Seven Highlights from 2011 and the Outlook for 2012

With the end of 2011 in sight and a new year on the horizon, it’s a good time to reflect and to plan. Let’s reflect on the key events in supply chain sustainability from 2011.

Highlights from 2011

So many supply chain sustainability initiatives and announcements occurred in 2011 that any summary is necessarily selective and subjective. But here are a few that I think are significant.

Greenhouse gas inventories of the supply chain

More companies are going to begin calculating greenhouse gas inventories for their supply chains and their products following the release in 2011 of two standards. In October the World Resources Institute introduced the new standards for value chain (scope 3) accounting and product life cycle accounting. Already, according to a new Green Research survey of sustainability executives, sixty percent of respondents say their company will calculate its scope 3 emissions in the coming year and over half intend to report the results publicly. These standards will help companies understand and begin to take responsibility for the carbon emissions of their supply chains.

Monitoring and reporting the use of conflict minerals

This year saw a lot of discussion and analysis of the implications of a new U.S. law that will shine a light on the supply chains of thousands of companies. The law in question is the Dodd-Frank law, whose conflict minerals provisions require U.S.-listed companies to conduct due diligence of their supply chains and report whether they are buyers of conflict minerals (minerals that may originate in the Eastern Congo and surrounding areas and whose trade may provide funding to armed groups in the region). In 2011, dozens of major companies including Apple, General Electric, Ford, Hewlett-Packard, Intel and Motorola worked to analyze their exposure and obligations under the law and began to put in place the due diligence processes required to ensure they are in compliance with eventual final rules. Given the global nature of supply chains, these regulations will have global impact and will accelerate the broader trend toward supply chain visibility and accountability. We maintain a site with news and information on the conflict minerals provisions of the Dodd-Frank law at section1502.com.

Sustainably sourced packaging

Green Research studies have found that companies in many industries entered 2011 with goals to reduce the volume of packaging they use. In 2011, we saw a number of commitments and initiatives to enhance the sustainability of packaging materials themselves. Toy makers Hasbro and Mattel announced commitments to shift to sustainably sourced packaging materials, for instance. Dell announced a new packaging material made of sustainably sourced mushrooms. PepsiCo announced a new plant-based bottle, and AT&T announced plans to begin using packaging that is partly plant based.

Commitment to sustainable palm oil

The Roundtable on Sustainable Palm Oil announced a surge in purchases of certified sustainable palm oil and many major companies, including Asda, Johnson & Johnson, Kellogg’s, McDonalds and SC Johnson announced commitments to shift their most or all of their purchases of palm oil to certified sustainable sources.

Forest products certification controversy

A conflict between competing North American forest products sustainability standards boiled over in 2011 as a number of major U.S. companies including Aetna, Allstate, AT&T, Comcast, Garnet Hill, Office Depot, Performance Bicycles, State Farm, Sprint, Symantec, United Stationers and U.S. Bank dropped the Sustainable Forestry Initiative in favor of Forest Stewardship Council. There are already too many “standards” in the sustainability field; some consolidation is welcome.

Business decisions about ecosystem services

The World Business Council for Sustainable Development introduced a new tool this year to help corporations put a monetary value on the ecosystem services they affect or depend on. The Corporate Ecosystem Valuation (CEV) tool is intended to help companies incorporate thinking about ecosystem services corporate in their strategic and financial planning. Shortly after the CEV tool was published sports-lifestyle apparel maker PUMA released a much-lauded “environmental profit and loss” statement that not only valued the company’s environmental impacts but also revealed that most of its impacts occur in its supply chain, something that is true for many companies.

Supply chain goals still in short supply

Despite the growing awareness that, for many companies, the supply chain is where many if not most of their environmental impacts occur, many companies have struggled to make firm commitments for improvement in this area. In a 2011 study of the global pharmaceutical industry, for instance, we found that ninety percent of the sustainability goals pharmaceutical manufacturers have announced deal with their internal operations; only a handful deal with the supply chain. Supply chain goals are scarce in the other industries we studied as well, including alcoholic beverages, food processing and telecommunications.

Outlook for 2012

All of this sets the stage for what promises to be redoubling of effort to improve the sustainability performance of company supply chains. According to the aforementioned survey of senior sustainability executives, improving supply chain sustainability is the number two sustainability initiative (behind employee engagement) of their companies for 2012. I expect to see companies aim for closer collaboration with suppliers, adopt more stringent scorecarding, put a greater focus on ecosystem services and biodiversity, and apply the new carbon accounting standards to their supply chains, among other initiatives.

[This post first appeared on the 2degrees Network.]

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