PostNL N.V. (PNL) Earnings Call Transcript & Summary

Hello, and welcome to PostNL Second Deep Dive for the financial markets. Back in June, we talked about digitalization as one of the drivers of our strategy. Today, it's all about sustainability. Thank you for joining us today. My name is Jochem van de Laarschot, I'm the Head of IR and Communications. We have the following program for you today. First off, Herna Verhagen, our CEO, will talk about our strategy and the pillars driving it, focusing on sustainability, of course. Then I will talk with 2 colleagues, Iris van Wees, Director Operations at Parcels; and Nikaj van Hermon, the Manager Services responsible for facilities, our fleet and also real estate. After those conversations, there will be time for your questions. You can ask questions in the chat function in your browser. And we also have a couple of analysts who are joining by conference call. Herna, over to you, please.

Thanks, Jochem. And it's very good we all -- are all together here this afternoon. I would like to start with a slide you probably all do know, which is about our purpose, ambition and strategy. They didn't change. So this is not new, but I think important to repeat. Our purpose is to deliver special moments. And of course, we're doing that being your favorite deliverer, being part of the heart of our customers and consumers, with a very clear strategy to be the leading logistics and postal service provider in -- from in, to and from the Benelux region, with very strong networks in the Netherlands and in Belgium and, of course, with Spring as an important part for our international volumes. That strategy is, of course, further worked out in how do we create value for our shareholders and how do we make this company attractive. Important in that is our value creation proposition, and this is what I presented last February as well with Parcels, which is managed for profitable growth by enhancing customer interaction, but for example, also by managing our network capacity and utilization of our infrastructure. And Mail, managed for value, to deliver stable and predictable normalized EBIT and cash flows going forward together with keeping the business accessible, reliable and affordable. And our new program introduced last February, Digital Next, while we want to transform our commercial engine and, of course, our core logistics together with scaling the successful platform we already have. What we didn't discuss a lot by that time were our strategic objectives. And today, we all focus on improving our environmental impact because we do think that, that is a license to operate when it comes to running our business going forward. Talking about ESG, talking about that license to operate and, of course, making immediately clear which of the UN Sustainability Development Goals are supported with the several aspects of our ESG policies. Important in that, of course, is environmental, improving our environmental impact. And I will show you in the next coming slides how we can do that best. But clean kilometers are in that of huge important next to network efficiency, our buildings and facilities and, of course, developing more green products and services. And because we are the biggest network in the Benelux on Parcels and Mail, being green, being sustainable is as important as many of the other things. Many of our customers and also many of our consumers do expect that PostNL plays a pivotal role in changing, of course, and making this world a little bit better place by being sustainable. It's what we do on the social side as well. And to realize the full potential of this organization, it's crucial to also realize the full potential of our people and act as a responsible employer. We try to measure that by, for example, our employee engagement. And later on, I'll show you the improvements we've made over the last few years, but also staying safe and healthy. And how important was that during COVID crisis, keeping our people safe, keeping our people healthy and with that, of course, keeping the network running in difficult times, together with realizing the change because workforce optimization, for sure, within our mail divisions remains crucial going forward. And the last, the G is about governance, being a transparent, responsible and accountable company on the environmental aspects, social aspect, financial aspects and lots of others. We do have a very clear governance structure with the 2-tier board. We try to take into account, of course, what stakeholders expect from this company. For example, by stakeholder dialogues with very clear business principles and also, of course, the UN Global Compact. We do think that being that green business going forward is one of the crucial things for this company to be. We've linked our ESG approach to the long-term impact of our activities and, of course, to the sustainable development goals set by the United Nations. And we've chosen 4. These 4 are what we think are best applicable to what we have to do and what we can do to impact environment, social and governance in a positive way. We see it as our license to operate and have embedded it already in our strategy, culture and also our day-to-day operations. And to give you a feeling around how we measure, steer, but also control ESG, this gives you a few