emissions, we'll start in transportation, and we'll walk through it through the lens of a T-shirt. So Talia, maybe you can start with initial advice.

Start Your Sustainability Journey

Talia Rudee: Yeah, yeah. So when we work with brands, we focus on three important steps towards sustainability, which is ultimately also going towards carbon neutral. And since that's the goal globally for everybody. And these can include first measurement. So we've already talked about that a lot, this pesky scope, three emissions. Second, finding areas to actually reduce those emissions and make progress. So for those of you who already have green initiatives, it will definitely be adding to that, and for those of you who need to know where to get started, we'll provide some advice today. And then third, especially for your shipping is offsetting. So, like I said, shipping is a hard to abate in terms of emissions industry. So full reduction really isn't always possible. So we also can help you offset easily and effectively.

So now let's really see this in action. Like Kathleen said, we'll actually walk through a shipment of Cotopaxi T-shirts for example and see what that will look like.

Emissions Measurements Use a Standardized Formula

Starting with the first step of measurement, let's just talk a second to understand the basics of emission measurements. The industry standard formula to use in all measurements really includes these three main things pretty simple, when you look at it, its weight, distance and emission intensity figure, these are all multiplied to reach your final emissions figure.

Emissions are typically measured in metric tons of CO2e or that's a co2 equivalent, and basically the most common greenhouse gases including carbon, so we run these inputs through our accredited calculator, which is by Smart Freight Center. And with these emissions intensity figures that are in conformance with the Global Logistics Emissions Council or GLAC framework, and that makes sure that we're automatically calculating accurate emissions figures that can then feed into your full footprint.

So understanding the basics here is really important when you're starting to make reduction decisions. Because then you might be able to see intervention points, where are those maybe weights, maybe distance, those are some some good places to start, and we'll get into that a little bit later. So let's start seeing that calculation in action.

Cotopaxi Measure All Shipment Emissions

Um, let's say that Cotopaxi is shipping 500 T-shirts from their manufacturing factory at two pounds a piece, and this includes packaging. So for a Flexport shipment for example, each leg or transportation portion of the journey is calculated based on GLACs emission figures per mode and type of transport.

An example there in terms of the type of transport getting specific with that emissions figure could be specifying drayage. So this is a truck carrying an ocean container and we'll have a different average of greenhouse gas emissions output, then curtilage trucking, which carries currents from an airport. So being specific well that would that will help get those emissions even more specific.

Each shipment will automatically calculate in the Flexport platform and this really requires no effort on your end. It's just in the details right there. It's also in your quoting stage so you can make decisions, and knowing what we know about the basis of calculation that we just went through last slide, you can identify those reduction opportunities in distance based on ports and modal switches wherever that's possible new markets are kind of crazy right now.

And Flexport will also help you with this. We have an upcoming emissions reporting dashboard release. So look out for that and let's couple months but this also means that every portion of your shipment tracking air ocean movement is really an opportunity for improvement. So gives you that opportunity to look very closely there.

Cotopaxi has continued to work with Flexport tools measuring shipments, not moving through Flexport, as well as many of our other fashion brands. And so this helps to get a full understanding of the transportation piece which includes downstream. And so any company can actually use that tool for free with our non Flexport shipments. So looking at the next example.

Cotopaxi Measure All Shipment Emissions

Last mile shipments, is something that's frequently uploaded there. And those can really add up in number and emissions as shirts are shipped individually to consumers. And like I said, anyone can use that third party uploader and upload as much as you want. And so that's a really easy way to map your data to those calculator inputs, and it will give you instant emission calculations as well.

So an example here is that if those shipments we saw in the Flexport shipment previously of Cotopaxi 500 T-shirts were then distributed to 500 different customers for that last mile shipment could be via UPS, FedEx, USPS, those shipments can be part of your footprint, or they should be part of your footprint with the same accredited calculator. Since they, like we see here, multiplied by 500, that really adds up.

So this is super easy to use, you can upload a CSV file with certain inputs. Those are really the basics we went over previously. So weight, distance. And there's also an option to call our API, if that makes it easier for you for automatic calculations. So this combined with the previous shipment, gives you that full picture.

