Carbon Footprint Management in Finished Goods Transportation


PT HM Sampoerna Tbk

INTRODUCTION

Sampoerna has strong commitment to operate with integrity and focus on responsibly delivering long-term and sustainable growth. For the Company, sustainability means creating long-term value while minimising the negative externalities associated with our products, operations and value chain.

Reducing environmental footprint is one of the sustainability strategy pillars of the Company. Effective environmental management across its operations and value chain goes beyond compliance with applicable laws and regulations – it is central to the security of raw material supply, promotes efficiency and savings, and minimises negative environmental impacts.

FRAMEWORK AND STRATEGY

One of Sampoerna’s business activity that produce carbon is product transportation and distribution. The Company delivers their product from manufacturing plant to their warehouses located all over Indonesia. They have three modes of transportations: vessel, truck, and train. In 2016, their carbon footprint was 148.40 Kg CO2e/million sticks cigarettes based on theoretical calculation of Fuel method & Tonnage km method.

To significantly reduce Sampoerna’s carbon footprint, the Company conducted a study to identify transportation type that can generate lower carbon emission. They identified that with the current tracks, vessel and train could produce lower carbon footprint than truck. Based on their calculation, in comparison to truck, transporting one million stick cigarettes by vessel can produce 30% lower carbon and 60% lower carbon by train.

However, it was another challenge to implement their improvement, Sampoerna could not just blindly change it to Vessel & Train and they needed to consider all aspects (Market Volume, Cost, Warehouse capacity, etc) without giving negative impact in their business for instance Stock availability issue, security issue, etc. After doing comprehensive study and exploration, the team found some routes can be changed to Vessel and Train, so that in 2018 their trucking figure decreased by 11% and for Vessel, increased by 7% and Train increased by 4% each.

ACHIEVEMENT AND IMPACT

Sampoerna successfully reduced Carbon Footprint by 3.3% (143.5) in 2017 and 8.9% (130.7) in 2018. This initiative has been sustained from 2016 until today and the number of carbon footprint positively decreased year by year. The Company also managed to deliver with higher load optimisation which can also reduce their transportation cost without giving negative impact in our business.

FUTURE DIRECTION

Sampoerna will continue with this initiative and at the same time, they are also looking for the opportunity to reduce their carbon footprint in more innovative ways or collaborate with other companies.
Sampoerna – an affiliate of PT Philip Morris Indonesia and part of Philip Morris International Inc. – is the leading Indonesian tobacco company, focusing primarily on the production and sale of clove cigarettes. The Company operates seven production facilities in Java, employing – directly and indirectly -- a total of approximately 65,000 employees, mostly in the production of hand-rolled clove cigarettes. Sampoerna distributes its products via 114 sales and distribution area offices across Indonesia.