examples. First of all, ESG is part of ambitious nonfinancial targets, which are frequently monitored. And you probably do know this as well from the nonfinancial targets that we, as a Board, took upon us. We've set those targets at PostNL levels, but also at our unity level so that it is clear for everyone what they can contribute to our ESG targets. The targets are in line with the Paris Agreement and are validated as scientific-based targets and they do support, as just explained, of course, the sustainability development goals. It's also embedded in governance and policies by, for example, setting clear strategic objectives for 2025 with also 2030. And with that, we've developed a planning and control cycle. It's part of our risk management framework and also part, as just explained, of our performance measures in remuneration policies. Embedding ESG in our governance and policies is crucial to make sure that not only today, but also tomorrow and the years after, it will be part of our strategy and will be part on the way -- of the way how we report externally. And that brings me to the third pillar, which is the integrated reporting. Of course, we want to be compliant with the relevant laws and regulations. And what we try to do in our annual report is to give you full insight how we comply, where we can improve, but also what we already have delivered. And I think it's a beautiful example of an integrated report, which we, of course, will further improve going forward. ESG is not from today, started already in 2007. By that time, still TNT. And by that time, it was a special thing, which was not done by many companies. But we've built it up and out over the last 14 years to what we are today. We actively steer on ESG since 2007. And fortunately, the whole world, next to us, of course, developed lots of charters, lots of other certificates, which we have signed, which we are part of, to contribute to being a more ESG-approved company. We do think that underwriting all these principles, but also being part of them is important. And it gives us a very strong foundation to work upon going forward. All in all, long term, it gives us a long-term and sound foundation upon which we can build. If you think about where we come from 2007, how we implemented ESG in our organization and how we've put into our framework of governance policies and reporting, we are happy, of course, that we're also recognized for it. And here, you find some of our key performance indicators and the external ratings. And some of them you did see before because they're regularly part of our financial updates, which we give every quarter. When it comes to environmental, we have more emission-free, last-mile delivery kilometers than we had in 2017, so here we improved; in carbon efficiency, we did not, and that is mainly a result of the sharp price in parcel volumes, partly related, of course, to the COVID crisis and partly influenced to the number of kilometers we traveled with large trucks. And in a few slides later, I will give you an overview if we have had taken none of the measures which we have taken over the last 3 years how carbon efficiency would have developed at that -- in that case. Of course, social. As said, we want to be a responsible employer, but we want also to be seen by our own people as an employer where it's safe to work at, with and, of course, where it's fun to work with. And that's what we see in the development of our employee engagement. The employee engagement came up from '17 to '20 from 67% to 84%. And the first measure we've taken in the beginning of 2021, it grew even a little bit to 85.7%, something which we are very proud upon. And governance, women in senior management positions, 28% we're at this moment in time, and we want to grow further, of course. I'm especially proud when I look to the Dow Jones Sustainability Index. We're taking part of that sustainability index already for many years. And what you see over here is that we have been seen and also have been rewarded as a top 3 worldwide company when it comes to transport and infrastructure. And that's what we want to continue going forward, being a world leader when it comes to sustainability. Of course, let's move to the topic which we want to give you a little bit more insight in today, which is the environment and then especially not looking back but looking forward. I think, first of all, let's move to our targets. These targets are in line with the Paris Agreement and are validated by scientific-based targets institute, which means that they contribute to reaching our Paris Agreement targets. We've divided them in 3 scopes, Scope 1 and 2, which are our own fleet, own buildings; and Scope 3 is what is emission by our delivery partners. By 2025, we want to have 25 city centers in the Netherlands where we deliver fully emission-free. By 2030, we want to have our last mile emission-free in the Benelux region. When you then take Scope 1 and 2 into account, that means that in the relative CO2 reduction, it will be a reduction of 80%, and in absolute CO2 reduction, it will be a reduction of 60%. If you take Scope 3 into account, then it will be an absolute CO2 emission reduction of 18%. By 2050, we want to be net zero. So we have a net zero ambition. Until then and from the next year, we will offset all emissions we cannot reduce yet to guarantee that all mail and parcels are delivered net zero from 2022. I, however, would like to stress that we continue to focus on reducing our actual footprint in Scope 1 and 2 and 3 to come to an emission-free last mile by ourselves by 2030. If you want to discuss CO2 emission reduction, then of course, you look into and how do we create CO2 emission. And then looking into our networks and the way we work, you find 4 main reasons for our CO2 emission. And the first one, which is by far the biggest is kilometers. 