2Sustain

Today we offer another post from our distinguished co-sponsor, WSP, written by Josh Whitney:

On the heels of numerous recent conferences and wide-spread media attention on the energy impact and carbon footprint of consumer products, WSP recently hosted a breakfast seminar in Santa Clara. The workshop explored various methods and standards used to analyze products and sought to emphasize the value that product and supply chain carbon footprinting can provide to a company. Clearly the carbon market has arrived and it’s certainly here to stay. There’s money to be made, the winners and losers have yet to be identified, and for those who understand the business implications of carbon, first movers will be rewarded with clear advantages.

The seminar provided a forum to discuss the tangible steps for conducting a product carbon footprint and identify bottom-line performance outcomes.  In attendance were a host of hi-tech and bio-tech leaders, as wells as notable consumer products companies and one of world’s largest wine makers. Demonstrating that companies are on the move in this area, 1 in 3 indicated that they are already or will be soon performing a product carbon footprint of their products in the near future.

To help shed light on the fast-paced market and leadership position that Europe has taken in this area, we brought over one of WSP Environmental’s practice leaders, Andrew Bright, to discuss the regulatory and increasing supply chain pressures mounting across the EU and how they may likely be transposed in the US.

Following are relevant thoughts and observations from the day’s proceedings:

While the US may be lagging behind the EU in terms of progressive cap and trade carbon emissions schemes or regulations that require energy efficiency labels on electronic products, US manufacturers and retailers are quickly realizing that global legislation on carbon have significant implications across your supply chain. Even though the EU is ahead of the game, US companies will likely interpret and apply these concepts more quickly and with fewer costs.  US leaders will not be laggards for long, and proposed legislation in the US Congress includes a provision for a tax on carbon-intensive goods.

As the Wal-Marts and Tesco’s of the world impose a range of requirements, from electronic scorecards to product carbon footprint labeling, suppliers at each step will need to understand how to cost-effectively report this additional data requirement. This seemingly administrative burden also represents yet another opportunity to find efficiencies in operations, creating new products and driving triple-bottom line performance.

Our most important piece of advice: be precisely clear on what you want to achieve and understand where your pressures and potential opportunities lay.  Are you going to lower costs and increase your revenue? Or is it more about improving your brand equity and future proofing your products for sale on another retailer’s shelf? You should also be able to understand and communicate the benefits for your suppliers and explain how they may be able to achieve efficiency within their operations.

Standards are now also emerging to help you along the way. The International Standards Organization has released an ISO specification on Life-Cycle Analysis, however in the fast-paced world of business with limited budgets, an academically oriented approach to LCA is often unrealistic.  Sophisticated LCA software databases and programs help simplify product analysis, however, they are often costly and may not offer a tailored solution or ‘answer’ that is specifically aligned to the client organization or product.  The World Resources Institute and World Business Council for Sustainable Development’s Greenhouse Gas Project Protocol provide the basic methodology for accounting for the emissions associated with projects; however, it is more focused on providing the appropriate metrics than a discrete methodology for products or supply chains.  Consequently, in March 2007, the UK’s Carbon Trust (a government funded organization) launched its Methodology for Product Carbon Footprinting, based upon ISO and GHG Protocol, which up until recently has served as the best practice guidance.  In conjunction with the Carbon Trust, the British Standards Institute just recently launched the PAS 2050 standard which is a 2.0 version of the previous Carbon Trust methodology, seeking to provide guidance on the measurement of embodied greenhouse gas emissions in products and services.

We further explored the details on how to build a supply chain process map, define the scope and boundary of the analysis, and identify primary and secondary data sources.  Two points were highlighted:
•    Allocating sufficient time and resources to defining scope and boundary, you’ll substantiate your analysis and save countless hours later. 
•    Identifying a crisp and efficient data collection system, either by leveraging your companies own ERP/ PLM system, or by procuring a software vendor such as Aravo’s Sustain platform (a 2sustain.com sponsor) – will also save time and money, and can also add significant value in other parts of your business processes.

Citing previous and current client engagements, we discussed the key challenges that any company should be aware of, the most important of which include:

•    Understanding how to effectively engage staff with a limited bandwidth;
•    Capturing data fundamentals like electricity and fuel consumption;
•    Scalability across operations and suppliers; and
•    How to maintain data integrity and quality across a complex set of raw materials.

The remainder of the seminar focused on understanding how to use the results of this type of study to drive performance across your business. The results can help reduce liabilities by removing carbon from your supply chain (reducing your exposure to future carbon taxes and regulatory compliance costs).  It can also ensure your products’ market access and brand differentiation in an increasingly competitive market place.

With a global presence and client base to match, we see market and regulatory pressures accelerating and companies responding in a conflicting variety of ways. While organizational carbon footprinting and energy emissions reporting in the form of the Global Reporting Initiative (GRI) or CSR reports is now commonplace in most Fortune 500’s, the door is wide open for a company to stake out their position by measuring the footprint of the energy it took to produce their widget.  In a world where we are becoming increasingly connected with the products on which we rely, consumers want to know their impact and potentially have the choice to choose a more efficient product over another. In same way a carb-conscious consumer will pick diet coke over a milk shake, your product may now be competing on its carbon footprint, not just on price.