Net Zero Is Great, but it Must Make Unit Economic Sense

“In the MHE (Material Handling Equipment) industry, transitioning to zero emissions is not just an opportunity to improve RoI / lower opex, it’s our obligation to lead the way towards a sustainable future. GEAR’s Lithium-ion MHEs are emission-free, driving us closer to Net- Zero and sustainable Green Logistics. Together, we can reduce our carbon footprint and ensure a better world for future generations. Let’s take action today for a greener tomorrow,” emphasizes Varun Chopra, Executive Chairman, GEAR India, during this interview… 

What exactly are sustainable business practices?

Before getting onto this topic, we need to take a step back and understand the various phases of sustainability. We all touched upon Scope 1, Scope 2 and Scope 3, we understand the Scope 1 is from OWNED assets, Scope 2 is a source of power and Scope 3 is from sources which are outside your control. Scope 3 accounts for 70% of total emissions. Supply Chain accounts for 60% of total emissions. The use of technology comes from two points of view. While the focus is on sustainability, there is also the aspect of safety, which is critical and linked with sustainability. The use of sensors is one of the tech measures that companies are implementing in terms of enhancing safety of men and materials. The second aspect I would like to draw your attention to is the use of lithium-ion batteries.

Net Zero is great, but it has to lower my opex or increase my productivity. It must make Unit Economic sense. That’s the inflection point we see right now. That’s where we are going to see sustainable energy patterns having much greater adoption going forward. The goal of Gear is to drive a sustainable business, not just by achieving green growth on our own but also by empowering our customers and suppliers to do the same. We must lessen our impact on the environment and fight climate change for the benefit of our clients, our company, and the entire world. We have taken a top-down and a bottom-up approach and have held several rounds of discussion with our customers as well as our suppliers. We have tried to understand their concerns and we have taken data from them.

Climate change is one of the most significant challenges affecting our globe today. Therefore, driving change that avoids a global climate emergency and maximizes the potential for green growth is in everyone’s best interests. At GEAR, we are aware that our business operations have an impact on the environment and the community, and that it is our duty to ensure that this impact is favorable. Additionally, we believe that operations need to be efficient and long-lasting in order to generate long-term value. As a result, we are committed to being responsible in our business practices by integrating ESG factors into our decision-making and operational procedures.

We are raising the bar for lithium-ion material handling equipment in India in an effort to lessen our carbon footprint and promote a cleaner planet. Since lithium-ion batteries have Zero Emissions, they can help businesses on their path to becoming Net-Zero. GEAR is dedicated to help customers meet their emission requirements by providing zero emissions and environmentally friendly lithium-ion batteries in the MHEs. We are also glad to work with new clients as they pursue Zero Emissions. We are dedicated to setting an example for others as a reflection of our mission to create lasting results.

Please enlighten us on the fuel consumption dynamics of lead acid batteries vis-à-vis Lithium-ion batteries…

Transitioning to EVs in the context of MHEs (Material Handling Equipment i.e. Forklifts, etc.) means moving to Zero Emission MHEs. These are crucial not just from a Net Zero and Decarbonization standpoint, but there are significant opex benefits associated, specifically in Supply Chain with respect to adoption of Zero Emission MHEs in Manufacturing sites as well as at Warehouses.

Let me share with you some stats… Lead-acid batteries require more energy and longer time to be fully charged. In addition, lead-acid batteries need approx. 8 hours to be charged, before they are ready to be used. Lead-acid batteries have an average of 1500 cycles if maintained well. Lithium-ion batteries require no maintenance, and still have 80% of their original capacity after 3000 cycles.

Batteries have no harmful emissions to the environment during usage, however there are emissions associated with them during production. Lead-acid batteries generate 50% more emissions from cradle to grave than Lithium-ion, and also produce acid fumes during charging and maintenance.

Lithium-ion batteries can also be used for longer, generating less toxic waste, and can be reused another time as a second life battery for energy storage. Various varieties of lithium-ion batteries exist based on their chemical make-up. The safest material, lithium-iron-phosphate, or LiFePO4, provides the best performance and longevity. Due to its chemical composition, the Lithium-ion batteries have the ability to store a high energy density in a small space. Lithium-ion batteries offer a wide range of efficiency benefits, including reliable power delivery and quick charge times. Lithium-ion batteries do not produce decreased power when charging is insufficient, in contrast to lead acid batteries. Additionally, they charge in about 120 minutes, which increases productivity. Having said that, these are very early days, we have miles to go from here.

How do you foresee the sustainability landscape moving from here on?

To achieve India’s Net Zero Target of 2070, each one of us have to strive in that direction with a high sense of urgency. I would propose to start with Decarbonization of Supply Chain, given that it accounts for 60% of all carbon emissions - one can take the first step towards Net Zero by transitioning to Zero Emission MHEs, which in addition to being zero emission also provide a higher ROI and Lower Opex vs IC and Lead acid powered MHEs.

According to you, what challenges are companies facing in shifting gears to more sustainable alternatives?

I think it’s more about lack of understanding / misconception that Lithium-ion / Zero Emission batteries are more expensive. One needs to look at it from a TCO (Total Cost of Ownership) point of view and then the ROI kicks in.

How can companies assess suppliers on various ESG parameters? How can technology adoption drive significant change in this regard?

There are several tools that can be used to assess supplies on ESG parameters, which can be used. Technology is already there which can play a crucial role going forward in ESG i.e. from an Environmental point of view using Zero Emission MHEs, on the Social front, it is about improving diversity and equity in the workforce and from the Governance perspective, it’s about compliance with respect to safety and minimum wages.