Cotopaxi Measures All Shipment Emissions

So we always want to remember all those last mile shipments. And so that full picture really from origin that manufacturing to warehouse to putting that sharp in the customers hands. It is that full lifecycle, as Annie mentioned, looking at everything holistically, and the real impact is in that combination.

So putting this into context just a little bit. Since you know, tons of CO2 might not mean so much to some of you. Definitely it's hard for me to grasp. So that's roughly equivalent to 7.1. That total is roughly equivalent to driving over 17,000 miles in your passenger vehicle. So think about that adding up over the course of a year with all this customer shipments, it's really a lot of impact with that full cycle of shipments adding up over time. Next, please.

Continuous Monitoring and Improvement

So the important part of measuring is once you get to that full picture is regularly monitoring your progress. So for example, you are able to easily view emissions from your shipments through our platform, even if you are using the free uploader. So over on the left, there is a screenshot of our analytics where you can toggle for a specific timeframe and by mode to know where you're currently at and track progress over time. So making that reduction a lot easier for you.

And then on the right there is that free CSV uploader and API in the same platform. As I mentioned previously, that will then show each of your files, total emissions, with an option to offset those as well right away once you upload. So it's super quick to do that.

So whether or not you ship with Flexport, we recommend working across teams to establish KPIs and rhythms to view all of your scope 133 emissions, or at least the areas that are largest and most impactful for your business. So going back over to Annie, we would love to know what your sustainability team and logistics team are working on to monitor progress and how you actually use emissions data and reporting to work across teams and anything that you might recommend for some real life experience.

Annie Agle: Yeah, sure. I mean, I think my first piece of advice is what is more simple is more sustainable. And so supply chains are super complicated. And so I think the first thing is really having a mapping exercise and that sounds like a complicated thing. But mostly, that just means sitting down with your supply chain sitting down with partners like Flexport, understand where your suppliers are, where's it coming from to the best of the ability and start with your tier one supplier, so your cut and saw in this case, and start there. And understand where things are coming from and understanding and simplifying as much as you can so that you can get a grasp of this.

And then I think from there, we just started measuring what was easy to measure, like a lot of people. So that started working like with Flexport because man they did the measurement, so we didn't have to do that and there was an incentive to join the offset program. So I'm thinking, well, that's a win win for me.

And then we started to measure the aspects of our supply chain and our operations that were easy. And so your power bills. This also starts by two years ago, we helped all of our tier one suppliers adopt an environmental audit every year, which helped them measure their emissions. And then, you know, about a year and a half ago, we expanded that to tier two. So all of our fabric mills now have environmental audits. And they plug that in through the Higg index, through the sustainable apparel coalition, and that just automatically ends up online. And from that, we're able to compile those measurements through climate neutral. And that really allows us to kind of keep a running record of our emissions.

And every year, we really just want to see reductions in what we can reduce. And then also just kind of have the patience and sense of partnership and humility to look for alternative ways of doing that. Sometimes that means, you know, we have our rule of thumb with the three R's, that all of our major materials need to be third party responsible certified, so organic cotton, or fairtrade, or recycled or repurposed.

And so there's always little tricks like that you can do to just make it simple. And so my advice is measure what you can measure, start with partners that are gonna allow you to do that and then expand to frameworks from there.

Kathleen Hegyesi: I love that, especially what you said of what is simple is more sustainable. And that's why we built a lot of the tools that we have at Flexport even if we've heard so much about how complicated that can be, as we try to just make it as plug and play as possible. Amazing. Thank you both. So phase one of Section Three was measurement right? Now what like you both said, the real goal should be reducing as much as possible. So let's talk through that.

Optimize Your Mix of Transportation Modes

Fashion brands, in particular have been facing extreme delays, material shortages, ocean port backlogs, all of these supply chain challenges. And then that's when coupled with increased consumer expectations for quick delivery windows.

In practice, we often hear that it usually means fashion brands have to heavily rely on air. But air shipments on average generate 47 times more emissions per ton mile moved than ocean. As a question for you, Annie, you know, how does Cotopaxi think about choosing air versus ocean? Have you been able at all to work towards using less air and more ocean? Or what advice would you give?

Talia Rudee: I think Annie actually had a little work from home moment. So I can chime in and then hopefully she'll be back.

