This episode kicks off The BIS Season 4, which explores all things environmental, social, and corporate governance (ESG). Cindy Moehring sits down with Craig Harper, Chief Sustainability Officer at J.B. Hunt Transportation Services to discuss J.B. Hunt’s first sustainability report and the company’s journey towards a more ecologically responsible, inclusive, and safe set of business practices. Tune in to learn how truck drivers are fighting human trafficking, how to reduce your own carbon footprint, and more!
Resources From the Episode:
- Carrier 360
- SEC Weighs Making Companies Liable for Climate Disclosures
- J.B. Hunt Sustainability Report (2020)
- Let's Talk about Forced Labor J.B. Hunt Workshop Sign Up
- How To Avoid a Climate Disaster by Bill Gates
0:00:15.0 Cindy Moehring: Hi everybody, and welcome back to another episode of the BIS, the Business Integrity School, and I am honored to tell you that today we have with us a very special guest, Craig Harper from JB Hunt. Hi, Craig.
0:00:27.7 Craig Harper: Hello, Cindy. Glad to be here.
0:00:29.9 Cindy Moehring: How are you today?
0:00:31.8 Craig Harper: Great. I'm glad the weekend's coming up, it's been a busy week, but I'm thankful for those.
0:00:37.2 Cindy Moehring: Absolutely. Well, let me, before we dive into this podcast with talking about all things ESG, which is the topic for this entire season, let me first just tell you a little bit about Craig and also JB Hunt. Craig has been with JB Hunt for almost 30 years now, and he has spent about 28 of those years, just a little more than that, as the Chief Operating Officer of JB Hunt. Recently, he moved into a new role, which is the Chief Sustainability Officer and Craig, I think your prior role set you up perfectly for this new very important role. JB Hunt, for those of you who may not know, is a transportation and logistics company that is based right here in Northwest Arkansas, Lowell to be exact. It was founded by Johnny Hunt and Janelle Hunt in 1961, right about the same time that Walmart was also being founded and established by Sam Walton.
0:01:32.7 Cindy Moehring: The company, JB Hunt, currently employs over 24,000 people. It operates more than 12,000 trucks, and the fleet consists of over 100,000 trailers and containers. Last year, actually in 2019, JB Hunt had revenues of over $9 billion and we are proud to say that they are a fabulous public company representing Northwest Arkansas well throughout the entire United States and Canada and Mexico. And I am super excited to say that JB Hunt is also sponsoring this entire season of the video podcast, and it's one of the reasons I'm just really honored to be able to have Craig here with us today to tell us all about what's going on at JB Hunt in the area of ESG. So Craig, let me ask you, how did you get from your role as COO into this now really important role of being the Chief Sustainability Officer? Tell us a little bit about your time with JB Hunt and how you got there.
0:02:39.4 Craig Harper: Yeah. Well, it really started about two years ago when John Roberts, our President, CEO, and Dave May, who at the time was our CFO, came to me and they said, "We gotta get a committee formed and really look at this sustainability and ESG that we're hearing so much about and so many questions on and see where we stand." So, I did. I put together a committee, a sustainability committee, and we had people across all business units and every different area inside the company, there were like 24 of us on that committee, and we started digging into the world of ESG and sustainability and really learning and trying to understand where we were and perceived in that, and we found out quickly that we had not been doing a good job of telling our story. And what we learned was if you don't tell your story, somebody else will, and they very well may get it wrong, and that's what we thought.
0:03:45.3 Cindy Moehring: Right.
0:03:45.7 Craig Harper: So, we launched into this and we could see quickly, like intermodal. Intermodal is two and a half times more efficient than trucking the freight, and we had not done a good job of getting that word out. So we said we gotta make that more known about the benefits of intermodal and sustainability. And the same thing with JB Hunt 360, which is our technology where we put the carriers and shippers together, and the goal for our whole company is to become the most efficient transportation network in North America, and JB Hunt 360 helps in that, because it puts the right truck on the right load at the right time, and therefore, you can reduce a lot of empty miles. And we also found we were not telling a good story about our equipment, we buy the latest newest equipment and put on all the accessories that we can to improve the fuel mileage, such as...