85% of our carbon reduction targets needs to come from clean kilometers. While we will replace our fossil fuels with fleet with electrical vehicles and, of course, auto fuels. We can also do something in our reduction via network efficiency by reducing the total amount of kilometers traveled, of course, by our people in vans, trucks, et cetera, et cetera. By having sustainable buildings and facilities, and you find 2 asterixes because we already have 0 emission there and, of course, by developing green products and services. But as said in orange, clean kilometers are our main focus point when it comes to the contribution to the carbon reduction targets, which we have set. Think about the network we have. And this is a reminder because many parts of this slide are already discussed in many situations. But this is the network we're talking about. So when we talk about the reduction of kilometers, when we talk about more clean kilometers, when we talk about buildings and when we talk about green services and products, then this is what we talk about. 2020, 337 million parcels and more than 2 billion letters. It was an exceptional year. It means 8.1 million letters a day, 1.1 million parcels a day, more than 40,000 employees. For example, more than 1.1 million kilometers transported in the Benelux region per day, not per year, per day. It's 1,200 times around the world, to give you an idea about how much it is, 31 sorting centers in the Netherlands and, of course, 2 to come in Belgium. Lots of solar panels and lots of vehicles. So if we talk about creating less CO2 emission, then this is the network we talk about, and this is where we have to do work with. In the next slide, I'll show you our road map to reduce our environmental footprint. And what you see over here is what I already said. If we would have not taken actions between '17 and '20, the development of our CO2 emission would have developed like you find the dotted line. So the fact that 2017 and 2020 are not that much different takes into account the enormous growth in volume we did see within parcels nationally and internationally. Towards 2030, you find a big reduction. And what the slide shows you is that -- and that was already said, 85% of this reduction will be found in last-mile delivery. That's the reason why the orange part in 2030 is almost reduced to 0. In air and large truck transport, and I'll come to that in a minute to a little bit more detail, it's, of course, a little bit more difficult. There we are dependent on other developments, which we want to introduce as soon as they are available. I think the more light blue gray and orange part in 2030 also gives you an insight why it is that important that we do lots of -- that we take lots of actions to reduce our CO2 emission. So this is the road map. And this gives you an idea on how we want to set targets towards 2025 and also towards 2030. If we dive a little bit more into the details of the important parts of this graph, then I would like to start first with the largest part of our emissions, which comes from last mile delivery and road transport. The way we want to reduce that is by increasing the use of renewable fuels as a transitional solution towards 100% electrical fleet, but also throughout the full supply chain, which we have. And of course, we have an accelerated approach to our delivery partners Scope 3 from 2025. Important milestones at this moment in time is that already within Mail in the Netherlands, 70% of what we do is emission-free delivery, and already 30% of our large truck transport kilometers are driven on sustainable fuels. So renewable fuels, sustainable fuels will drive, of course, our sustainability for the next coming years and then taken over by having a bigger electrical fleet year-over-year. And as of 2025, also introducing much more electrical fleet with our delivery partners. An important part. The second important part is, of course, the reduction of our carbon emission from air transport. What do we do to create lower emission from air transport? First of all, where we have the opportunity or possibility to go from air to road, we do. And we changed lots of the routes in Europe from air to road over the last few years. We optimize our packaging and we optimize our route planning, also important when we talk about network efficiency and important here as well because it means less load in airplanes, less load in trucks and, therefore, also less CO2 emission. What we did do, because this is not fully in our hands, we do not have our own fleet. So that means that we're partly dependent on what -- on the development of the air industry and development also, of course, in the large truck industry. Those we follow closely and want to implement opportunities where we find opportunities of CO2 reduction