Category Archives: Supply chain

Yogurt Maker’s Sustainability Approach Has a Different Flavor

Yogurt maker Stonyfield Farm recently revealed that it had calculated the carbon footprint of 150 of its products, three quarters of the items it sells. (Disclosure: some of those items are in my refrigerator right now.) If you are interested in how companies account for and manage their environmental impacts, you should take a look at Stonyfield Farm. Here are three things worth noting:

Over half of the carbon footprint comes from milk production. That means cows passing gas and cow manure. In other words, the biggest source of emissions are verdant pastures, happy bovines, not belching factories. Research is underway to reduce the footprint of milk production. But my point is that most people don’t think of basic agricultural processes can have such a big environmental impact. They can.

Data is updated daily. Most companies that calculate their carbon footprints do so yearly. That’s because the processes most companies use are very labor intensive. There is still little automation of carbon accounting. The system Stonyfield Farm uses calculates product footprints daily and allows continuous monitoring of the company’s performance versus its goals. That should give the firm an edge in meeting its targets by enabling it to make mid-course corrections and improvements as it learns.

Focus on greenhouse gases rather than energy consumption. Many companies that talk about reducing their carbon emissions are actually focused on reducing their energy consumption. There are two reasons for this. First, consumption of non-renewable energy is a pretty good proxy in many cases for greenhouse gas emissions: the more you consume, the greater your emissions. And second, and more importantly, energy costs money while emitting carbon is still free in much of the world. So companies manage energy consumption, aiming for cost reductions and reaping emissions reductions as an added benefit. Stonyfield Farm focuses on greenhouse gas emissions rather than energy partly because a lot of their emissions don’t come from energy use (they come from cows) and they don’t come from their own operations (only 13% of the footprint is attributable to manufacturing).The link between costs and greenhouse gas emissions is much looser for them. So they are directly managing for environmental benefits, not just cost.

Stonyfield Farm has long staked out a leadership position in its commitment to environmental stewardship and its use of that commitment to boost brand value. The company’s approach to managing and tracking its carbon footprint is part of that tradition.

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Filed under carbon, Life Cycle Assessment, Supply chain, sustainability

Why AT&T’s Eco-Rating System Is off the Mark

AT&T has launched its eco-rating system in stores, allowing customers to compare cell phones’ environmental impacts. The system rates handsets on 15 criteria, granting a point for each environmentally preferable criterion the handset possesses. Phones with 14-15 points will get 5 stars;  phones with 5 or fewer points will get no stars. AT&T expects most phones it sells will fall somewhere in the middle.

AT&T has articulated the following goals for this new green labeling scheme:

  • Engage consumers and respond to growing interest
  • Drive industry improvement on sustainability
  • Help set the agenda for more sustainable products
  • Anticipate regulations
  • Demonstrate AT&T leadership

As our recent research shows, a growing number of companies are beginning to take responsibility for the environmental impacts in their supply chains. AT&T’s initiative is not an example of this. Rather than stipulating sustainability standards itself, AT&T puts the onus on consumers to determine the relative importance of the environmental performance of the handsets and the manufacturers that make them.

That’s not necessarily a bad thing. But here’s what is: AT&T has just created the world’s 434th ecolabel (if you believe the tally of the Ecolabel Index).

Does the world really need another green label? Perhaps. But what it doesn’t need is the continued proliferation of brand-specific labeling. The more labels that cover the same product categories the more confusion and likely consumer indifference.

Last year AT&T competitor Sprint led the development of a standard for “environmentally preferred mobile devices” with UL Environment and has committed to certifying all handsets it sells with that standard. The AT&T labeling scheme uses some of the criteria from that standard, and blends in some others. The result is a proprietary set of hoops its suppliers need to jump through that are different from the hoops that may be set by other carriers.

Why is this a problem? Because suppliers are becoming overloaded with sustainability information requests and lack standard measures of environmental performance. In our research, we asked sustainability executives at manufacturers and retailers about the biggest challenges they faced in obtaining environmental sustainability information from their supply chains. The top answer? A lack of standard ways of measuring environmental performance, a lament shared by 62 percent of the respondents to our survey. The introduction of proprietary product rating standards only going makes this worse, and could well hamper rather than help the cause of driving sustainability in the supply chain.

AT&T said it introduced the eco-rating system in part because it wanted to show leadership. Going it alone, though, is an outdated mode of leadership, especially in this arena. A better model is the one embodied in the Sustainable Apparel Coalition. In that organization, dozens of manufacturers and retailers, including direct competitors, came together to develop a single sustainability measurement standard for their entire industry. The coalition unveiled version 1.0 of that standard just this month. They’ve deferred the possible development of a consumer-facing label to a later date.

AT&T can’t really say for sure what impact the new labeling scheme will have on its supply chain. But it is hopeful that it will be good for the top line. According to market researcher NMI, which AT&T hired to help understand the marketing benefits of ecolabels and green seals, “seals increase purchase intent.”

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Free Webinar: Sustainability in the Supply Chain

Green Research is hosting a free webinar to share highlights of its latest research on the best practices, latest trends, and new tools for managing and improving sustainability in the supply chain.

Please register for “Sustainability in the Supply Chain: Tools, Trends & Best Practices? on Aug 9, 2012 11:30 AM EDT at:

https://attendee.gotowebinar.com/register/1670708262142123520

The research was conducted over three months and drew on executive interviews, a global survey of sustainability executives, briefings with technology providers, and a review of public documents outline corporations’ sustainability initiatives.  Green Research recently published the complete results of the study in a report available for purchase and immediate download here.