0:04:41.6 Cindy Moehring: Sure.
0:04:42.2 Craig Harper: ...the low rolling resistance tires, idle optimization and automatic transmission, so that was the big discoveries that we just had not been telling the world what we were already doing, and so...
0:04:55.1 Cindy Moehring: Right.
0:04:56.1 Craig Harper: We tactically went after some of those rating agencies to see how we could improve on those, the different rating agencies and reporting agencies.
0:05:05.8 Cindy Moehring: Well, it sounds to me like that was a really smart move on the part of John Roberts to get JB Hunt kinda focused on ESG, because it only picked up steam in the last two years with everything that's happened, just in kinda the recognition of climate change and the social justice issues and everything else, COVID. I mean, it all sort of kinda snowballed together, and now that you've been in this space for a little while, do you sense that it's here to stay and can you identify a tipping point, if you will? I mean, in the past, I think it was sort of a side issue, but now it seems like it's just squarely front and center. But I'm interested if you sense that as well and can identify a tipping point?
0:05:56.1 Craig Harper: Yeah, absolutely. About it, it's here to stay. I see more activity each and every week, and I believe that part of this really started with a letter that Larry Fink sent out. He's the CEO and Chairman of Black Rock, it was back in 2018, a letter that he sent out to all CEOs. And he was telling CEOs that now, it's not just good enough to have a good service or a product that you've gotta be doing what is best for society in general. And that letter got a lot of talk, a lot of activity, because before, people always talked about a corporation was here to make profits.
0:06:42.3 Cindy Moehring: Right.
0:06:42.8 Craig Harper: Well now, he started saying that all stakeholders are getting involved, and when I say all stakeholders, I mean all stakeholders, you know? The investors with your customers, your suppliers, the community, the people in the community that you serve, and then also your employees. So now that everybody is getting concerned about what is going on in the world of sustainability, in the world of ESG? So, I think that was the tipping point back in 2018, it got a lot at that momentum going, and then all the things that you talked about earlier with the social unrest and then COVID hitting, I think just added to that. And another point that you made is that it's not slowing down, it continues to gain momentum again, each and every day, we see that around here.
0:07:34.7 Cindy Moehring: Yeah, I think that's true. I mean, just this week, earlier this week, there was an article in the Wall Street Journal, you mentioned the rating agencies earlier, and we gotta talk about that for a minute, but yeah, when the Wall Street Journal, just earlier this week, the SEC chairman, Gary Gensler, made it very clear that he has his staff now looking at whether or not companies should be disclosing their climate-related risks in at least public companies, right? In their disclosure documents, like in their annual reports and their 10Ks, all the way back to potentially like the... What they call it, the Scope 3 emissions, which are the emissions of others in your value chain. But I would be really interested in knowing about what you mentioned, the rating agencies, how many are out there, if there isn't one consistent level, which I think is what Gary Gensler's after, right? Let's make it transparent for investors and others to be able to compare, can you do that now or do we really need one measurement stick?
0:08:41.5 Craig Harper: Yeah, we certainly need fewer measuring sticks than we have today. [chuckle] There are currently over 600 different rating companies out there. So, we could spend all day long filling out a new report from a different request from this customer or this other customer, so we do need to get some standardization in these rating agencies and reporting platforms so that all the stakeholders can depend on getting consistent information that is verifiable, that is decision useful and that they can take across different industries, different countries, different time periods, and know what they're comparing. And there is some hope here, we have recently seen two of such agencies like SASB, Sustainability Accounting Standards Board, and IIRC, which is the International Integrated Reporting Council, those two reporting platforms are coming together and forming one, so that's a step in the right direction, so we're glad to see that.
