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Greening the Supply Chain
When retailers 'green their supply chain' they call for a level of environmental accountability in the practices of their suppliers. Supply chains are often complex, with environmental issues taking place at multiple levels in the supply chain. More and more companies realize that customers do not make a distinction between a company and its suppliers. Therefore, greening the supply chain is a concept that is quickly taking hold in retail.
Breadth of Practice
Like many environmental initiatives, greening a supply chain often starts with establishing a policy, which one case study in the Greening Retail best practices database describes. A procurement policy needs to be effectively communicated to the staff who will be carrying it out. One case describes how responsible sourcing training is implemented for staff.
In order to systematically relay the expectations retailers have for their suppliers, retailers often set out codes or standards that suppliers should strive for. Suppliers need to be able to understand the expectations of their buyers, and the database contains five case studies of retailers who are giving special attention to educating their suppliers about implementing the best practice standards.
To follow up on the progress of the suppliers in meeting their standards, a retailer will often audit the companies. Because greening the supply chain involves multiple companies within multiple sectors, working together in formal partnerships is helpful. The database describes four such partnerships.
Establish a Procurement Policy
Like many environmental initiatives, greening a supply chain often starts with establishing a policy: in the area of supply chains, they are often purchasing or procurement policies. OfficeMax, for example, introduced its paper procurement policy, enhancing the company's current environmental policy by setting direct product expectations and business relationship expectations for paper product suppliers. The OfficeMax paper procurement policy defines performance criteria for its product suppliers in the selection of raw materials and production of paper products and will guide the company's actions in support of its commitment to environmental sustainability.
Provide Responsible Sourcing Training for Staff
Policies needs to be communicated effectively to staff. To that end, Waitrose piloted "Responsible Sourcing" training, in 2005 and rolled it out to all Waitrose buyers and technologists in 2006/07.
Set Out Standards for Suppliers
Large retailers are especially influential in their supply chain. To systematically relay the expectations retailers have for their suppliers, retailers often set out codes or standards that the suppliers should strive for.
For example,The IKEA Way on Purchasing" (IWAY) was introduced in 2000. It's a code of conduct that specifies the minimum requirements concerning protection of the environment, working conditions and child labour that they place on suppliers and describes what they can expect from IKEA in return. They support the suppliers by developing action plans for improvements, explaining the requirements, monitoring, consulting and training.
The Warehouse Supplier Enviro-Mark programme began in March 2003. Enviro-Mark is a web-based step by step environmental management and accreditation programme. "The level of participation the Enviro-Mark programme has resulted in both management and operations staff having a much better appreciation of the process and how their actions contribute to our efficiency and environmental impact.
Building on the philosophy of accepting all of the main certification standards, Office Depot has worked extensively with other suppliers of catalog and insert papers to encourage their pursuit of forest certification. They recognize that FSC is still the only standard accepted by many environmental groups. Given that as of 2006 only 6 per cent of the world's forests were certified to any standard (according to Conservation International), they prefer to grow demand for "certified" fiber overall, rather than focus on nuances between standards. They have also asked suppliers to assure them of sustainable fiber by providing chain of custody certificates.
Suppliers need to be able to understand the expectations of their buyers, and the database contains case studies of retailers who are giving special attention to educating their suppliers about implementing the best practice standards.
Waitrose, for example, holds conferences and workshops for suppliers, and supplier manuals encourage suppliers to promote responsible sourcing down their own supply chains. As well, Boots' suppliers attended a series of three free workshops - on packaging, efficient use of resources and energy management. These gave practical advice on working more efficiently and with less impact on the environment. Suppliers were also given an opportunity to establish relationships and share best practices.
In 2003, Tiffany & Co was one of several organizations that convened a conference on responsible mining, which was attended by nongovernmental organizations, retailers, investors, insurers and technical experts seeking to identify best practices. The resulting dialogue led to the publication of the Framework for Responsible Mining: A Guide to Evolving Standards, with the goal of advancing productive debate, and, ultimately, action-by governments, retailers, civil society, the mining industry and others.