want to implement them as soon as possible. An important milestone in 2020 is that we developed an air carbon emission calculation tool together with the University of Delft. And that gives us the opportunity to calculate much simpler our CO2 emission and, therefore, also think more clearly about how can we reduce. The third important part in the reduction of to -- and also, of course, also bringing this company to a zero carbon emission is buildings and facilities. And we're proud here because as you can see, there are no carbon emissions of -- from our buildings and facilities in 2020, and that's also, of course, what we expect going forward. We've invested a lot by solar panels, by energy efficiency, by, of course, making sure that the new buildings we created do have a BREEAM certificate. And also the ones we've built before are now, of course, transferred to BREEAM certificated sorting centers. Currently, we do have 32 centers in the Netherlands, 26 of Parcels, 5 of Mail, 1 of international, and we will open our small parcel sorting center next week. And of course, we're opening early 2022, our first sorting center in Belgium. All these sorting centers are set up to be zero emission free. We have more than 25,000 solar panels already at this moment in time on the roofs of our sorting centers that generate more than 50% of the sorting centers energy, and we want to build it out further. So this is an important element in our CO2 emission-free strategy as well. And of course, as you can see over here, lots has been done already. That brings me to value drivers. Because in the end, when you talk about CO2 emission reduction, you talk about what's going to happen in the next coming 9 years, if you think about the target we've set for 2030. And of course, nobody knows exactly how future looks like, and nobody knows exactly how quickly certain developments will come up and will be available for companies like ours to reduce our CO2 emission. That's also the reason why we tried to make visible what are the important value drivers behind the CO2 emission reduction. And there, you find, of course, our network mix, which means that we, step-by-step, will step over to an electrical fleet, which gives, in the end, emission-free last-mile delivery to kilometers in the Benelux. It's fleet composition, but it's also our fuel mix. And you find here the way we still have to go from 2020/'21 to 2030 to realize our targets. I think important to say is that we manage this in a carefully decision-making process. That means that, of course, we try to align these developments to our volume development, that's one. We try to align these developments to the possibilities we see in the external world and new developments we see on CO2 emission opportunities. And what we try to do is, of course, to do it financially as efficient as possible. That leads to the following curve. And here it's made visible how we do see the reduction of carbon emission towards 2030, and on the other hand, of course, how we see the improvement in 100% emission-free last mile delivery in 2030. The improvement step as of 2025 to 2030 is because as of that moment in time, we introduced Scope 3 into our calculations as -- sorry, it's already in our calculation. We introduced it, of course, into the way we act. And that also means that we put much more focus on our delivery partners as of that moment in time. So it's not a linear road and there's still a lot to do to reach 2030 with 100% last mile emission-free delivery target. What we announced in Q2 is that we also will accelerate the spend to sustainability between 2022 and 2024. In total, we will spend EUR 80 million in that period, which is fully included in the financial projections towards 2024. It's an acceleration in investment and also an acceleration in cost. And that's the reason why we made the orange and gray parts in the graph, which gives you a view on what is OpEx and what is CapEx and lease. Of course, as you can imagine, the majority of these initiatives are at Parcels. So the majority of investments are as well within Parcels. And this is an ongoing commitment to 2030, which means that investments after 2024 will continue. We're fully committed to reach the 2024 road map to reach the 2025, of course, the 25 cities in the Netherlands and by 2030 to reach the 100% last mile emission-free delivery. That commitment is again showed on this page. We see ESG as a very important license to operate, and one of the important pillars behind or underneath our strategy and value creation model. We've made a sound road map, which is tested by the business, which delivered targets, which are ambitious on the one hand, but reachable on the other hand as well. And hopefully, we will be helped in the next coming year by more speedily developments than we can foresee at this moment in time. And it's integrated in our business, of which I do think it is crucial that people are clear about targets we have set, that they are measured, that are, of course, given feedback upon that we can steer upon them and it, therefore, is also an important part of our decision-making process. An important step forward which was worthwhile, I think, spending 25 minutes of presentation with you to give you more insight in our ESG strategy. And I'll hand over to Jochem again. Thanks a lot.

