Increasing Environmental Commitment in Supply Chain Performance Management

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Courtesy of SGS

In 2015, China reinforced its environmental policies and laws, strengthening air and water pollution controls.

Trend toward Environmental Commitment

Almost immediately, polluters found themselves subject to litigation, for example, a group of chemical companies subjected to compensation demands for about US$26 million (1). China is supporting victims of air and water pollution by actively clamping down on polluters and forcing them to comply with environmental regulations. Other countries are implementing similar measures. Some companies are also taking the lead on the subject, implementing ambitious initiatives, moving faster than policy development.

Some brands and retailers are now implementing dynamic and ambitious voluntary sustainability programs. They are measuring tangible impacts of their industrial processes and their commitments are pulling forward their services providers and competitors. For example, site assessments are routinely combined with laboratory analysis (e.g. waste water, incoming water, sludge sampling). Thus, voluntary initiatives are a strong driver for supply chain improvement, which coincide with higher regulatory and NGO pressures. But for other market players, how to identify relevant actions and make the first step?

Around the world, many governments are strengthening regulations, with commitments to build the relevant frameworks for environmental protection and vigilance. For example:

- Due diligence duty for parent companies in France

- OECD guidelines

- European Parliament resolution of 29 April 2015 … on the Bangladesh Sustainability Compact (2)

Increased empowerment of stakeholders (NGOs, unions, etc.) and their need for transparency has pushed forward these recent policy developments.

Pro-active communication campaigns, especially those using social networks, have helped NGOs to increase their audience and their capacity to have an impact on brand reputations.

For example, as a result of the Greenpeace Detox Campaign, some of world famous fashion brands but also some retailers have committed to eliminating toxic chemicals from their manufacturing processes and supply chains. Greenpeace persuaded brands to disclose information about their supply-chains and their progress, in recognition of the public’s “right to know”.

Next Steps to Environmental Sustainability

Many industries saw the appearance, in 1996, of ISO 14001 as a solution to manage all environmental risks, including those impacting supply chains. However, many factories are not structured to implement such systems. Lubricant leakage, waste burning in backyards and water or electricity overconsumption are regularly observed in factories. Very often this is not malicious, but due to an ignorance of environmental topics.

Every company should identify environmental risks relevant to their sector. It is the starting point to solve the issues found in the supply chain, and reduce environmental footprints. Extending a company’s responsibility to all steps of the supply chain is driving industrials and retailers to monitor all the potential impacts of their activities, worldwide, including environmental ones. It requires organizations to evolve and acquire new skills and processes.

Supply Chain Performance Management for Environmental Sustainability 

The Global Social Compliance Program (GSCP) for Environment has been designed to stimulate and support this new focus. Several initiatives use the principles of this framework to improve supply-chain environmental performance by using self-assessment, audit, training and consulting. Major initiatives include BEPI, SAC/HIGG Index and ZDHC.

About Global Social Compliance Program

The GSCP includes environmental clauses. This cross-industry platform provides retailers, service providers and related stakeholders with a global approach for the continuous improvement of working and environmental conditions in supply chains.

About Business Environmental Performance Initiative 

The Business Environmental Performance Initiative (BEPI) is the business-driven service developed by the Foreign Trade Association (FTA) for retailers and importers to improve environmental performance in their supply factories worldwide. Initially developed in 2012, BEPI provides a practical framework that supports all product sectors, in all countries, to reduce environmental impacts, business risks and costs through improved environmental practices. Built to help producers of all sizes to develop an Environmental Management System, BEPI works to reduce environmental impacts and increase operating efficiency. Through BEPI, member companies, mainly in the consumer sector worldwide, can access a concrete system for the implementation of environmental performance measures in their supply chain.

Zero Discharge of Hazardous Chemicals 

In 2011, in response to the Greenpeace Detox campaign, a group of major apparel and footwear brands and retailers made a shared commitment to help lead the industry towards Zero Discharge of Hazardous Chemicals (ZDHC) by 2020. The Joint Roadmap is a plan that sets a new standard of environmental performance, including specific commitments and timelines to realize this shared goal.

The Sustainable Apparel Coalition Index

The Sustainable Apparel Coalition (SAC) is a trade organization comprised of brands, retailers, manufacturers, governments, NGO and academic experts, representing more than a third of the global apparel and footwear market. The focus of the coalition is the HIGG Index – a suite of assessment tools that standardizes the measurement of the environmental and social impacts of apparel and footwear products across the product lifecycle throughout the value chain.

Assessing Supply Chain Sustainability 

It is early days for this market and most companies are measuring their supply chain impacts with the aim of taking definitive actions. Following these measures we identify two groups of companies, those that are considering how they will go move forward and are preparing strategies, and others that are acquiring a more advanced knowledge of their suppliers. They are achieving this by conducting on-site assessments, including environmental audits (practices and process of manufacturing, on-site environmental management) and effluent analysis (waste water, sludge, hazardous substances residues on products), all to help build capacity for improving their environmental footprints.

Moving Forward to Sustainable Supply Chains 

High-level steps to progress can be summarized as follows: define an environmental policy applicable across your supply chain, define a system to identify and monitor environmental issues in your supply chain (e.g. a sectorial initiative), audit suppliers and setup improvement programs. Simple but effective actions can be taken to remove or at least reduce pollution sources from the supply chain, and some tools are readily available.

With experienced project managers, auditors and consultants, SGS can provide a bundle of solutions and tailor made programs. SGS facilitates the preparation and the management of the project, with trainings, technical support and KPIs monitoring. The company deploys it on the field with self-assessment, audit, environmental testing and capacity building.

References:

(1) Library of Congress – Notable Environmental Public Interest Lawsuit (http://www.loc.gov/lawweb/servlet/lloc_news?disp3_l205404168_text)

(2) European Parliament Resolution – Bangladesh Sustainability Compact (http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+MOTION+P8-RC-2015-0363+0+DOC+XML+V0//EN)

About SGS Product Sustainability Services

Product sustainability services from SGS (http://www.sgs.com/en/Sustainability/Facilities-and-Production/Product-and-Packaging/Product-Sustainability-and-Procurement.aspx) expand clients’ range of environmentally responsible and sustainable products with a practical approach to ecodesign. SGS’s innovative ecodesign methodology, Green Forward, consolidates disparate data on hygiene, health, nutrition, quality and resources to speed-up a product’s route to market, by delivering turnkey solutions for:

- Environmental product declarations (EPD)

- Sustainable design and procurement 

- Risk-free environmental communication

- Environmental audits and suppliers improvement programs

For further information, please contact an SGS representative.

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