While scanning Logistics Management, an article by Jeff Berman that said “a new approach for sustainable supply chains is needed” caught my eye. I’m a big believer in sustainability, but I’m also a strong believer that in their effort to jump on the bandwagon, some companies, governments, and individuals are doing – to be blunt – stupid things.

The article was based on a recent report by Adrian Gonzalez of ARC Advisory Group, in which the author notes that there are various tradeoffs when shippers and carriers strive towards sustainability. The tradeoffs exist because most products, manufacturing processes, and supply chains were not designed and built with sustainability in mind.

Gonzalez also noted that many people in the space are equating green with the reduction of their carbon footprint, as if the two concepts were interchangeable. Furthermore, even among those that realize that there is a spectrum to environmental friendliness, the author is finding that individuals are giving higher priority to initiatives perceived to reduce their carbon footprint – and, contrary to what you might expect, this may not be a good thing.

Let’s start with my favorite pet peeve – bio-fuels – and corn-based ethanol in particular. Although it’s true that the amount of contaminants, and carbon, produced by burning a barrel of corn-based ethanol is significantly less than the amount of contaminants, and carbon, produced by burning a barrel of crude oil, the fact of the matter is that, when you factor in how much oil you have to burn to create the bio-fuel, it actually increases your carbon footprint!

Using today’s technology, it can take up to 7 barrels of oil to create 8 equivalent barrels of corn-based ethanol. That’s a 12.5% return. 12.5%!!! That say’s that if you simply reduced your energy requirements by 12.5% you’d be a lot more environmentally efficient using oil! And you wouldn’t be harming the poor every time you drive your converted Honda. That’s right – by burning bio-fuel that’s inefficient to produce, you’re harming the poor every time you drive your Honda by driving up food prices! Last November, the American Farm Bureau (as chronicled over on Supply Excellence in “Inflation at the Thanksgiving Table”) reported that the cost of a traditional thanksgiving dinner rose 11%. Not only are corn prices rising due to ridiculous bio-fuel demands, but so are prices of wheat, grain, barley, and hops around the globe as farmers start planting corn for bio-fuel instead. These increases are in the double digits, and in some cases, triple digits as shortages are starting to become common. (Hops shortages are already threatening European brewers – who like their beer almost as much as us Canadians.) In other words, I guess what I’m saying is if you don’t mind increasing the lines at the food banks, then feel free to stay on your ethanol kick.

Now if this was the only example of stupidity from a sustainability perspective, it might not be so bad, but it’s only one example. Another example of ‘green‘ asbestos is the over-promises and unreasonable expectations associated with the use of fluorescent bulbs. Now, don’t get me wrong, I’m a believer in this technology (I use them myself) – but it’s not as green as you think it is. The average bulb contains mercury for crying out loud! And it’s not as efficient to produce them as an average light-bulb. They do require less energy, and they do, on average, last a lot longer, and I believe that this offsets the extra damage caused by the manufacturing process and inevitable recycling process, but it’s not a silver bullet. And it doesn’t mean that you don’t have to worry about leaving your lights on 24 hours a day – they still take energy! The only way you’re going to be green in using them is to be green with respect to their use – and turn them off when you don’t need them. This means you need to do more than just outfit your office building with them, like installing sensors that actually turn them off when there’s no one in the room!

I could go on (and might in another post), but the point is that it takes more than just “reducing your carbon footprint” to be green and sustainable. Furthermore, everything you do has a price or tradeoff associated with it. Ethanol is green, but its production is not. It’s still better to be energy efficient (better processes, new technology with lower energy requirements, conservative uses). However, it’s not the only green source of power – what about the stuff that occurs naturally around us – like wind, waves, and sun rays? So be smart – and then you’ll truly be sustainable and not just another product of ‘green‘ asbestos.

Earlier this month, Integrity Interactive announced the formation of a Supplier Ethics Management (SEM) Charter Group with Ryder System, Inc., H. J. Heinz Company, and bioMerieux as founding members. The goal of this initiative, as outlined in the Supply & Demand Chain Executive Article on “Combining Forces to Improve Ethics and Compliance in the Extended Supply Chain”, is to help develop specific practices and technologies that will ensure the integrity of products built and delivered through extended global supply chains. More specifically, the goal is to develop an online solution to monitor and improve the integrity of the supply chain (as per the Integrity Interactive website).

Now, it’s obvious that today’s supply chains need more ethical monitoring, in addition to more compliance and regulatory monitoring (as evidenced by the many posts on sustainability and corporate social responsibility that you will find on this blog and others), as the following statistics from a compliance survey of Global 2000 companies that were quoted in the original press release are scary enough:

• 88% do not maintain a platform for identifying, tracking, and communicating with suppliers
• 78% do not include suppliers in the company’s code of conduct
• 58% don’t regularly assess compliance risk in the supply chain
• 56% do not audit supplier compliance with code standards

But ethics goes beyond compliance, and I really have to wonder if an online solution for supply chain monitoring is going to fix the “ethics” problem. I do believe an on-line solution could go a long way to monitoring compliance, and that solutions like Aravo‘s Supplier Information Management (SEM) and Ecovadis‘ for Sustainable Supply Management (SSM) and CSR monitoring are a good start, but how do you monitor a supplier’s ethics without actually visiting its locations and getting to know its personnel.

Let’s face it, just because they don’t employ child labour at the locations they make your merchandise at does not mean they are not opposed to the idea, or that a sister company at another location (owned by the same parent “shell”) doesn’t employ child labor. Just because they check a box saying that their employees don’t work more than 50 hours a week doesn’t mean it doesn’t happen. Just because they say they are an equal opportunity employer, doesn’t mean that they are an equal opportunity employer with respect to the definition you or I would attach to the term. After all, just because they’d hire a woman to stitch garments, that doesn’t mean that they’d ever allow one to be promoted into management.

The point is, in today’s age of global sourcing, your suppliers are half a world away in another country with customs, beliefs, and traditional standards of operations that are likely quite different from what we are used to. And just because they check a box on a web form doesn’t mean that they are being compliant – or that they even understand what you are asking! (And just because they show you a plant that appears to be in compliance the day you show up after you gave them a month’s notice, it doesn’t mean that is how the plant always operates.)

Just like the only way to confirm compliance is to do unannounced plant visits, as far as I’m concerned, the only way to confirm ethics is to do the unannounced plant check and have a few good heart to heart talks over dinner afterward (assuming they pass the plant visit).

What do you think?