Kathleen Hegyesi: That's great.

Talia Rudee: Yeah, so from the Flexport perspective, in practice, we actually helped many fashion brands, look at models of modality switch, such as air to ocean, with scenario planning tools, and anybody can email us for help with that. So feel free to do that.

We also know that avoiding air right now may not be fully possible. Actually just talking to Annie about that. It's definitely super difficult at this moment. But oftentimes, there still may be able to be supplemental air shipments with LCL or less than container load, instead of that full container load. So for example, using air for a large product launch and stores, but then going through a regular LCL schedule of smaller shipments or pallets to keep shelves stocked everytime.

So weight is actually a really good intervention point, as well. And there can be other sustainability initiatives that cut down on weight and therefore impact your shipments which we will get to in the next slide. But let's, looks like Annie is back now. So let's go back to hear from her. Kathleen, if you made me want to repeat that question.

Annie Agle: Sorry, work from home moment.

Kathleen Hegyesi: That's what I said. I was just asking Annie kind of you know, how Cotopaxi approaches thinking about modes when thinking about higher transporting fits?

Annie Agle: I mean, obviously, we try whenever possible to ocean freight absolutely everything and domestically. We have a no air ever policy, and we've really tried to coordinate with last mile shipments and have done some cool work around that about facilitating that in our distribution center. I think we always again, we aim and everyone on our logistics and supply and sourcing as well as our distribution center has been trained in kind of sustainable principles very similar to the topics that Talia has presented on here. So that everyone understands the sustainability as well as the cost implications.

I mean, transportation is a great place to start on a sustainability journey because what is more sustainable, it does save you money. It's very easy to see that the triple bottom line return there. And so we try to ocean freight whenever possible, we have had issues like everyone else has with the supply chain crisis, we really tried to work on that a variety of ways.

One is just taking responsibility for that through offsetting, through Flexport and carbonfund.org. So that we understand that while we are having to increase our negative impacts on the planet, we are taking responsibility through them through credible carbon reduction offsets.

At the same time we are really trying to get deeper planning and I think sometimes what we've found is education of wholesale partners. And so again you're not in this alone, but most of the time where we feel the most pressure for production timelines is not through our own e-commerce, because we can adjust that and so we've had a more patient model and our e-commerce team has been great about making adjustments, but with wholesale partners such as like Nordstrom or REI that's where there is a certain pressure from that go to market team of having a certain product in warehouse by a certain date.

And we've really tried to educate those teams who are more on the buyer side about, hey, what does more sustainable logistics look like? What is a more sustainable planning timeline look like? And how are we gonna have to adjust our calendars knowing that, frankly, this is going to be the new normal for a while, it's not just going to be this year. And so that's something I'd recommend is, do what you can to take the pressure just off of yourself and know you're not an actor in a vacuum.

And how can you think collaboratively about your different partners with your go to market teams with your sales teams, whether they be internal or external, as well as great logistics partners to think about how you can build yourself some more grace period so that you can decrease the need for air.

Kathleen Hegyesi: Super interesting Annie, would you say there's an element of, almost like consumer education and expectation there as well?

Annie Agle: Yep, absolutely. And I mean, I think it's not just Cotopaxi, but we've seen a lot of companies, B Corp’s really started this. And I actually think it started with B Corp’s, we had a conversation in our marketing channels about a variety of B Corp’s just saying, hey, the whole world is in pain right now, our suppliers and workers are in real pain right now, they're doing everything they can to do this, but there are shutdowns, and we need you to understand and have some patience. And while it's not always actionable to accomplish all of your sustainability goals as an individual, this is a tangible thing you can do as a citizen of the world is just to have more patience, to have more patience, and not expect all of your demands to be met in that moment.

And so I think that we've seen an really good response from our consumers from kind of that pushback as well as education. So I would give companies and say, hey, how we're using cause marketing around these items, to educate consumers about supply chain and choices and actually have that be, a kind of PR and marketing win for you, about demonstrating, and nothing is powerful in terms of cause marketing, as marketing that helps educate consumers. And we've actually seen that doesn't drive consumers away, they're no less likely to purchase, they actually feel that that's a very legitimate stance that they're taking. And you're incorporating their actions into your supply chain journey, and you're providing sustainable information alongside that product. And I think that's a win for everyone.

