Greening your supply chain: The next step of keeping your environmental house in order
It’s a frustrating reality: a company’s direct emissions make up only a small percentage of its carbon output. Most of the impacts are spread through an often lengthy supply chain.
In fact, when Unilever measured the environmental footprint of its products, it was shocked to find less than 5% related directly to its own operations. The other 95% of the pollution and waste Unilever caused came from its suppliers and customers.
“It’s the next step for businesses that have already targeted their own processes and emissions,” says Ann Smith, CEO of New Zealand environmental certification provider Enviro-Mark Solutions.
“When they have their own house in order, they have to look closer at how their suppliers and customers impact their emissions. Strong environmental credentials across your supply chain in turn benefit your operations.
Smith says companies are increasingly looking to certifiers like Enviro-Mark Solutions to measure their carbon footprint, so they don’t miss out on big contracts.
“Buyers want to know the companies they are purchasing from are proactively managing their environmental impacts. They also look at environmental credentials to enhance their well-earned reputation by association. If you can’t provide that they may well look elsewhere.”
Take office products supplier OfficeMax New Zealand. Work within its own operations saw the company achieve a 26% year-on-year reduction in electricity usage at one of its sites in the first two years of the programme, and a 5% year-on-year reduction nationwide since 2009.
But the company is taking additional steps to ensure that its supply chain also benefits from the green advantage. OfficeMax conducts a bi-annual review of suppliers, and offers mentoring and OfficeMax team support. It also offers an EcoMax range for customers; products with proven environmental qualifications.
The transparency of an organisation’s supply chain is critical to a complete understanding of its “cradle to grave” environmental impact, Smith says.
It’s not just big companies that benefit from a supply chain review, Smith says. New Zealand owned insurance broking firm Apex General recently introduced a programme where suppliers were asked about three key credentials: kiwi-ownership, if they were a mutual customer, and if they had environmental credentials, such as the carboNZero certification they had achieved.
If the suppliers couldn’t tick the boxes, Apex General either started working with them to make improvements or found another company that shared its values. Apex general manager James McGhie says his company is committed to having a positive impact, so it made good sense to support likeminded suppliers.
Enviro-Mark Solutions recognises the time is right for action. Globally, atmospheric carbon is rocketing, and Statistics NZ reports our net greenhouse gas emissions increased 111% between 1990 and 2012.
Many New Zealand businesses have yet to realize the advantages of supply chain reporting, Smith says, but overseas the process is further advanced. UK supermarket giants Asda and Tesco are just two examples of massive global purchasers who have reduced their emissions and are now putting the onus on their supply chains to follow suit.
Asda has acknowledged that 95 per cent of its fresh produce is currently at risk from climate change. It has instructed its buyers to work with companies across its supply chain to develop a carbon reduction strategy.
Meanwhile, Tesco has developed a three-pronged carbon reduction strategy: looking at emissions produced directly by its stores (and by the process of moving goods to them); emissions produced by the supply chain; and also those from customers as they consume Tesco products.
With relationships seen as important in reducing the carbon footprint across supply chains, the company has created a Tesco Knowledge Hub, a global online community for Tesco suppliers encouraging them to share information, experiences and best practice in carbon reduction. This collaboration and transparency ensures efficiencies and savings can be shared across the chain.
Smith says evidence that voluntary carbon reporting can lead to economic benefits may help accelerate the uptake among businesses. The Carbon Disclosure Project’s S&P 500 Climate Change Report 2014 showed that companies who are reporting on carbon, and therefore managing it, have a higher return on investment than their non-reporting counterparts.
The businesses reporting on their carbon management are also more profitable, more stable, are growing their dividends, and exhibiting value to investors and stakeholders. On a local level, voluntary emissions measurement and reduction drives efficiency and differentiates proactive companies in a competitive marketplace, the report says.
Smith anticipates that New Zealand businesses will ultimately adopt similar reporting.
“The UK is leading the way. The supply chain requirement is now the key reason for businesses signing up to our UK partner. Voluntarily reporting your carbon will show a proactive commitment to being a stronger long term supply chain partner.”
Carbon reporting is the first step for companies to begin reducing their greenhouse gas emissions because it enables them to set clear targets and establish carbon management initiatives.
About Enviro-Mark Solutions
Enviro-Mark Solutions, a wholly-owned subsidiary of Landcare Research, provides environmental certification to organisations and products internationally, including CEMARS® (Certified Emissions Measurement and Reduction Scheme) and carboNZeroCertTM certification for carbon reporting, Energy-Mark® certification for energy management, and Enviro-Mark® certification for environmental management systems. Enviro-Mark Solutions’ certification programmes serve over 450 clients in 14 countries and the company’s customers have so far cut approximately 3m tonnes of CO2, or roughly the equivalent of carbon held by 2.5m acres of forest.