Thank you, Herna. We're now going to dive deeper into 2 topics related to sustainability. The first is electrification of our fleet. Let's look at this video. [Presentation]

So I'm joined here by Nikaj and Iris.

My first question goes to you, Nikaj, you must have one of the coolest jobs within PostNL because you get to go on our rooftops. My first question to you, from your perspective, what would be the biggest challenges towards reaching those ambitious goals for environmental footprint?

Yes. As you can see in the video, we have been testing and piloting a lot over the last few years. And now we are actually entering the phase what I would like to call the scaling-up phase. For that, we have a clear road map. You can also see in the presentation. And the biggest challenges are either on the technical side, so then you need to think about the availability of the electrical fleet by our suppliers, but also on the capacity that we need to load all our electrical vehicles. That's a challenge, but also how do we maximize the utilization of those charging facilities. We will be investing in them, but at least we have to maybe adapt our operations to fully maximize the investments. And the second one also shown in the video is how we engage our delivery partners because they are part of our 2030 targets.

So what can we do to help those partners to accelerate with us?

Yes. Actually, the first delivery partners are already making that step together with us, that's very good to see. But then you can think about how can we help them and actually give access to our markets, our suppliers, maybe you can help them either in buying or leasing electrical vehicles. But on the second hand, I mean, 2 years ago, we invested in our first electrical vehicle, and we are leasing all our parcel vans. So in the next 3 years, the first-, second-hand electric vehicle will be available, which could be very interesting for our delivery partners. And on the other hand, we basically can help them by making our charging facilities available for them as well.

Clear. Iris, you're the Director of Operations in our Parcels business. Can you tell us how will the shift to electric vans impact our operation, your day-to-day life, so to say?

Yes, my day-to-day life, but also the day-to-day life of my management, who is responsible for our sorting and distribution centers. Yes, it's a big change and it's a big transition. I think one of the key pillars is that we stay very close to the current network setup that we have. So the vans that we choose are actually very much, let's say, talking to the structure. We actually load directly from the sorter into the van. So it's important to have the same kind of setup of the van. It has to be a good working space for the delivery, boy or girl, men or women, because we want them to be happy and to be able in the operation to do their work in a proper way. So that means that we have to adjust, let's say, market standards of electrical vans to our needs. So that's a very important one. The second thing that's important is our route structure. So our route planners get a different KPI. We add, let's say, zero emission or carbon efficiency as a KPI to route planning, and that's a new game for them. So they are normally on cost efficiency, and now we actually add the carbon emission and KPIs to their -- the way they structure the routes. So -- and we do that with very, very good reporting on a very low level. Actually, on route level, we can see carbon emission per route, and this actually empowers route planners to create the good route structure. And the third one is very important is the road map for our management because every manager has -- who is responsible of sorting in distribution depot has also a road map towards 2030. So we actually help them, giving them the tools, the vans, the infrastructure, and Nikaj will provide them with the fuels, the right fuels, but they will set up their own road map towards 2025 and 2030 to reach the objective.

This has to work economically as well, especially for our audience today. How is this a viable business case for us?

What we see is that the cost of a electric van, the total cost of ownership at the moment is higher than the traditional diesel vehicle. But however, we expect in a few years that this total cost of ownership will change in favor of the electric van. We do have also the -- we call it the HVO100 transition fuels that we use in our depots, which are only slightly more costly than the current diesel. So in that mix, we are able to actually, let's say, have an acceptable, let's say, extra cost on the last mile, which will change over time in a couple of years.

Do the current electric vehicles comply with your requirements when it comes to reliability and the quality of our deliveries?

As I said in the beginning, I think the van, the delivery van for the driver is very important. So if he can do his work in a proper way, he can move in around the van in a good way because he spends like 80% in and around the van, and only maybe very limited time towards his delivery area and to go back. I think when his work is facilitated well, he will, for sure, provide the right quality, but also the availability of infrastructure and fuel station is important. This is why I need Nikaj for this to ensure it. And so it's a very close cooperation with central staff and local management in order to have this high quality that we are having in a high value is also certified.

Clear. Going back to you, Nikaj, what do you expect from further changes in regulation in this area?

Well, we actually expect that all the cities will start raising the bar on sustainability. You've seen in the presentation that we selected 25 cities, but maybe that can increase. So that will be something we need to be aware of that we maybe -- should be able to adjust our plans to facilitate that as well. And also, it's not only regulation, but also we need to find our cooperations with other companies and also with net operators from the grid, where we have some technical challenges. And how can we, yes, combine our forces to get it done because in the end, we also need to think of that creating all those charging facilities just for your own operation might not be a really good idea. And so we have to look at collaborations with neighbor companies and other people to optimize the use of the facilities.

