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Logistics as part of the solution

As the climate crisis unfolds, globalisation is no longer tied simply to a logistics system that is functioning, but one that is also environmentally friendly. Solutions for this are being developed at the Kühne Center for Sustainable Trade and Logistics.

How can globalisation be made to be both sustainable and prosperous? This is one of the core questions being addressed at the Kühne Center for Sustainable Trade and Logistics in Zurich.

Credits: Uni Zürich: Vision Inspires, Marco Blessano

The clue is in the name. The new Kühne Center for Sustainable Trade and Logistics receives its research funding from the Kühne Foundation. In the United States, such funding has long been the norm, explains Director Ralph Ossa, Chairman of the Department of Economics and the Kühne Foundation Professor of International Trade at the University of Zurich. What is more: “This funding is completely transparent, and of course there is no duty of loyalty in our teaching and research.”
The importance of this independence in the controversial issue of globalisation is obvious. Whilst much of society is convinced that Germany, in particular, benefits greatly from global trade, many trade agreements are hampered by the doubts of those who think otherwise. For example, the Transatlantic Trade and Investment Partnership (TTIP) with the US is on hold, and the Comprehensive Economic and Trade Agreement (CETA) between Canada and the EU was ratified much later by Germany.

The problem here is that there is no simple solution. Few parameters are fixed, as recently demonstrated by the COVID-19 crisis, supply chain disruptions and geopolitical changes. Many interdependencies are highly complex and assessing these is also a balancing act. Is the key priority here how goods are traded most efficiently and the economic prosperity that is associated with it, or are the demo-cratic interests of people and the protection of the environment more important than economic prosperity?

The research centre, which was founded in 2019, addresses precisely these and other questions relating to the role of world trade in combating climate change. The scientists at the Kühne Center – which is based on a long-term cooperation between the Kühne Foundation and the University of Zurich – want to rethink the existing world trade system in order to pave the way for more sustainable globalisation.

The Kühne Center for Sustainable Trade and Logistics is at the University of Zurich.

Local sourcing equals climate friendly?

The vision is clearly defined: “Our core message is that trade should not be viewed simply as the problem, but as part of the solution,” Ossa stressed. Sustainability is usually about mitigating damage, for example through introducing lower volumes, greener modes of transport and more sustainable energy sources. “The assumption is that local consumption is automatically green.” Many people associate international trade, in particular, with harmful emissions during transportation.But this is usually not true at all. “In agriculture, for example, 90 per cent of emissions are caused by production and only 10 per cent by transportation,” explained the professor. One example of this is apples sourced from New Zealand, which have a better climate footprint than locally sourced apples when in season over there. How come? The energy-intensive storage of local fruits in cold stores means that fruit from New Zealand is environmentally more advantageous despite sea transport.

Green sourcing is a catalyst for change

Researchers have therefore been working for over a year as part of the study entitled “A quantitative analy-sis of sustainable globalisation” to create mathematical models of the global economy for use in predictions. “In a fictitious example, we looked at how world trade would develop if every state worldwide imposed a tax of USD 100 per ton of CO2 equivalent,” Ossa reported.

Initial interim results are already available. “The foreign trade ratio, i.e. the ratio of trade to gross domestic product, would be as high in a sustainable world as it is today,” reported the director. “Nevertheless, the model calculation also shows that global CO2 emissions would be reduced by almost 30 per cent.” The main catalyst here is greener sourcing. “When households and companies source their goods from more environmentally friendly countries, this significantly reduces emissions,” stated the professor.

Ossa does not expect that such a tax would ever be enforced. “But it would simplify decision-making processes for businesses if states exercised their regulatory role more effectively.” This also applies to consumers, whose decision – according to analyses on sustainable trade – is crucial. It would be much easier for them to assess the impact of climate change if this were already reflected in prices or, in economic terms, if all externalities were internalised. “Until now, this has only been possible for individual companies or within the framework of corporate social responsibility. So this is already one way in which we can see politics has failed,” explained the director.

The study, due to be published in the first half of 2023, is based on the preliminary work for the Sustainable Global Index, which will be released regularly in the future. This shows how close trade is to the ideal as it stands. “Since about 2001/2, the index values have been worse because lots more was imported from China, so the sourcing hasn’t exactly been ‘green’,” reported Ossa. But there is also a positive trend: “Since 2012, the index’s values have been moving in the right direction again, given that the amount of emissions in China has been declining.” (cb)


Kühne Center for Sustainable
Trade and Logistics

Established: 2019
Headquarters: Zurich
Employees: 1 professor, 1 postdoc, 4 doctoral students and several research assistants

“If households and businesses source their goods from more environmentally friendly countries, this will significantly reduce emissions.”

Ralph Ossa, Chairman of the Department of Economics and Kühne Foundation Professor of International Trade at the University of Zurich

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