On Monday the Financial Times topped with a story on Wal-Mart, which is starting a pilot with thirty companies in seven product categories to get them “to measure and report their green house gas emissions, in the biggest move to disclose emission from businesses.” Wal-Mart wants to be able to compare suppliers based on their emissions efficiency, and they draw a direct line from reducing emissions, to reducing energy use and thus cost among their suppliers. Eventually the retailer wants to role out the program to 68,000 suppliers.
It seems that the main supply chain initiatives fall into one of two categories: either they go far down the value chain of a product, from the base of the pyramid to the top, completely disclosing on a product; or they go wide, casting a wide net and engaging many direct suppliers of the company and dispersing the initiative across more suppliers, but not as deep.
The article is interesting because it lists efforts by Coca-Cola (also part of Wal-Mart’s pilot),Cadbury Schweppes and Kimberly-Clark trying to do the former, measuring the carbon footprint of certain products, whereas the Wal-Mart initiative and currently also the GRI/GTZ “Transparency in the supply chain” project do the latter, engaging first tier suppliers.
Looking at this division, it is interesting to see that brand name companies are looking to make certain identifiable products stand out as completely transparent, whereas retailers lean more towards being “generally responsible” and engage with their direct suppliers, which, of course, are quite often said brand name companies.
Regardless of preference or relative incentives, however, it is important to choose the right approach for what you want to measure. As far as emissions go, it makes sense to go as far down the supply chain as possible: the big emissions are usually at the bottom of the value chain! EarthNews’s Michael Burnham rightly remarks that “To reduce its indirect emissions of carbon dioxide and other Earth-warming gases, Wal-Mart may have to influence companies several layers deep into its supply chain.”
You can start by going far or wide but to really measure emissions in a significant way it will be relevant to end up doing both.
December 18, 2007 at 12:56 pm
A current problem is the lack of standard procedures to measure energy consumption and emissions of transport / logistics activities at the corporate level or at the supply chains level where multiple companies are involved.
This results in a low transparency, the absence of verification, and as a consequence in a low confidence in initiatives and communicated projects by companies.
Standard procedures would solve these problems and would facilitate:
· companies to launch logistics environmental initiatives
· the exchange of environmental data within supply chains
· the measurement of progress
· verification and audits
· benchmarking opportunities
· the use of reported emissions for academic research
· the measurement and reporting of (GHG) emissions on country levels
· the integration of standard environmental data into future transport and supply chain software applications
· the establishment of emission registries and inventories
· the introduction of certification and labels
The Green Logistics Consultants Group have recently launched an initiative to develop these standard procedures and guidelines for measuring energy consumption and greenhouse gas and other emission from logistics activities and (total) supply chains at corporate and product levels.
This project will be coordinated with other international organisations and several stakeholders are and will be involved in the development, testing and subsequent use of the standardized guidelines and procedures.
The procedures will be consistent with, and complementary to the Intergovernmental Panel on Climate Change (IPCC) guidelines and the GHG protocols developed by the Word Business Council for Sustainable Development and the World Resources Institute.
The Green Logistics Consultants Group, http://www.greenlogisticsconsultants.com, is an international collaborative network of consultants with a proven general or specific expertise in areas where companies and/or local and regional authorities can improve the socio-environmental performance of their supply chains or transport infrastructure.