0:09:52.7 Cindy Moehring: It is. Yeah. Well, that will certainly help. I think there's gonna be a lot that's gonna happen in this particular area of ESG, rating agencies, what's gonna be the measurement stick, is it gonna be required for companies to put it into the reports, of course, that creates legal liability, so are they gonna get protections for disclosure, if it's required, that we're gonna have to watch that evolve. But I do agree with you that it's needed because I can't imagine how a big company like JB Hunt possibly tries to keep up with all of the different rating agencies and how you can possibly even compare to figure out what are the best practices, are we meeting the right benchmarks, I mean, it's... We could do with a bit of rationalization, I think, and culling of the rating agencies, so that will be good to watch.
0:10:41.6 Craig Harper: Absolutely.
0:10:43.6 Cindy Moehring: So now let's dive into something that I think is very exciting, your sustainability report. First one just came out July 16th, so I know you've been working on it. It takes a lot of hard work and you're gonna tell us a bit about that, but that's a big moment. So first of all, congratulations for getting that out, that's really great. And as I was reviewing it, it talks about JB Hunt's reducing of carbon emissions, promoting diversity and inclusion, and even some talk about ending human trafficking and the role that trucking companies play in that, but let's talk about particularly the carbon footprint first. What hurdles do you and other transportation providers currently face when you're trying to reduce your carbon footprint?
0:11:34.0 Craig Harper: Well, as you know, being in the transportation business, our biggest hurdle is finding a replacement for fossil fuels. That's... You touched on Scope 3 emissions, which the audience probably knows is like your supply chain emissions and scope one emissions are the emissions that come from the equipment you own and scope two are electricity. But scope one emissions by far are our largest emissions, and that comes from our diesel, so we need the diesel that we use in the trucks. So we need an alternative to diesel. And so, we are very excited about what we're seeing coming along in the world of electric vehicles, whether it's battery electric or fuel cell electric, but we need to get that technology here sooner than later. And we're excited about it, we've been testing it, but it still has long ways to go. So we need a commercially viable option and we're all anxious, we would like it to be here now, but it's not.
0:12:35.2 Craig Harper: You know, it is available in the automotive sector also, and some smaller commercial vehicles like vans, but in the heavy duty space, there is not a commercially viable product right now. The equipment costs three times more than the diesel equivalent, and the range is significantly less. An 18-wheeler has a range like 1400 miles, one of these vehicles would have the range right now, they're under 200 miles. So, you're gonna have to buy... You have to have two or three trucks to do the work of one truck, so that ain't gonna make sense. So we need a product that can haul the same amount of weight, get us some... We don't have to have 1400 miles, but we definitely need 300, 350 miles, we'd love 400 miles, and then have the same type of refueling or re-energizing network. You know it's... Right now the infrastructure is such a long ways off, and we're running into hurdles there as far as when we have been testing the equipment to get the transformers upgraded to operate just one truck, and so, now all of a sudden you start putting that over all 18,000 trucks that we have, then, you've got significant hurdles.
0:13:51.9 Cindy Moehring: What do you think that time horizon realistically looks like?
0:13:55.7 Craig Harper: We'll start seeing products this year. Likely, we'll see a few products come about in some test markets and all. Some more products will come out in 2022 and you'll see them continue to improve, but the tough part is, again, with that range limitation and the cost that we talk about and the weight is when are you really going to jump in full force?
0:14:21.1 Cindy Moehring: Yeah, right.
0:14:23.0 Craig Harper: Because a little bit, I use the flat screen TV analogy. When did you buy your flat screen TV? When they first came out, there were $20,000.
0:14:32.7 Cindy Moehring: Yeah.
0:14:33.2 Craig Harper: Well, not too long after that, they dropped all the way to $10,000. Most people still didn't buy. You then... $5000, $4000, $1200, I think I finally bought one in $1200, and now you could go by that television for probably $350 or $400.
0:14:47.0 Cindy Moehring: Yeah. The prices have come way down, yeah.
0:14:49.2 Craig Harper: So if you jump in too early on a technology, you've actually created a disadvantage for yourself, because then the next year somebody has a truck that has better range, can haul more weight, has a faster refueling time, but we definitely wanna get some in our hands, operate these pieces of equipment and see how we can help improve that technology, but it's gonna be a while.