Kathleen Hegyesi: Absolutely. I appreciate that so much, especially as supply chains have even just become more visible in the past couple years, and they may have been before.

Annie Agle: Absolutely.

Reduce Packaging and Product Weight

Kathleen Hegyesi: What might not be as visible maybe is some another reduction tactic, which is thinking about your actual product packaging and weight. So Talia may be linking it back first for kind of the emissions piece. What would you advise for that?

Talia Rudee: Yeah. And I know, Annie just mentioned there's the new normal, so there's other ways of course to adapt to what we need to do to fight climate change. So really, going back to our foundation today, the basics of calculation are formula weight times distance, and transportation mode, emissions factor, weight can actually be a major factor for emissions. So both packaging and product materials themselves can be levers for emissions reduction, especially over time.

So for packaging, that can really help maximize space and containers, by reducing error around product or creative solutions, like using different methods besides poly bags, if possible, for your specific product. Glory, who's an athletic clothing brand talks about this on their website, going plastic neutral, and they have the roll pack and tie packaging method. So that's just an example of getting creative, saving some airspace in the containers and in packaging, and that really helps also with consolidation and waste, so win win win there.

Also changing materials can be super beneficial by using lighter materials, less waste and innovative designs and patterns. So, to Annie, how is Cotopaxi thought about this and your sustainability initiatives. I know you talked about the Del Dia collection before, which is up here, which maybe is a good example, but we'd love to hear more.

Annie Agle: Sure, I mean, I love this approach to that. And I think this is where you can get creative, but you can also win a customer base, and we're here to say like, hey, you can absolutely make very sustainable design decisions and have like a cult following overnight. Our growth is a testament to the character of our citizens, and everyday we succeed as a company just demonstrates that human optimism does have a basis of truth in that. And so, all of our products, first of all, they really have to, we have to be convinced that there's a need for them in the real world, because fashion is not the same thing as an MRI, right? This is not saving lives, it's about expression, it's about, you know, thermal protection from the elements.

But let's be honest, like you don't need 18 backpacks, you really only need one. And so how do you think about function first, and then from there thinking about materials, and materials is where we see the biggest reductions that can kind of happen overnight. And a lot of that just means, again, we call it our three R principles. So we know the biggest climate impact and actually increases weight of product a lot is by using conventional cotton and poly blends.

So that's just something from day one as a company, we just said no, we are, we will not be using conventional cotton, it's really bad for water, it can cost upwards of 20,000 liters of fresh water to produce a single conventional cotton t-shirt, regardless of the crude oil that has to be extracted and then becomes the poly by products that's woven with the cotton.

And also we know that's contributing to human health issues, that it's very bad for the suppliers and agriculture farmers. And so thinking about materials, and it takes a few seasons to build in those material ships. But there are a lot of great lighter weight, more sustainable material impacts that have come online since then. You have companies like Queen of Raw, that allow clothing companies to buy deadstock, so you're not contributing to inputs.

And actually, that's amazing for logistics, because if you think about it, you take tier three and tier two out of the sustainability equation. So there's as much of a 40 to 60% sustainable improvement on that. And you have no costs associated with the raw material production, or the shipping of those materials. So that's a great easy solution that a lot of companies are looking at. There's also a lot of organic cotton options now and alternative natural materials like hemp or organic, sustainable alpaca and different kinds of cool natural fibers. And there's also recycled poly options and new BCI options.

So I would say that's a great option to look at with your design teams, and making sure that you're kind of coordinating with your logistics providers, as well as your product design teams to think about where you can consume, knowing that you're also going to be able to charge more and have far higher customer loyalty. And one of the things we've seen from a bottom line management is that we pay much much less, as much as like 30% less in terms of customer acquisition and retention than other companies, because once people are invested in your values, they don't change their values, values don't change nearly as often as tastes do.

And so if you're playing to people's values rather than a trend, you get a different kind of investment that you don't have to work as hard to retain and you can hot, charge a higher price for that. And so it's a win win all around, and we've seen great business sustainability alongside product and logistics sustainability.