Thank you. Very clear. Now let's move on to the next Deep Dive topic, which is renewable fuels as a transitional solution. Let's look at this video. [Presentation]

So Nikaj, the big question is probably when do we get those first electrical trucks on the road, do you think?

Yes. As you could have just seen in the video, the big trucks are a really different challenge. At the moment, we are driving the small trucks electrified, so that's working. But on the large trucks for us, next to what you saw in the video, yes, the loading capacity that you need to charge the vehicle, that's on a technological point of view, a whole different ballgame. And on the second part, if you look at our operation at the moment, there is no time to charge because the large trucks, they keep driving between all the sorting centers. So we are awaiting or following closely the technology development of that. And as soon as that large truck is available, we would be very happy to test it as one of the first companies. But in the meantime, yes, we're making the transition on the fuel part and introduction to HVO100 that actually results in also 90% less carbon emission, so which is a very convenient in-between step. But as soon as it's available, I would be lucky to drive it as the first colleague of PostNL.

Looking forward to that. This is obviously going to be a big step. Iris, any opportunities you see to speed up the process towards improving the environmental impact, specifically in large transport?

Yes. Well, we do own one of the largest truck companies, I think, in the Netherlands, so we do see it as our responsibility to be ahead and to speed up. I think as Marlies said in the video, we did put a beautiful basis already on investing in -- starting with biogas trucks. We have now almost 100 running on LNG and bioLNG. And on the other hand, also 100 trucks that are now on renewable fossil fuels. So I think the base is already there, which means that once we have the, let's say, the infrastructure for fueling, again, I'm looking to Nikaj for it, but also indeed what Marlies stated also, you have to look to government and even other authorities to push that. I think we can speed up because our fleet is quite young. We have a big, big owned fleet. I think we have -- of course, we have a Scope 3 charters that work for us, but we have a big, big own fleet. I think you can see them every day on the road. So yes, I see an opportunity to speed up once we have the availability of the fuel.

One of the things I learned when preparing for today is that you have different sorts of renewable fuels. How do you know that the quality of that sort of fuel meets for purpose, is the right fuel for us?

It starts with good certificates and the right fuel on the purchase side. For that, again, I look to my colleague. But if the reliability would be -- the question, I think I would have Marlies on the phone at the moment because she's already running 200 trucks on these alternative fuels. So I think at the moment, we can say that it's very, very reliable. Towards the future, I think we monitor closely that the quality keeps up to the standard when it comes to those renewable fuels.

Very clear. Nikaj, is electrification of the fleet the end game? Or do you expect other developments to sort of follow up on electrification as the solution?

My personal opinion, I don't think it is. If I would think it is, I would have told everybody this is the end game, and this is how we move forward. What I mentioned in my own video as well is that we need to look around what's happening on the technology side because hydro-oxygen might be a solution, maybe the renewable fuels go that far that it's the same as running the large electrical fleet, and that doesn't harm our operation to put it that way. So to be honest, we need to look around, and I don't think electrification is the end solution.

Okay. Thank you. Well, let's see what the questions are that come up from our audience. There are 2 ways for you to ask questions. The first one is for most people to use the chat facility in your browser. And the second one is for a couple of analysts who are on the line and can ask the questions by audio. We're going to pause for a moment to allow for your questions to come in. So we're back, and let's look at the questions that come in. The first one is for you, Herna. Are you satisfied with the progress that we're making in this area at PostNL?

Yes, I'm quite satisfied. So I think we've made a lot of progress when it comes to buildings and facilities. We're also making good progress when it comes to our fleet, and Iris already discussed and talked about that in your short Q&A round, which we just had. And I think where we have to spend, and that was also already said by Nikaj, where we truly have to spend attention to is, of course, the developments in the air and large transport industry because there we're partly dependent on what others do. And yes, as soon as possible as we can move forward there, we will do. So the answer is yes. And I think still lots to do. That's the other side of the coin, of course. But yes, I'm satisfied, yes.

Our first question from the air so to say, is the use of cargo bikes becomes more important. And some cities prefer to ban delivery vans. How do you expect the mix, bikes and electrical vans, to develop going forward? How do you plan to organize this. Iris, I think I'm going to ask you this question, if that's okay.

