2Sustain

Many companies today are focusing on improving energy efficiencies in their supply chains as a way to mitigate risks, lower costs, improve compliance and meet new expectations from a variety of corporate stakeholders.

But, improving energy efficiencies in the supply chain is challenging –and if your suppliers are located in China, that “challenging” task can sometimes seem nearly impossible.

China, which emits more greenhouse gasses than any other country, is notorious for factories with poor energy and environmental performance. In fact, researchers now estimate that many Chinese factories use about 10 times more energy than their counterparts in Japan. And, remedies to improve factory energy-efficiencies don’t come easy there. In China, poor factory performance there is tied into challenges related to the country’s regulatory structure, the professional energy-service-provider industry, and lack of information about opportunities and standards for measuring emissions.

Is there anything you can do to help your suppliers begin moving in the right direction?

Well, for starters, I recommend reading BSR’s new report, “Unlocking Energy Efficiency in China: A Guide to Partnering with Suppliers,” which offers a clear, credible outline for how companies can overcome the obstacles and launch supply chain energy efficiency programs in their China supply chains.

For example, according to the report, companies can turn China’s unique obstacles into opportunities by offering suppliers:

• Insight. Global companies can orient suppliers with best energy-management practices, and they can also share staff, trainers, and other resources that that can help suppliers address challenges such as garnering support from senior management.

• Information. By offering tools such as data-reporting systems, companies can provide suppliers with instant feedback and analytics to help them make better decisions on their own.

• Incentives. Company initiatives that link supplier purchase orders to progress and stipulate that collaboration with suppliers will depend on responsible energy use make energy efficiency more attractive.

“The benefits to launching supply chain energy-efficiency initiatives are great: Companies can save money, reduce their energy-related risks, gather information to communicate to investors who are increasingly savvy about climate issues, and establish themselves as leaders before supplier energy management becomes mainstream,” says Ryan Schuchard, BSR’s Manager, Research & Innovation and lead author of the report.