Kathleen Hegyesi: Amazing. Thank you so much Annie, I love just even that last piece you mentioned of playing the values over taste. I feel like that's even where a lot of the carbon neutrality comes into piece, because you're thinking about what your brand is, what you stand for, whether you're working towards carbon neutrality, net zero, or even some of the more advanced science based targets driven by different actions.

Tackle Remaining Emissions To Reach Carbon Neutrality

So when thinking about carbon neutrality with shipping, Talia what pieces come into play there?

Talia Rudee: Yeah, so at Flexport, we really have these two primary ways for carbon neutrality. First is biofuel offerings, our partners for example, offer fuels for purchase per ton, for a full on reduction of about 80 to 100% of emissions, just depending on that purchase. These are new partnerships, and because biofuels are globally pretty limited in terms of capacity. It's a really exciting opportunity that we've just gotten started with our partners, good shipping for marine biofuels and Air France–KLM for staff, for sustainable aviation fuels. So this is really emerging and, but super, has a lot of potential, super impactful industry with biofuels, because it makes those huge reductions. So that's kind of first and foremost to start with large reductions.

And then, second is offsets. Because transportation is a hard to bait industry, as I've mentioned, each one of say, Cotopaxi t-shirts have emissions that are really not going away. So, that's where offsets come in to make a carbon neutral t-shirt or other garment, whatever it is that you are selling. So it's super important to take a close look at your offset partners and projects to ensure high quality that's something that we look at a lot. Some examples for looking at high quality offsets include additionality, so that's making sure that project you're contributing to, such as avoiding deforestation in the Amazon, really wouldn't have happened without your contribution and leakage, making sure that Amazon project isn't just moving deforestation elsewhere in the rainforest.

So we've vetted our partners, carbonfund.org and Pachama, but there's of course, a lot of others out there. For both of these things, it's really great to find a customized combination, because biofuels are a bit more expensive, really exciting new opportunity, but we understand there's definitely a portfolio approach that is most impactful for companies using both biofuels and carbon offsets to optimize your cost and impact.

Also, if you want to learn more about high quality offsets, Kathleen's actually going to be part of a webinar on April 12th, that's with GreenBiz and Pachama, one of our offset partners, and we'll take a closer look at what you should be looking for with high quality offsets. So feel free to join, if you want to learn more about that.

How Cotopaxi Works Towards Carbon Neutrality

Kathleen Hegyesi: Awesome. Yeah, that'll be a fun one. There's so much emerging for how technology can help, carbon offsets and the monitoring and making sure they continue to be high quality and all of those factors that tell you I just mentioned. And Annie, I think particularly relevant, I know, Cotopaxi has been certified climate neutral brands since 2021. Tell us more about how that all comes together for you, for transportation, are your emissions more broadly for scope one through three. And maybe how you see it impacting your broader sustainability strategy.

Annie Agle: Sure, absolutely. I mean, just to reiterate, I think the message that you and Talia have already got across, I think the entire sector is aligned on these three steps of measure, reduce, and offset. And it is important to understand, you can't fix what you can't measure. So the first bit and the hardest bit of this is, step one, which is measurement. I think for most people getting into this space, it can feel really really daunting. And so finding the right partners, to just get your toe in the water. And I would say, you know, I remember kind of making a list of what we could measure today, what we could measure tomorrow, and what we could measure in a year. And kind of making this laundry list and go out, going after those quick wins.

And I'd say Flexport was really amazing, cause it was the quick win. And it helped us, kind of, galvanize our team around this and making it feel more achievable. And getting that first step, I feel like is some of the hardest, especially getting into scope three, which is the supply chain, which again, that's the area of your production, where you know, you have the highest environmental impacts, but also the least oversight. Those are issues and environmental impacts you don't really see and you're not alone contributor too, your with other companies with other suppliers.

And then I'd say it was getting our suppliers on board. And I would say that was really working with the Higg Index, so if you are in the fashion sector from here, I really recommend the sustainable apparel coalition and just getting your supplier start with tier one, then go with tier two of getting them to plug in their own environmental data and having Higg verify that. It's cost effective, it all ends up in one data library that you can pull it.

