Monthly Archives: January 2008

Sustainability 2008 Wrap-Up

First of all, the doctor would like to thank all of the bloggers and guest bloggers who participated in the first Sourcing Innovation sponsored cross-blog series of 2008. With nineteen participants and well over thirty postings on the topic, the doctor believes it was a great success. In case you missed a post, here’s the complete list, by blogger:

As well as the complete list of the doctor‘s summary posts of the insightful writings that the bloggers and guest bloggers shared with us:

Although the series may have ended up more questions than it answered, the doctor believes it was well worth it, because if you don’t know the right questions to ask, how will you ever end up with the right answer?

Wired! and CNet Enter The Sustainability Fray

Yesterday, Wired published an article summarizing the recent State of Green Business 2008 from Greener Media which gives a bracingly candid interpretation of businesses’ green and greenwashing efforts. The report found that only 8 of 20 indicators showed progress in 2007 while 2 of the indicators, e-waste and carbon intensity, actually got worse. (Guess they still haven’t figured out that they need to design for recycle from the outset!)

The reality is that even though corporations like Apple, Google, and Wal-Mart tout their green virtues on a daily basis, their “greening” efforts have been mixed at best. Furthermore, most companies are still tinkering at the margins and have not embedded sustainable practices like recycling, efficient energy use, and waste reduction into core business practices.

CNet also had a good post over on their Green Tech blog yesterday. According to the blog entry, which had a different take on the State of Green Business 2008 report from Greener Media, there is real money behind the claims of many corporations purporting to “go green”, but consumers still need to be convinced that it’s more than just feel-good PR, which is to be understood. We all know that there has been lots of green-washing going on, and that not all efforts are well thought out and as green as the corporations think they are.

CNet noted that despite the fact that companies are only improving incrementally, and that many of the gains are not enough to over-take the ever-growing economy, these companies are recognizing that pursuing environmentally aware policies does not need to conflict with a corporation’s financial goals. You can do good and save money!

It also noted that consumers and investors are willing to put their money behind companies that make serious efforts to be sustainable. Of the 1,000 investors surveyed, almost half said they were likely to invest in a company or mutual fund with an environmental component to it. Seventeen percent have already made that sort of an investment.

Sustainability: The Final Stretch

Over on Spend Matters, Jason Busch points out that the market, and not regulation, is the reason sustainability wins. He points out that maybe we should review Malcom Gladwell’s The Tipping Point to better understand how trends become standard practice. He notes that sustainability in the supply chain is on the verge of reaching the tipping point, and this is partly because the message has reached a much broader audience than just procurement and operations practitioners. He also talks about Wal-Mart’s efforts, their recent press release, and how Wal-Mart’s President and CEO is almost missionary in his call to sustainable action. Furthermore, he posits that this evangelical commitment to sustainablility is a step in the right direction which Wal-Mart’s competitors will be forced to emulate.

Chris Jacob Abraham gave us his follow up to a brief background on sustainability issues over on @ Supply Chain Management. He notes that the crucial, unstated, assumption in most sustainability definitions is technological stasis, which is an idea that shouldn’t be sustained. It, in fact, points to a deeper issue with the very language of sustainable development – that most proponents of sustainability miss out on the fundamental nature of technology. The definitions of resource and pollutant are based upon today’s technology.

Chris argues that there are two broad-stroke problems that sustainable development should address: the Malthusian problem and the Climate-Change problem. At a simplistic level, Malthus’ believes that the constantly subsisting cause of periodical misery has existed ever since we have had histories of mankind, does not exist at present, and will forever continue to exist, unless some decided change takes place in the physical constitution of our nature. Taking the logic to its conclusion, the basic argument is that we’re living (far) beyond our means. Without innovation, we most likely are – but can we innovate our way out of the problems we create. The Climate Change problem basically boils down to Global Warming, which binds the synapses of anyone who dives into it.

Dave M offered us his third post by tackling a model of sustainable sourcing transparency over on Buyer Analytics. He says that to learn more about ethical sourcing, we need look no further than Mountain Equipment Coop, which takes corporate transparency to a whole new level. MEC fully discloses non-compliance in its supply chain. It reports material issues and openly discusses the dilemmas the company faces when it comes to ethical sourcing. It publishes an annual sourcing report with positive and negative information. It realizes the foundations of the solution to any problem, including sustainability, are truth and open discussion.

On MEC’s Ethical Sourcing blog, Harvey Chan tackles pollution, social ills, and the developing world. In the article he notes that, according to the United Nations Environment Program, Canada, on a per capita basis, produces five times more carbon dioxide than a communist apparatchik in China or an impoverished farmer in Sri Lanka, which is not all that “progressive”. The only thing us Canadians can be proud about is that we’re still slightly ahead of our southern neighbors, who produce 2.3% more equivalent global carbon dioxide emissions. He also points out that paying disposal taxes when we buy a product is brilliant because we consumers are price sensitive and making pollution costly will force us to think about our choices. This indicates that the big challenge facing government is finding similar policy instruments to reduce industry driven carbon dioxide emissions and that carbon taxes on corporations is the next logical step.

It’s Not Easy Being Green

Sustainability may be more … much more … than being green, but that doesn’t mean one should ignore the great article that recently popped up over on Chief Executive.