0:15:18.1 Cindy Moehring: Wow, okay. Well, in the meantime, I also liked how JB Hunt is serving the communities with some educational tools. For example, you've put together guides on how just individuals can help reduce their own kind of carbon footprint, so how... Tell me a little bit about how those guides work, and have you seen any positive impact from that yet?
0:15:40.9 Craig Harper: Yeah, what you may be talking about is the carbon diet and the carbon calculator.
0:15:45.6 Cindy Moehring: Yeah, yeah.
0:15:45.7 Craig Harper: With carbon diet, we work with our customers and help them, first and foremost, to understand their carbon footprint. What is it? And then all the different aspects of that and what makes up such... The majority of that footprint? And what we find lots of times is that you start digging into it and you look for ways to reduce the miles. And so, how can you reduce the miles? About well, it's where do you put the distributions in, where do you put the cross-dock? Then also you dig further and it's like, let's look at the payload. Are you maxing out all the equipment? Are you shipping air?
0:16:24.2 Cindy Moehring: Yeah. Yeah.
0:16:25.2 Craig Harper: And then you look at mode conversion. Can you do consolidation shipments and ship the same freight but with fewer loads? Can you put the freight on intermodal? Again, intermodal is 2 1/2 times more efficient than truckload. So, those are some of the things that we work through with the customer, to find ways where they can reduce your carbon footprint. And then also the carbon calculators where you can actually put your freight into the system, and the pick-ups and delivery points, and it will tell you how many metric tons of CO2 you can avoid by again, converting that freight from over the road to an intermodal load.
0:17:09.0 Cindy Moehring: Wow, I think that's just fantastic. That's really spreading the knowledge, right? And helping everybody try to get a little bit better, which... That's what we're all gonna have to do. I mean, this is such a big issue, it's not gonna be able to be solved by just one company and one effort. It's gonna take everybody kind of diving in and doing it together. That's a big one, obviously. I think for JB Hunt given that you're a big trucking company, but like any other company, you've got other issues in this big ESG bucket that you also have to address. So, now let's turn to the issue of, let's say some of the social issues, some of the diversity and inclusion and the stakeholders of your own employee base. And the communities that you serve. So, what have you been doing in the area of diversity and inclusion internally first, and then also have you been extending that into the local communities, and if so, how?
0:18:04.0 Craig Harper: Yeah, first off, we've really expanded our training of the employees. Now all of our front line managers have had trainings such as unconscious bias training.
0:18:16.1 Cindy Moehring: Yeah.
0:18:16.9 Craig Harper: So that's something that we kicked off several years back and continue to expand on that. And then just recently, Shelly Simpson who is our Chief Marketing Officer, her scope of responsibility was broadened and she's taken over people in Human Resources. So again, along those lines, she has brought in a vice president of inclusion, and this person is now gonna have responsibility for going across the country, across all business units and developing a group of people that work alongside him to get this inclusion diversity spread across the country. And also, the gentleman will also have responsibility or does have 'cause he's already been placed in his position, responsibility for our employee resource groups. And we have five such groups such as one we call GROW, which is Growing and Retaining Outstanding Women.
0:19:14.2 Craig Harper: We have an employee resource group for our African-American community, for our Latino community, for our LGBTQIA community, and also our veterans. And as far as in these resource groups what they do is, they provide a way for these people to connect and share their experiences in their professional life and also in their personal life, and it's been very well received and will continue to expand the people, and the numbers in those groups has been phenomenal how fast those have taken off. And then also, as far as out in the communities, those groups themselves actually do outreach in the community, and they have different projects that they work on, so it's exciting to see them work outside in the community.
0:20:07.0 Cindy Moehring: That is. That's really important. Well, that's another really great initiative, I think, that you have overall, with in terms of hiring somebody to focus specifically on inclusion and figuring out how to extend the reach of those employee resource groups and having them engage in the community. That's really... That's impactful. That's impactful, ground level.