And then we found a measurement partner in climate neutral. And they're really the ones that help you walk through your scope, one, two, and three emissions, they give you all the prompts you need, they tell you how to measure it, and they help verify it. And for the pieces of data that you can't measure, and I want to say like, unless you're an IBM or some massive company with really elite technology, chances are you're going to have data gaps, we still have data gaps. And climate neutral allows you to estimate reliably, and verifiably what you can't measure, and so really recommend them as a partner, they've been a phenomenal ally for us.

And then the reduction, this is the great meaning of the work. And we all need to be more focused on reduction and not just seeing offset as the first alternative. And also that's not a cost effective, and I would say reduction is not just where you see a decrease in your carbon impacts, it's also where you see cost reduction, and typically where they're reductions their cost savings. And so, very easy example of this is moving from air freight to ocean freight, there's a massive cost savings associated with that. Generally speaking, obviously, there's some like weird movement in the logistics sector that'll I'm sure be calming down eventually.

But generally speaking, you know, you want to ocean freight rather than air freight. And so reduce what you can reduce and then offset. And we've worked with carbon fund as well as the Bonneville Environmental Foundation, and we really wanted our offset program, since our mission is really on human sustainability, we're really, we were founded as a sustainable means of addressing extreme poverty globally. And so all of our carbon offsets have economic and social returns as well as environmental return. So we don't just do renewable energy, we invest in renewable projects, for example, that are also providing communities in global south and elsewhere, options and new employment opportunities in the energy and clean energy sectors.

So that's kind of how we've looked at this and you can see immense philanthropy returns on this, as well as marketing and storytelling returns, the more you kind of lean into those stories from those offsets, and I would say, really tapping into your philanthropy teams to help you look over those offsets. That can be a really great internal kind of play to get more investment for sustainability, because a lot of offsets are philanthropies in the same way that a lot of foundations or nonprofits are, and so that's just another recommendation that I make is getting on board, you're kind of CSR and giving teams.

Talia Rudee: It's great to hear all those partnerships and initiatives has fed into some other partnerships like working with climate neutral. Flexport actually has also been a longtime partner with carbon neutral, they call our API, that I've mentioned previously for calculations when certifying companies, so trusting our certified calculator, so that's awesome to hear, it's kind of all connected.

Kathleen Hegyesi: Speaking of connectivity. And the last couple minutes here before we flip to key takeaways and questions, we'll talk about circularity. So Flexport, of course focuses on transportation, that's what we do, but Cotopaxi has already alluded to go so far beyond that, to focus on what they call holistic circularity, especially thinking about products, raw materials and the materials manufacturing.

Fully Upcycled Products Made From Previous Products and Waste

So Annie, talk us through the approach, and maybe like what advice you'd give to growing brands on the line who want to introduce this into their own company?

Annie Agle: Sure. Again, I think circularity is one of those terms where a lot of people hear it, and they know it's a good idea, but it's very daunting. And so what circularity means is that you are reusing materials. So if you think about producing one product, you're able to take and evolve that product so that it stays in circulation without producing additional need for raw materials. And so, we know that the fashion industry, one is very ripe for circularity, it's very hard to make certain industries circular, but fashion can be made circular, you can reuse a lot of the materials. And second of all, I think fashion has an obligation to be doing this, because we're not like a life saving resource. Most fashion is nice to have, but it's not necessary and it doesn't really make or break the human condition in terms of quality of life.

And so at Cotopaxi, we really see it as a responsibility, but we also just kind of see it as fun. And I'd say, do the extent that you can anyone in this space, making these challenges more fun and creative rather than making them feel like obligations. You're still in this grace period where a lot of this work is voluntary, but we know those days are coming to an end. And so getting ahead of these things before it becomes regulated, and doing it on the terms of your business is going to make a difference. It also allows you to capitalize on consumer and partner interest in things like sustainability performance.

We also see at Cotopaxi that in an inflationary market, we're having to pay more and more for raw materials. And so if you're able to keep the same raw materials in generation without having to pay for additional ones, it's the sustainability one, but it also makes really sound business sense. And so, we've really launched a lot of recommerce this year, and we're really digging into that. And we're also trying to get a lot of materials from customers back and turn them into other new products without having additional raw material inputs.

