2Sustain

Earlier this month, the World Environment Center (WEC), in conjunction with GreenBiz.com, released a white paper, titled “Greening the Supply Chain in Emerging Markets: Some Lessons from the Field.” The paper takes an in-depth look at how Greening the Supply Chain (GSC) initiatives can contribute to business success. It also presents ideas for managing effective GSC projects and provides an overview of how business managers, government policy-makers, and financial management partners can work together for the success of future GSC initiatives world-wide.

Over the past four years, WEC has undertaken eight GSC projects in a variety of locations, including Mexico, Brazil, Romania, El Salvador, China, and Australia. As a result of implementing these projects, WEC was able to research this fundamental question: What is the business value that results from seeking to achieve a greener supply chain?

The answers WEC uncovered are intriguing. The paper distills their findings into five basic points, summarized here. WEC found that GSC initiatives are valuable to business because they:

•    Mitigate business risks. GSC initiatives help companies reduce risks from environmental, health, and safety factors. They also help businesses respond to evolving legal requirements and a growing expectation for improved corporate governance of supplier performance.

•    Reduce costs. Improving efficiencies –whether by recycling and re-using, better building design and maintenance, or some other method –is both environmentally conscious and prudent.

•    Motivate better performing suppliers. Implementing GSC initiatives allows companies to focus and rationalize supply chains by eliminating low performers. Advancing business relationships with suppliers that can meet rigorous sustainability criteria creates the opportunity for strong partnerships.

•    Preserve business continuity. GSC initiatives that focus on energy efficiency can buffer business operations from the interruption of electricity or other energy/natural resource inputs that commonly occur in emerging markets.

•    Enhance market access and degrees of business strategy freedom. Companies that adopt GSC initiatives are better able to reconcile their business strategy with society’s needs for limited resources.

The paper goes on to identify six key factors for successful GSC initiatives. This list includes:

•    Obtaining senior management commitment.

•    Providing direct support to suppliers. For example, companies need to offer on-the-ground training, technical support, mentoring, monitoring, and performance assessment.

•    Acknowledging the wide range of supplier competencies. Some suppliers are “mom and pop” operations; others are sophisticated global businesses. Successful GSC initiatives recognize the range of capabilities in the supply chain and tailor projects accordingly. 

•    Creating benefits for suppliers. These advantages may include strengthened competitiveness, improved processes and productivity, cost reduction, and improved business relationships with customers.

•    Recognizing external incentives for greener supplier performance. Global companies need to support government and NGO sustainability institutions in developing nations.

•    Working within the national culture. GSC initiatives gain legitimacy when companies operate and communicate within the accepted cultural context.

The 11-page report is well worth a few minutes of your time. Beyond the highlights I’ve provided, it also includes steps for managing GSC initiatives and a look forward to how business can add value to their current GSC projects.