That's okay. Of course, we already initiated the use of cargo bikes in a couple of cities in the Netherlands in the inner city. It is in an investing phase. So we're likely testing them and piloting them. But I can say that they're very promising. It's a very cost-efficient way of doing delivery in a city. It also is helping congestion in the inner city. So I have a great belief in -- that you will see a lot of cargo bikes with the PostNL brand in the coming future in the inner cities, yes.

Well, as a bike fan, I'd like to hear that answer. Herna, second question for you. Where do you -- where do we stand compared with competition or in a broader perspective in the sector?

Yes. I think almost everyone at this moment in time is, of course, active in trying to make their companies more sustainable. That's also the case for our competitors. As PostNL, I do think that we're frontrunner when it comes to the Benelux, look into the amount of vehicles we already have, more than 1,300 vehicles which are all electrical or of course, a little bit different, but are CO2 emission-free, the development or the money we put into development. And of course, the cargo bike, Iris is talking about has a possibility up to 3 roll containers of parcels in that cargo bike, so that gives us truly a good possibility to have an emission-free delivery in the inner cities. So I would say, frontrunner, and that's also expected from customers and consumers that we are, of course, a big distributor in the Benelux and, therefore, also, we have to do something around it.

Next question is for Nikaj. You mentioned hydrogen. Many companies are already testing trucks. What is happening at PostNL in this regard?

We are looking at it, and we're trying to prepare our first test with it. But also there on hydro-oxygen, yet you have the availability of it, which is a big discussion at the moment. So we're trying to both test it and await technology on the supply of it.

And a follow-up question on that would be looking at buildings. Herna already talked about it and said we are carbon neutral today. The next step is probably BREEAM certificate. Can you talk about how many of our buildings locations are certified already? And are we working towards full certification in that regard?

Yes. Herna already talked about mostly the parcel sorting centers. The last 7 we built over the last few years, they're all -- they don't have any gas connection and they're BREEAM certified, outstanding on the highest level. And today, now we're working -- we're hoping to end this year to certify all the 17 existing buildings also a BREEAM certification. So that enables us to prove that the buildings are sustainable, but then it doesn't stop. So we will keep trying to reduce the energy consumption, even if it's green electricity, but we try to use to reduce it and make it on that level even more sustainable, but also more cost effective. Because nowadays, energy prices are supporting sustainable investments.

So we've talked about the fleet. We've talked about the buildings. And a third obvious factor would be the people. Iris, looking at you, when you talk with people in the operation, what is the level of enthusiasm around this topic among drivers? How can they contribute themselves? How can you get them engaged basically?

Yes. I can see a lot of engagement on the local level, on management level, but also on -- from the drivers. They see that we actually invest in a good van that is economically working well for them. On local management, we do see that they are very competitive. Of course, local -- operational management, all very competitive. Once you show them the KPIs, they go and run. But also, it makes them very proud to be a frontrunner on sustainability because they get a lot of also complements when they actually deliver a parcel to a customer with an electric van, they get a good response. So I also see a lot of pride. So I'm not worried about lack of engagement from my people per se.

And is that same answer true for delivery partners because, obviously, they are quite a factor as well in this?

In fact, I do speak to delivery partners from time to time, and you see that they are also realizing that they are going to be in this transition as well. So it's not even a pull. I think it's going to push from their side and they ask us, how can you help us to set the kind of example and so that they can learn from us. We also can sometimes learn from them. So I do see that delivery partners are very aware that this is coming and being entrepreneurs, they also look ahead and plan. So it's a very big topic on the table at the moment, yes.

Herna, you are using 4 SDGs, which seems a bit narrow according to the person asking this question. There are other postal companies, who also look at number 11 SDG. Sustainable cities and communities, which seems to be closely related to sustainable transport. Would it be an idea to add that one you think?