Key questions answered by the research include:

  • Can companies improve sustainability in their supply chains without compromising their business goals?
  • What are leading corporate practices for improving sustainability in the supply chain?
  • How should companies assess supply chain sustainability management vendor solutions?

Who should attend?

  • Sustainability executives and practitioners
  • Supply chain and procurement executives
  • Corporate leaders
  • Sustainability and strategy consultants
  • Vendors of IT solutions
  • Non-governmental environmental organizations
  • Universities and sustainability research centers
  • Sustainability public relations and marketing agencies

Attendance is limited. Priority will be given to to retailers, manufacturers and their agencies.

Register now by clicking here.

After registering, you will receive a confirmation email containing information about joining the webinar.

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Focusing on Sustainability, Companies to Collect More Data from Suppliers

Executives See Path to Significant Sustainability Gains

New York City (July 24, 2012) – Green Research, a New York-based corporate sustainability research and advisory firm, today released a new study of corporate environmental sustainability practices and trends.  The study finds efforts to improve sustainability in corporate supply chains are hindered by poor data quality and a lack of measurement standards. In a survey of 30 senior sustainability and procurement executives at major companies globally, 62 percent of executives said their efforts to track supply chain sustainability performance are impaired by a lack of measurement standards. For suppliers already beleaguered by numerous information requests, things will get worse before they get better: 81 percent of companies plan to ask suppliers for more information in the coming year.

Executives Believe Gains Are Possible without Compromising Business Goals

Despite the challenges, executives are optimistic about the prospects for significantly improving sustainability in their supply chains. “Companies often lack direct control over their suppliers and sub-suppliers,” said David Schatsky, principal analyst and founder of Green Research.  “But new tools and management practices are empowering companies to drive improvements in supply chain sustainability.” Sixty-four percent of executives surveyed said their companies can have significant influence on their top suppliers’ sustainability performance.  Eighty-four percent believe their companies can obtain much better environmental performance from suppliers without compromising their companies’ business goals.

New Management Practices Profiled

Supply chain sustainability improvements will be made possible in part by the adoption of new green technologies throughout the supply chain but also by new management practices, Green Research found. The company conducted a series of exclusive executive interviews coupled with an analysis of public company disclosures to identify 10 supply chain sustainability best practices. These include setting specific goals; educating and supporting suppliers; and leveraging emerging standards to collect and analyze sustainability data from the supply chain.

Report Offers Vendor Assessment Guidance

The study also finds that a wide range of technology vendors and service providers have entered the market with solutions for helping companies collect, track and manage supply chain sustainability performance data. The study presents profiles of a dozen such vendors representing a range of approaches for addressing supply chain sustainability issues, along with a Vendor Assessment Framework companies can use to help them select an appropriate vendor. Nearly 40 percent of executives surveyed in the study said their companies were somewhat likely or very likely to acquire a new IT system to help with supplier sustainability information over the next 12 months.

The supply chain sustainability study is available for purchase online at greenresearch.com.

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Which Looks More Sustainable?

On a recent GreenBiz webinar, Jeff Rice, director of sustainability at Walmart, gave a compelling presentation of is company’s approach to sustainability. This slide caught my eye. It illustrates what Walmart calls its “productivity loop”:

Source: Walmart

Walmart has been a real sustainability leader in recent years and deserves lots of credit for it. But to my mind, this picture has nothing to do with its sustainability leadership nor, for that matter with sustainability. Indeed, to me it depicts an inherently unsustainable dynamic: prices the spiral endlessly downward while sales continue to rise. I am pretty sure there is a lower limit on prices, and an upper limit on sales for that matter.

Contrast Walmart’s “loop” with this depiction of the “Circular Economy,”, from the Ellen MacArthur Foundation:

This is a vision of a truly sustainable system.

Now, the comparison isn’t exactly fair, because Walmart is an enterprise, and its “productivity loop” depicts its own operating model, while “The Circular Economy” depicted above is an entire economy. But it is worth thinking about what the future of sustainability demands of a retailer like Walmart, after it has wrung environmental and economic inefficiencies from its own operations and from its suppliers. How will it need to adapt its model to fit with and support a sustainable economic ecosystem?

Any thoughts?

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Knowing Your Supply Chain from a Hole in the Ground

A new standard of accountability and traceability for supply chains is emerging. Companies are increasingly faced with the need to be able to trace their supply chains back to the hole in the ground their raw materials came from. This is one of the implications of Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, a U.S. Federal law passed in 2010. Section 1502 requires any company that must file reports with the SEC to assess its supply chain for the presence of “conflict minerals” and determine whether they originate in mines in the Democratic Republic of Congo or surrounding nations.

There are lots of nuances and implications to the law. (For more information, see Dodd-Frank Section1502.) But an essential one is that companies are being asked to know far more about where the raw materials in their products came from, and the conditions under which those materials were obtained, than ever before.

On behalf of a client I am currently researching the impacts of Dodd-Frank Secdtion 1502 on companies. A number of the firms I’ve interviewed see a broader trend toward ever higher standards of visibility, traceability and accountability in company supply chains. As they work to design processes that will enable them to comply with the new rules, they are trying to think ahead and design them to be able to accomodate new requirements, which they believe are all but inevitable.

Another example of these heightened standards for traceability and accountability is the recent announcement by fruit producer Chiquita Brands that it had committed to identifying – and eliminating from its list of fuel suppliers – all of the companies that it believes sell diesel made from Canadian tar sands oils. This action came after a pressure campaign from the environmental group ForestEthics.

We are entering an era when “fungible commodities” such as petroleum and tin are not as fungible as they once were. Companies are going to need to improve their supply chain game to keep pace with rising expectations for traceability and accountability.

What are your thoughts?

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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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