0:20:29.5 Craig Harper: We're seeing something else that has been a huge success here is a program we have called Elevation, where employees, every employee can submit any idea on any topic, as far as a way to improve the company. And this has been going on since 2015, and we now have over 20,000 ideas that have been submitted, and we've actually taken action and implemented over a thousand of those. And an example, we just kicked off an ideation session in Elevation, which is where we specifically target an idea that somebody brought up and say, "Okay, how can we expand this?" And it was on sustainability, and in that, we had more than 300 ideas, submitted by more than 200 people.
0:21:19.6 Cindy Moehring: Wow.
0:21:20.5 Craig Harper: Elevation has been a big hit.
0:21:22.3 Cindy Moehring: That's great. So empowering, right? If you have an idea, submit it and let people work on it. That's great.
0:21:29.5 Craig Harper: Then also in the communities, we're proud that we're able to work with the University of Arkansas so well. It's been an ongoing, long-lasting relationship, and we were glad to announce 1.25 million dollars that we actually gave to the school, for an inclusion and education thought leadership fund. And that fund is really established, focusing on bringing in to supply chain, people from historically underrepresented backgrounds, so we're excited about that. Also, there was a million dollars given for an innovation and education and management research supply chain fund, and we're excited about that and the work that will come out of this, because with this fund, we look forward to seeing some ideas on the innovation and research that will help promote sustainable business practices and encourage engagement in sustainable supply chain.
0:22:35.5 Cindy Moehring: Well, that's... Yeah, so in terms of outreach to the community, that's a huge one, and thank you so much, just again, on behalf of the university, so transportation companies also play a... For those of you who may not be familiar with it, an important role in stopping human trafficking, some people may think another name for it is modern-day slavery, so people may think, "Oh gosh, that was eradicated hundreds of years ago. What are we talking about?" But lo and behold, modern-day slavery, human trafficking does still exist and transportation companies play a real important role in trying to eradicate that, and can you explain a little bit about how JB Hunt is involved in this space and what your drivers do to support the cause?
0:23:22.4 Craig Harper: Absolutely, it's horrific that it even exists today, and you touched on this that a lot of people don't realize how big a problem it is, but it is out there, and as far as being in transportation, our drivers are a uniquely positioned to be able to identify and intervene in some of this because they're frequently going in and out of at truck stops, and with that, all of the movement going on at truck stops, cars coming in, the trucks coming in and out all day long, it's been known that that is an area where unfortunately some of this human trafficking does take place. So since 2014, that's when we kicked off training our drivers on this, we've now trained over 100,000 drivers on how to identify and intervene with human trafficking, and we cannot wait to continue to march on this mission of ending this, and we showed our support last year, we went to DC and were there to support, show our support for the DOTs transportation leaders against human trafficking. We further submitted that with our platinum sponsorship of Truckers Against Trafficking, which I know Candice Paris who is going to be coming to the headquarters here and doing a training session, and she's actually gonna be participating in one of your workshops.
0:25:00.7 Cindy Moehring: Yeah, yeah, we're so excited to be able to welcome her and Greer as well, so that we can have the workshop on... Let's talk about forced labor, I mean by some statistics, that's like more people in the world today are involved in modern day slavery, not of their own choosing, of course, than live in the entire country of Canada, and even here in the US, there's numbers that it's over 700,000, and the numbers are really hard to verify, because it isn't something that you can go necessarily count. You're really trying to rely on those who do have the ability to speak up and have the courage to do so and then do some extrapolation from there, but it's a big issue.
0:25:41.3 Craig Harper: It is, it's a huge issue. And when you hear the stories of some of these people and it's gut-wrenching, and it will make you wanna support this initiative, which I hope it does, so we're excited to do our part to try to put an end into this.
0:26:05.8 Cindy Moehring: Well, great, I can't wait for that workshop and to hear about your program and be able to hear from some of you, the truckers specifically, and victim and with Truckers Against Trafficking, that's gonna be a really, really great one. So now, a tough question for you that everybody always wants to know, accountability, measurement, how do you actually make sure that all of the things you mentioned in your sustainability report that you're gonna be able to continue to make progress on? And that it's gonna be measurable progress, how do you ensure that you're reaching the right outcome?