And so, here on this side, you have an example of a few fully upcycled product ideas that are coming to market this year or next, just from alternative kind of sources. And so, the bag on the right for example, we worked with a domestic rope manufacturer who has been recollecting ropes with the hope that it can do something circular with them, but when we went to them, they were like yeah, we have a lot of rope, that would be amazing. And so that's keeping that rope out of warehouses and landfills. And a bag is a really easy thing to make, and we can make it from a lot of remnant or materials.

And then our jacket is using an existing pattern for a jacket, but without a zipper which makes it easier to create a circular motor for and it's reversible, it's fun, it can be on trend, and you can kind have make it from any of our products. And then we have these fun zip pants. And so you can kind of tap into that more hip hop, and kind of Y2K trend back, and you, it's actually very easy to create simple patterns and reuse materials. And already, I'd say the pilot in terms of financial performance blew it out of the water in terms of customer attraction that we got, we sold out of resale items in a week, I think. For everything that was offered as resale through our platforms, and our upcycled items in our retail were like out of the stores before we could even think about restocking, and so we know the efficacy is there for this. And we know that fashion needs to move in this direction. And from a business standpoint, it just makes sense to be able to make multiple sales off of one set of inputs, rather than having to get and pay for raw material inputs for every single product that you make.

And it's a huge sustainability win. And from logistics, you're taking out a lot of the unnecessary monkey motion, you're working with a subset of suppliers that are really tier one direct to, you know, your distribution center and your customers without having to look in the tier three, tier two sections, which is where so much of the logistical nightmares are occurring, I'm sure pretty much everyone on this call is aware of that. So, it's just, it's a huge win from every perspective you can look at it.

Talia Rudee: Also will say that, these are awesome products, I'm definitely gonna go look for them. So in terms of, you just mentioned logistical nightmare, well, Flexport also has some, on a different note, some ways to help with circularity, and with those logistics of donations, we partner with companies and nonprofits for discount and free services to ship product donations to communities who need it most. This is all free and you can actually manage it right, and your impact dashboard where those other products are that I showed before, like calculation.

Kathleen Hegyesi: Awesome. Thank you, Talia. We'll take it home with some key takeaways besides y2k being back, which is mind boggling for me, but no idea whenever it happens again.

Getting Started On Your Sustainability Journey

Talia Rudee: Yeah, for sure. So we really talked about what it will take to move through your sustainability journey and begin that process. So first and foremost calculation, as Annie also mentioned this, but what is measured can actually be managed. I've actually seen this in practice. Allbirds really does this well, with their carbon footprint transparency, with a kind of like nutrition label for individual pairs of shoes, all about carbon, but it includes transportation in there too, so just an example of putting that into practice.

Then once you measure, find opportunities to reduce your impact. So things as we mentioned, like modal switches consolidations, and these are really where you can find those leverage points from that initial calculation equation that we keep coming back to.

And as we just discussed too, offsetting is a critical tool when it comes to carbonizing transportation, and it's really important to look for those high quality offsets. So reminder for that webinar, if you're interested to learn more about that. And finally, don't forget to continue to monitor and improve your environmental impact. It doesn't go with just one year of measuring and reducing. But it's all about continuous improvement and learning from your peers, like you are today and looking at platforms and tools to help you with that.

Kathleen Hegyesi: Awesome. Thank you so much Talia.

Shipping Relief To Ukrainian Refugees

We'll jump into questions in a moment, please continue to send those in. There's some great ones so far. A real quick, we'd also just like to mention that flexport.org is currently raising donations, the social impact side of the flexport.org team to help send shipments of relief supplies to refugees from the current crisis in Ukraine. Annie, I also saw that Cotopaxi is responding if you'd like to share more about that.

Annie Agle: Yeah, we're matching 100% of customer donations right now that are going directly to Poland and Moldova, who are helping Ukrainian refugees. So, very happy to be kind of jumping on this issue as we think it's going to be one of the largest human displacements of the last 50 years. So, just doing what we can and happy to match any donations that you guys might have.

