It’s safe to say that the majority of supply chain professionals did not enter the field to become environmental decision makers. Yet more and more they are the lynchpin of sustainability strategies in leading companies.
Still, the question arises – why would a company want to add environment to the existing safety, quality, reliability, and cost issues they already manage in their supply chains?
Like with other business metrics, the numbers tell part of the story:
- Size: In a majority of industries over 75% of a company’s carbon footprint lies in their supply chains
- Competition: Half of multinational corporations are expected to choose suppliers based on their CO2 emissions performance in the future
- Stakeholder Expectations: 72% of the Global 500 companies that disclosed their greenhouse gas (GHG) emissions information to the Carbon Disclosure Project included information on their value chain emissions
Initiating green supply chain efforts can be daunting. Responding to corporate requests for a streamlined process to quantify GHG emissions in supply chains, the World Resources Institute and the World Business Council for Sustainable Development released two new GHG accounting and reporting standards last week.
The standards are outputs of a 3+ year process that involved over 2,300 participants and 60 companies (including three from Minnesota) that road tested the methodologies within their own supply chains. While they are focused on GHGs, the methods can also be used to measure other environmental impacts.
Before you jump right in, here is a quick overview of the differences between the two standards:
The GHG Protocol Corporate Value Chain (Scope 3) Standard allows companies to take the 30,000 feet views of their value chains. Rather than looking at individual products, this standard allows companies to assess their entire value chain impact, identify “hot spots” of emissions, and focus their efforts on the most effective ways to reduce emissions outside of their direct operations.
Companies using the GHG Protocol Product Life Cycle Standard can measure the GHGs from the full life cycle of individual products, from raw material extraction through the product’s eventual disposal. In addition to helping companies identify sourcing, efficiency, and product redesign opportunities, the Product Standard will make it easier for companies to communicate the environmental aspects of their products.
Why do we need supply chain standards?
- They demystify product and supply chain assessments, expanding the use of these tools for a growing number of companies by distilling the methods into concrete steps.
- They build confidence in the results for companies, their suppliers, consumers, and other stakeholders.
But don’t take my word for it. For a more visually-appealing explanation of the standards, check out this animation video.
Working together, the new standards give every business the ability to make decisions that increase competitive advantage, drive efficiency and innovation, and cut risks. If these are the benefits of green supply chain management, are they much different from the results of successful business strategies?
Environmental Initiative notes: Learn more about this topic – and hear from two of the three Minnesota companies that tested the new GHG Protocol Standards – when you attend our next Business & Environment Session on October 25.
Holly Lahd is a Graduate Research Fellow with the University of Minnesota’s Nothstar Initiative for Sustainable Enterprise. Previously she worked at the World Resources Institute on the GHG Protocol Standards.