0:26:41.8 Craig Harper: JB Hunt, we've always had a culture in here about accountability, whether it's been financial statements, whether it's safety results, so we're used to accountability, and now with our journey on sustainability, we'll have it there too, and there's a lot of different ways that we can continue to observe the progress that we're making and hold ourselves accountable, and part of it is with these rating agencies, because they do have you put your information in and some standardized formats, even though you and I talked about earlier, there's too many.
0:27:20.8 Cindy Moehring: Right.
0:27:22.2 Craig Harper: But you do have information or repeatable steps that you can utilize every year to come up with that information and show the progress that you're making, and then also our ultimate goal is to know what we're doing for the longer term environment, impact on it. And that's where, again, measuring the carbon footprint that we have today, which we have that verified by an outside third party, so we have a good benchmark of where we are and measuring that intensity as we continue to march forward, so there will be several ways that we can monitor and measure and take pride in the improvement and success we have, because we will have it, we've gotta be able to get all the OEMS on board to bring out that equipment and bring it to us as fast as they reasonably can.
0:28:17.4 Cindy Moehring: Right.
0:28:17.5 Craig Harper: And be on track on this progress.
0:28:19.8 Cindy Moehring: Right, you can't do it on your own, you recognize that you're emitting a lot and you wanna reduce the footprint, but it requires bringing everybody along. So collaboration, communication, those kind of skills are just going to be vital to address this issue and in my opinion, we've got the right person in charge of that there at JB Hunt because you clearly have had a lot of experience with that over your time there with the company.
0:28:48.5 Craig Harper: Well, we've got a ways to go, we've got a lot of people pulling on the same rope around here to get this done. And it's been a lot of fun. I look forward to seeing our progress and the changes that we can make, I look forward to seeing what we can work on with the University of Arkansas and those different funds, because there does have to be some new technology come along.
0:29:12.4 Cindy Moehring: Yeah.
0:29:12.9 Craig Harper: We've got the battery electric, the hydrogen fuel cell and use that in the electric space, and then there's gotta be some ways that we can actually pull those carbon out of there, there's a carbon capture right now. It's expensive, but it's expensive too to do nothing, can come up with new technologies.
0:29:34.7 Cindy Moehring: Yeah, yeah, well, we live in a very entrepreneurial part of the world, and companies like JB Hunt, and Walmart, and Tyson all started by some very strong entrepreneurials and that spirit is still here in this area, and I'm confident that what the University of Arkansas's focus on that as well, and support from folks like JB Hunt, we'll get this figured out, we'll be able to work on this all together. So Craig, as we end this conversation, I always like to leave the audience with some additional resources where they might go to do a little more reading or watching or listening on this topic of ESG. So is there a particular book or documentary or maybe a podcast series, something you've listened to lately that just really struck you, it was like, "Wow, that's stuck with me", that you could recommend to the audience?
0:30:27.1 Craig Harper: Yeah I think the book by Bill Gates is a fantastic book and "How to Avoid a Climate Disaster", and when you read that, it will open up your eyes to what is going on around the globe, and it will open up your eyes to how big of a problem this really is, but on the same note though, he gives us actual solutions and he says it in there, it's a huge problem, but he is optimistic, he thinks we will find a way to address this problem, but he points out that we need more and more money going into research to continue to develop technologies that are further developed technologies that are there today, but also to come up with some technologies that you and I hadn't even heard about it yet. So, excellent reading, you learn a lot, and it'll make you think twice about what's going on across the road.
0:31:24.7 Cindy Moehring: Well, that's a great recommendation. And interestingly, you're not the first guest that has recommended that book, so I think it's almost required reading for somebody who wants to get a little more in the know on that particular topic, so... Craig, thank you so much for your time today, thank you for your partnership with the University of Arkansas more broadly, and this has just been a really great conversation. Congratulations again on your first sustainability report, and we look forward to watching the continued progress.
0:31:53.9 Craig Harper: Thank you, Cindy.
0:31:54.8 Cindy Moehring: Alright. Bye bye.