Yes. The -- I think we've chosen 4 to indeed narrow a little bit the actions we're taking on certain of those development goals. Number 11 is very close. When you think about what we do in the cities in the Netherlands and what we try to do to get the inner cities emission-free, that truly, of course, also contributes to sustainable communities and cities. And next to that, we're also investing a lot in, for example, Jarige Job, which is an association in the Netherlands, helping young children who are not able to celebrate their birthday because they do not have money enough. So there are also lots of social initiatives in our company, which can help in being -- in creating sustainable communities and cities. So the answer is, yes, we could add, and I also always think about is it easier to add it to or is it easier to make it more explicit in 1 of the current 4 or should we add a fifth one.

Clear. Can you explain -- you mentioned in your presentation that we have chosen to offset our emissions as of 2022. How do you see that develop going forward over the next few years?

Yes. The reason why we offset as of 2022 is because we find it important to be sustainable and to have the possibility to be indeed emission free in our last mile. If you look forward, and if you think about the graphs I showed in my presentation, then of course, what we have to, how do you say that -- I'll say it a different way. I think what we try to do going forward is, of course, to do it more by ourselves. And that means that year-over-year, we have a bigger electrical fleet, that's one. Secondly, year-over-year, hopefully, we have more HVO100 vehicles. We have, hopefully, more big trucks that can run on LNG or even better on hydrogen fuels, et cetera, et cetera. So when time passes by, the amount or the percentage of reduction we can do ourselves with our own means becomes bigger and bigger. And hopefully, and that's what I said in my presentation as well, developments go much faster than we think today and that will help us to speed it up even more than what we're doing at this moment in time.

We will close off with a couple of financial questions for the audience today, of course.

Of course, yes.

So first off, we have indicated on the 9th of August that we're going to make extra investments, not just in sustainability, but in a broader range of targets. And we have talked about the flexibility that is required in making those investment decisions. How does that apply to the ESG investments? How flexible can you be in that regard?

Yes, the EUR 80 million is part of the EUR 450 million or EUR 950 million we've mentioned at Q2. So it's part of that. It's partly OpEx and it's partly CapEx. And around 35% is OpEx, around 45% is CapEx. So that's more or less a division between now and 2024. If you want to, of course, have your emission-free last mile by 2030, you need to keep investing also after 2024. So I do not expect big changes as of the year 2025. And hopefully, that's what I said already quite a few times, we will be helped by some developments as well.

Next question is about what the role of ESG is in our conversations with shareholders? You and I are both quite regularly participating in roadshows and in interaction with shareholders and investors. Maybe you can talk a little bit about how ESG is becoming more important in those conversations and how we play into that.

Yes. I think it is more important than it was, for example, 3 or 4 years ago. So in many more of the meetings we have with shareholders, ESG is a topic. And when you are a fleet and people-intensive companies, it's in, most of the cases, both areas. It's, of course, fleet or fuel or kilometers and its people. The way we play into that is, of course, by, for example, what we've presented now and which we've communicated to shareholders in a certain way already in the discussions we had, next to giving them an update on the progress we make. Also the reporting is -- the internal reporting, therefore, is crucial. And of course, talking a little bit more in detail about some of the ideas we have, some of the developments, the pilots we do and also the innovations we can do ourselves, like the tool we developed with the TU Delft. So we try to give feedback on this topic in many ways. But these are the important elements which we see at this moment in time in the discussions. And it's not -- I think 5 years ago, it was much more questioned if it was a wise investment. That is not the case anymore. So there's a big change, I think, took place over the last 5 years.

Clear. I think a final question, going back to the financial question. Today, we announced EUR 80 million to be spent on sustainability, OpEx and CapEx. Beyond 2025, what can you say about the development you expect in those years towards 2030?

Yes. My expectation is that the investments remain to be part of our OpEx, CapEx budget and the amounts we have not forecasted yet exactly, and we did not communicate around that. But nevertheless, I expect more or less the same line and the same view on the investments we have to do both in OpEx and CapEx to make this company year-over-year more sustainable.

Very good. We have no further questions at this stage. If you were to have any further questions on the topic of sustainability, you know where to find us, [email protected], and you know where to find us by phone. We look forward to meet again with you over time if possible, for instance, in the small parcel sorting center, where we would be happy to invite you to look at the new operation that we are opening next week, as Herna mentioned. For now, I would like to thank you, Herna, Nikaj and Iris for your contribution. Thank you for joining us on this webinar. I hope to see you next time. Thank you.