The Green Report Part 2: Is Your Green Sustainable?

Increasingly  it seems that just about every organization or product is claiming to be  “green.” Even if your company is not planning to address becoming greener this year, your customers, your competitors and your government probably are, but supply chain professionals and regulators are also growing increasingly skeptical of unsubstantiated “green” claims and  wary of brands that fail to address sustainability in a transparent & systematic  manner.

Business and governmental leaders around the world are  grappling with unprecedented and simultaneous economic, environmental  and social turmoil that calls for new approaches to decision making in  the production and consumption of goods and services. Increasingly,  systems thinking, sustainability and transparency are the core  principles behind the new approaches being taken to avert disaster and  restore confidence. In addition, new standards, sustainability  management tools, social networks and web 2.0 capabilities are  increasing the ability to detect unsustainable “green” claims.

Systems thinking seeks opportunities and solutions to  problems by understanding the linkages, interactions and processes  between the elements and conditions that comprise whole "systems" end-to-end. Sustainability requires decision-making that takes economic, social and environmental system factors into account considering the full “cradle to  cradle” lifecycle of products and product systems. Transparency  is a foundational sustainability concept that addresses the disclosure, accessibility and verification of standards-based product lifecycle data.

An increasing  number of firms are aligning their decisions with the four  sustainability system conditions called for within the Natural Step framework:  i.e. To reduce and eventually eliminate the ways in which the goods and  services they purchase or produce contribute to:

  1. ongoing build-up of substances taken from the earth's  crust
  2. ongoing build-up of substances produced by society
  3. ongoing  degradation of natural systems by physical means
  4. undermining  the ability of other people to meet their social & economic  needs

Many large companies have set explicit objectives for  minimizing the negative impact of their supply chains, including the  impact caused by their suppliers.

In response,  several major supply chain management organizations such as the  Institute for Supply Management (ISM) and the Sustainability Purchasing  Network have developed sustainable purchasing initiatives and US Federal  Trade Commission is expected to intensify scrutiny of green marketing  claims in the next several months.

According to ISM:

The development and implementation of measurement and  performance criteria is important to the success of sustainability and  social responsibility programs. Integrating goals and objectives with  relevant measurements will ensure the ability to track and report progress against various initiatives. Supply professionals must consider  impact, influence, and positioning when selecting and developing  metrics to embed throughout the: (1) supply organization, (2) entity and  (3) supply base.

A metrics  document was developed by ISM to provide supply professionals  and management with a broad-based list of possible metrics. Despite  differences in emphasis, sustainable procurement activities in both the  public and private sectors take four main approaches:

  • Procurement of eco-labeled products or services
  • In-house  product/service evaluations
  • Third-party product/service evaluations
  • Industry or  product category supply chain programs

Members of  the Sustainability Purchasing Network (SPN) take the economic value for  money (price, quality, availability, functionality) as well as the  environmental, social, and ethical impacts of the goods and services  they purchase- at local, regional, and global levels. When purchasing  products the SPN members consider:

  • What the  product is made from and how long it lasts.
  • The energy,  material, and emissions "footprints" associated with its manufacture and transport.
  • Who has made  it, how it's made, and under what working conditions.
  • How it will  ultimately be disposed of.
  • Whether the purchase needs to be made at all.

The range of  objectives such sustainability purchasing programs might consider include:

  • Contact  information for Chief Sustainability Officer publicly available
  • Use of  sustainability criteria in procurement decisions
  • Processes in  place to embed sustainability & social responsibility into supplier
  • qualification  and certification decisions
  • Maintain appropriate records to feed into corporate  sustainability & social responsibility reporting
  • Development  of relationships with key suppliers to gain access to protected  information on chemical makeup of products being purchased
  • Published  internal policies and guidelines
  • Waste prevention and reduction
  • Green  buildings and construction
  • Paper and paper product consumption
  • Transportation  and logistics management
  • Pollution and toxin reduction
  • Water  conservation and consumption
  • Reduction of greenhouse gas (ghg) emissions
  • Biodiversity  maintenance
  • Wages and working conditions
  • Employee  health and safety
  • Growth of a sustainable economy
  • Support for  local economy
  • Support for social enterprises
  • Minority  procurement & diversity
  • Participation in Consortia
  • Awards and  certifications
  • Education and communication initiatives
  • Sustainability  policy built into supplier contracts and measured
  • Fair trade

While factors  like eco-toxicity and recycled content remain important to consumers,  three specific environmental metrics –  water use, energy use & global  warming potential (GWP) – are of increasing concern to supply chain  professionals and regulators due to the relevance of current energy and  climate change concerns. GWP combines emissions that trap heat in the  atmosphere into units of CO2 equivalents (CO2e), or the amount of CO2  that would have an equivalent effect as the emitted greenhouse gases.

With gas cap and trade legislation expected from  congress this summer and a new global climate change treaty expected to  be agreed upon in Copenhagen this December a host of new “carbon  management” software applications are coming to market that can  help suppliers to major corporations and government agencies address  rising demand for lifecycle data  and sustainability performance  reporting.

Microsoft has  recently incorporated an Environmental Sustainability Dashboard into  its Microsoft  Dynamix offering that is designed to help Microsoft Dynamics  AX customers track their energy consumption and greenhouse gas  emissions, also known as their carbon footprint. The Environmental  Sustainability Dashboard enables companies to track and report on four  environmental performance indicators related to energy and emissions as  prescribed by the G3 guidelines from the Global Reporting Initiative, an  internationally recognized organization formed to facilitate  sustainability reporting.

Microsoft is  not the only major player in enterprise software to throw its hat into  the sustainability & carbon management software ring. SAP has recently  acquired Clear  Standards, a company that provides enterprise software  solutions to help global organizations accurately measure, mitigate, and  monetize greenhouse gas (GHG) emissions and other environmental impacts  across their internal operations and supply chains.

Yet another Sustainability Management Software As A  Service (SAS) offering that seeks to extend sustainability and carbon  management into the supply chains of large organizations has recently  been introduced by Hara, a startup  funded by venture fund Kleiner  Perkins Caufield & Byers (which former Vice President Al Gore joined as a  partner in 2007.)

Hara  maintains that in addition to the established business processes and  systems used to strategically manage the five key drivers of shareholder  value— customers, employees, supply chain, financials, and  products— there is a sixth “system of record”  and corresponding lever of shareholder  value that is emerging — the environmental record — which  includes the information across an organization and its supply chain  related to its natural resource consumption and energy usage, and the  resulting emissions and environmental impact.

As a wider array of stakeholders become more engaged  in environmental issues and the lifecycle impacts of corporate supply chains, their scrutiny of green marketing claims and their demand for transparency and disclosure of sustainability performance is likely to grow. Joel Makower refers to this trend as “Death by  Disclosure” and warns that new green gospel has become “Judge  thyself, lest ye be judged in your stead.”  If your company plans to become greener  this year, employ systems thinking and be sure that your green efforts  are sustainable.