Greening the supply chain

The green supply chain is the next hot issue in corporate sustainability. Climate savvy consumers are extending their interest beyond the environmental impact of a company's operations to include the footprint of specific product lines. They are then making purchasing decisions by comparing the green credentials of similar products.

Similarly, investors are seeing climate change legislation and growing green consumer awareness as an investment risk, and exerting market pressure on large company's to account for the environmental footprint of their supply chain. The impact of this pressure is being felt through supply chains the world over. Wal - Mart , the world's largest retailer, has for example recently set a new goal for shrinking its environmental footprint, aiming for a 20-million-tonne cut in greenhouse gas emissions from the life cycle and supply chain of Wal-Mart products by 2015.

To make use of a culinary metaphor: all the ingredients going into the pie are now being measured, and not just the footprint of the baker.

In addition to scope 1 and 2 emissions, more companies are measuring the scope 3 emissions of their operations, which include production of purchased materials and outsourced activities. To illustrate this we need only compare the results of the Carbon Disclosure Project (CDP) for the last two years. In 2008 40% of South African CDP participants reported on Scope 3 emissions while in 2009 65% reported.

‘There has been an increase in the reporting of GHG emissions, particularly as regards Scope 3 emissions and emissions intensity. The significant increase in reporting Scope 3 emissions is important, as it is indicative of the larger companies beginning to exert influence over the supporting companies that contribute to their indirect emissions. Measuring a company’s indirect emissions is the first step towards effectively influencing their supporting companies.’
CDP Report 2009

Given the growing trend of supply chain greening, it is essential that suppliers begin to educate themselves on the nuts and bolts of environmental accounting, and learn the language of sustainability. There are some very useful introductory articles freely available on the internet. Green Biz outlines the business case for greening the supply chain, while the New Zealand Business Council for Sustainable Development offers a useful Business Guide to a Sustainable Supply Chain . Ethical Corporation offers advice on collaborating for an ethical supply chain in their article on raw materials and Vancouver City has compiled a useful Sustainable Purchasing Guide.