The article essentially starts off by noting that while CEOs would argue that global warming is a legitimate universal problem to be solved, they may not be as clear on which of the dizzying array of green products, strategies and promises are, in fact, about sustainability. What impact will a “green” strategy have on the environment? shareholder value? corporate finances? and how do you know if the strategy is “green“? A CEO can’t just do what she believes is right – because it’s not the company’s money, it’s the shareholder’s money. She has to balance on what is currently a tightrope walk between fiduciary responsibility and environmental correctness. She has to find the “zen of being green” – the sweet spot – that represents a decision that is good for the environment, the company, and thus the shareholders.

The article then notes that a good place to start is with conservation strategies. For example, with today’s skyrocketing energy costs, energy conservation will save your company big bucks. Waste reduction in manufacturing will allow you to produce more with less. Paper reduction will also save big – in cost and in environmental impact. And efficiency will provide cost savings all around.

Now it’s true that not every cost-efficient strategy will be environmentally friendly, just like not every environmentally friendly strategy will be cost-efficient, but since companies are going to pay one way or the other – either today by adopting more environmentally friendly practices across the board or tomorrow when they are regulated, fined, or both – companies need to start taking environmental sustainability and green seriously today. Besides, as adoption of new practices and environmentally friendly materials grows, economies of scale will eventually kick in.

The article also notes that not only do consumers expect companies to make money and profit from the sustainability work they do but that they are starting to realize that if it’s not financially sustainable, it’s not going to be environmentally sustainable. This is good news. You can’t save the whales if you can’t save yourself. (And, if you’re truly innovative, there’s no good reason why you should not be able to do both!)

The article also includes a short check-list of five things to consider while developing your earth-friendly strategy.

  • Don’t Fudge!
    If you’re behind the green curve, and your customers are noticing, don’t rush out with a half-baked scheme – otherwise, you’re likely to be labeled as a “greenwasher” or a “green-lite” organization, and will earn the scorn of the watchdogs and consumers you were hoping to impress.
  • Pick the Low-Hanging Fruit.
    Start small and wring out energy costs, for example. Gain knowledge, save money, and keep investors calm before going for the big win.
  • Partner Wisely.
    Work with organizations that have proven success rates that will work with you, not just the first nonprofit that calls. The local non-profit might have great passion for the environment, but if they’ve never worked with an organization of your size before …
  • Show Your Work.
    The best defense against a “greenwashing” label is transparency. Be sure to tell your story in a metrics-driven, fact-based manner.
  • Get the Word Out.
    Once you have an authentic, successful green strategy, advertise.

Some Recent Pieces on Sustainability

Last November, the Supply Chain Management Review ran an article on The Sustainable Supply Chain that noted that being sustainable is now a source of competitive advantage and a matter of corporate survival rather than a costly inconvenience.

The article, based on a study by A.T. Kearney and the ISM that surveyed a diverse group of Fortune 100 firms, revealed that 60% of firms have adopted sustainable practices to strengthen brand names and deduced that it is now time for “wave-two” sustainability: for companies to move beyond saying the right words to truly making sustainability happen.

The article states that supply managers can foster sustainability by ensuring that suppliers incorporate sustainable innovations in operations and processes. (D’uh! But then again, this is an article that says our study reveals that achieving genuine sustainability results from making supply chains more sustainable. Double D’uh!) In particular, processes and technologies that reduce dependency on scarce and expensive resources.

It then outlines the following activities of sustainable supply management:

  • The Derision of a Sustainable Strategy
    A strategy defines the values a company wants to emphasize, declares how it will enforce those values, and identifies consequences when suppliers or employees don’t meet the guidelines.
  • Retooling of the Organization
    As firms increase the role of sustainability in their supply management practices, they must draft specific guidelines and procedures, create training programs, and introduce sourcing tools that equip buyers to support sustainability goals.
  • Supplier Relations Management
    You need to have relations with your supplier.

Which is followed with some implementation guidelines:

  • Survey the context
  • Understand the risks and opportunities
  • Get Ready
  • Set Priorities
  • Go

Not bad, but it seems to assume that sustainability is just about the social and environmental issues, which, although important, don’t necessarily address all of the sustainable issues. Plus, like most joint efforts, it’s very high level and doesn’t have a lot of details on implementation.

Then, earlier this month, Supply & Demand Executive ran an article called Building the Green Supply Chain that suggests that going green doesn’t mean going into the red, which the doctor agrees with, providing the organization is smart about how it goes green. (In fact, really smart organizations will find ways to go green and save money at the same time.)

It suggests, unlike the previous article, that although the drive toward a greener supply chain appears to be gaining momentum, the companies that are actually making steps in this direction remain in the minority. According to the article, a McKinsey survey found that while 59% of CEOs believe that their companies ought to incorporate environmental, social, and governance considerations into how they manage their supply chains, only 27% said they currently do – 33% more than the A.T. Kearney and ISM study suggest. This tells us that while Fortune 100 companies may have caught on to the need to get sustainable fast, the majority of global companies, especially smaller ones haven’t. This would suggest that either they haven’t caught on, don’t think they have the resources, or don’t think they’ll see returns from doing so. Hopefully they’ll read this sustainability series and start thinking otherwise!