Kathleen Hegyesi: Amazing. Yeah, I think the average displacement for a refugee is about 20 years. So it'll be a very long term response, but if anyone wants to learn more, we'll drop links in the chat about both of those efforts or to make donations. And then let's flip it to Q&A, you can ask questions using the widget on the right, do our best to answer as many as we can in the next four minutes here. Let's start with the first one that's come in. So if the uploader and API available to companies that only ship parcel and LTL, less than truckload, we do peer to peer return looking the dimensional carbon saving of one shipment versus shipping back to the warehouse and then to another customer, amazing program. Talia do you want to speak about the calculator for non Flexport shipments?

Talia Rudee: Yeah, for sure. So, I already mentioned this a lot our CSV upload and API, but that's our calculator, and it can actually measure any type of shipment. So whether it is parcel, LTL, or with other freight providers, so you're all set there, and so that's a pretty easy answer. And you can, if you have any questions, you can email us at carbon@flexport.com or sign up to have access to that platform, even if you're not shipping with Flexport, on Flexport.org.

Kathleen Hegyesi: Perfect. Thanks, Talia. Yeah, so many things we talked about today are available to non Flexport shippers, you don't have to work with us, we build a lot of these tools and offer them for free because of the challenges that we've heard. So let us help take advantage of that.

Annie Agle: Which by the way is awesome. Awesome. Plug.

Talia Rudee: Love that.

Kathleen Hegyesi: Awesome. Next question here, maybe Annie, if you want to start, what trends do you see happening in sustainable transportation or all that even just sustainable fashion? What are you excited about?

Annie Agle: I think I'm excited about the fact that suppliers are coming online with this. And I'd say one trend is re-envisioning the relationship we have with suppliers and logistic coordinators in general, suppliers are human, they're people too. And typically, this top down approach has really, it's actually stunted sustainability performance. And some of our best sustainability solutions have come from our suppliers. And I think we're seeing more companies rehumanizing some of those relationships, because they build resilience, and we've seen that during COVID. I'm sure a lot of you have had some really deep heart to hearts with suppliers, and those relationships that felt very distant, or were email base, or you saw them kind of under high pressure conditions, you saw them on webinar, we were in each other's lives in a way that we've never been informed before. And so I'm excited about that rehumanization.

And I'm excited in general about fashion, about it just being more collaborative, about capitalism, moving from competition to collaboration. And you're seeing that in all kinds of fun creative ways in the fashion space. So you're seeing people like Allbirds helping Adidas, really do a very sustainable carbon neutral shoe. And to see companies like that coming together in collaborative ways to solve really hard problems, and to see the customer response, and the societal response for that is really incredible to me. So those are two big trends that I'm seeing, collaboration and just rehumanization of the supply chain.

Kathleen Hegyesi: Absolutely. I'm going to squeeze in one more quick question while we have a few seconds. Is there an estimated percent of how much it will cost to offset your carbon emissions from your annual revenue? I can jump in for that one. It can depend on your supply chain. But on average, when just thinking about freight, we see that offsetting adds less than 1% of your total freight spend. That's before customs duties, all of the additional spend there. So is one of the most effective levers to reach neutrality. And you should couple it right with other solutions in that portfolio like biofuels or cost saving reduction measures like any talked about to try to get to that end state.

Annie Agle: I'd also just say one of the things that we've seen is that there are more and more P and L's and more financial studies on how long term doing this today is gonna save you so much money in the long term, because again, we're in this grace period where this stuff is still voluntary, it's not going to be voluntary for long, you're seeing the SEC, you've already seen acts, like the vigilant acts, limited carbon taxes in the EU, this is not going away. So starting today, the investment is much less, carbon markets are only going to go up, so the more you can offset today and the earlier you can start that good habit. And the more you can incorporate that into how you're already clearly thinking about this, which as is as a function of expense or revenue. It's a lot less expensive to do that today than it's going to be to not do that and then put it off till tomorrow.

Kathleen Hegyesi: Absolutely. And I think the perfect ending is we're slightly over, but I think exactly summarizes well. Everyone, thank you so much for joining. Thank you Annie. Thank you Talia. I we've been learning so much just from today. A copy of the slide deck and access to the recording will be emailed to everyone tomorrow thank you everyone for joining us, stay safe and we'll talk to you all soon.

Talia Rudee: Thank you so much.

Annie Agle: Thank you everyone. Bye and goodluck.

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