Wal-Mart has announced it is to crank up pressure on its thousands of Chinese suppliers later this year as it enters the next phase of its plan to slash the environmental impact of its supply chain. According to Reuters' reports, the company is planning to meet with its Chinese partners this autumn as it attempts to apply the same green procurement policies it has pioneered in the US to its international suppliers.
To follow up on the progress of the suppliers in meeting their standards, it's beneficial for a retailer to audit the companies from whom they are purchasing goods. IKEA has approximately 80 (full or part time) auditors at the trading service offices to audit supplier performance. Boots also employs their own team to carry out most of their supplier assessments. Many other retailers employ external consultants to conduct this work on their behalf, but they firmly believe that they should take ownership and conduct as many assessments as possible themselves. Over 60 per cent of their suppliers have been assessed by Boots people. They closely monitor the suppliers' progress, to ensure continued compliance with their code.
Speaking at the Wall Street Journal ECO:nomics conference in Goleta, California last week, Wal-Mart chief executive Lee Scott said that the company has hired an outside consulting firm to help support the strategy and was looking to work with non-governmental organisations to help train its factory and plant inspectors to better monitor suppliers' environmental performance.
Support Suppliers in Going Green
Transitioning to greener practices often means extra effort and costs for suppliers upfront. Companies like Wal-Mart are aware of this, and so to encourage farmers to switch to organic cotton farming, Wal-Mart said it purchased more than 12 million pounds of transitional cotton from approximately 1,000 farmers at the same premium cost of certified organic cotton. Wal-Mart said that this month, it will sell Faded Glory brand T-shirts made of transitional cotton for $3.50 to $6.00.
Form Supply Chain Partnerships
Because greening the supply chain involves multiple companies in multiple sectors, working together in formal partnerships is helpful. In 2005, Waitrose supported the Envirowise Supply Chain Partnership, which helped more than 35 Waitrose suppliers use water, energy and raw materials more efficiently through a combination of training, waste reviews and impact assessments.
Several Nordic companies have initiated supply chain co-operation. One of these is a clothing company, Hennes and Mauritz (H&M), which started a pilot project in 2000 for its suppliers in India, Indonesia, Portugal and Turkey. The Supplier Environmental Motivation Strategy (SEMS) aims to increase environmental awareness and motivate suppliers to take greater environmental responsibility.
Brandix, one of Sri Lanka's largest apparel exporters, converted a thirty-year-old factory into a modernized hi-tech eco-friendly plant. Since the conversion, the "Green Plant" has been able to reduce the company's carbon footprint by 77 per cent--from 2,076 metric tons to 484 metric tons. They've committed to join with Marks & Spencer's "Plan A" and have developed a five-year eco-plan to further reduce their carbon footprint by 35 per cent by the year 2012-M&S's Plan 'A' target date to neutralize the company's carbon emissions. M&S CEO, Sir Stuart Rose, recognized Brandix as a valuable part of their production and offered his company's support to this eco-factory.
Wal-Mart Stores Inc has formed a partnership with the Carbon Disclosure Project to look for ways for its suppliers to better manage their energy efficiency, as part of its environmental push, the company said on Monday. Under the partnership with the not-for-profit organization, which collects greenhouse gas emissions data from large companies, Wal-Mart will measure the amount of energy used throughout its supply chain, and use the method on a group of its suppliers to look for ways to make procurement, manufacturing and distribution more energy efficient.
This synopsis was compiled from case studies in the Greening Retail Best Practice Database. Sources for the information in the case studies are cited in the database.
This database contains links to case studies of environmental best practice from retailers around the world. You can search this database by the name of the company only, or you can find case studies that match one or several specific criteria, such as the type of retailer, the type of best practice, the company's country of origin, and/or project return on investment.
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Please note that we cannot include all the practices of every retailer; therefore, the non-inclusion of a company, or of a certain area of practice for a company, does not mean that they do not presently have progressive environmental initiatives in these areas.
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