An encouragingly high level of sustainability activity is occurring across a broad spectrum of industries, much of which is being driven by the larger corporates. Richard Laverick, Director Corporate Responsibility at environmental consultancy ADAS, says that more can be done particularly if the sustainability message cascades down throughout the supply chain.
Many businesses now publish environmental reports or statements expressing their ambitions and goals with respect to issues such as environmental protection, climate change, community, waste minimisation, water use and biodiversity. However, these often relate to the activities of the company itself without taking into account the activities of others in the supply chain.
Encouragingly, now that many organisations are starting to take control of their own sustainability performance, the focus is starting to move to the supply chain. However, supply chain sustainability is more complicated to address, particularly if the number of suppliers is large and multi-layered. On the other hand, the opportunity for organisations to create beneficial effects through their supply chains is enormous. For example, one of the UK’s major supermarkets has found that the carbon footprint of its supply chain is ten times the size of that for its own activities and that the footprint of the ‘use’ phase of its products is one hundred times the size of its own footprint.
In order to implement supply chain improvements it is necessary for all parties to cooperate in a transparent manner and within an atmosphere of cooperation and trust, so supplier engagement programmes should focus on sharing best practice.
Supply chain engagement Sustainability activity in the supply chain can deliver energy efficiency and waste reduction but even if the benefits to individual members of the chain are relatively small, the sum of all the benefits can be enormous.
Public expenditure, even after the recent cuts, represents over 12% of GDP, so the Government’s supply chain represents an enormous opportunity to influence the sustainability of thousands of organisations.
ADAS is a major supplier of services to Defra and as such became heavily involved in Defra’s own supplier engagement programme, developing a ‘Joint Sustainability Action Plan’ that specified a broad range of actions with targets, areas for improvement and deadlines. The Plan included participation in Defra workshops in addition to Defra supported workshops at ADAS premises.
One of the tools employed by ADAS is the ‘Flexible Framework for Sustainable Procurement’ which sets out the actions required to make progress along a defined path in the five key areas: people; policy, strategy & communications; procurement process; supplier engagement; and measurements & results.
The framework has been particularly useful for ADAS and has been the catalyst for a broad range of sustainability initiatives.
A second major tool being employed by ADAS is a prioritisation methodology which is designed to help organisations identify those elements of the supply chain that offer the best opportunity for benefits.
These are assessed on the basis of risk (potential for harm, to the environment for example), scope (the scope for improvement against a number of sustainability issues that they affect) and influence (the extent to which the organisation is able to affect the market and its own supplier base).
The supplier workshops that ADAS has run have demonstrated the benefits of a partnership based approach. Suppliers are given assistance in finding ways to evaluate the sustainability of their own activity and that of their suppliers. In addition, workshops provide an opportunity for ADAS and its suppliers to share examples of best practise.
Sustainability at Boots UK
With manufacturing and logistics are located in one Nottingham location, Boots UK provides an ideal exemplar for the examination of sustainability.
Alex Gourlay, chief executive of the Health & Beauty Division of Alliance Boots says: “We have a 160 year history of doing the right thing; from making healthcare products affordable in our earliest years, to investing in recycling machinery in the 1930s and becoming a founder member of WWF’s 95+ Group to work towards sustainable forestry practices and wood products in the early 1990s. However, as a business we have to fully understand consumer trends and our customer’s expectations, including their attitude to complex issues like sustainability. We know that, along with all the usual value for money and quality considerations for example, they simply expect trusted brands like Boots to behave sustainably.
And that is exactly what we are doing.” Head of CSR at Boots UK, Ian Blythe, believes that climate change is one of the greatest challenges facing the world today. “This places an enormous responsibility on each and every one of us – as individuals, government and businesses,” he says. “For its part, Boots is a business that has a history of dealing with the big issues. But whilst we’ve made great steps to improve the sustainability of our operations, we know that this is an ongoing journey with a direction – not a destination.” The sustainability challenge for Boots is complex but Ian believes that the solutions are clear when the journey to sustainability is approached through the assessment of complete product lifecycles.
Boots has established a system which looks at each product’s life cycle and identifies the areas of greatest environmental impact. However, the system does not simply look at carbon emissions; it also looks at other issues such as water, waste, biodiversity and social issues.
The sustainable product assessment model scores some 23 sustainability indicators across the lifecycle of an individual product, including customer use. It creates a sustainability profile ‘footprint’ of a product to compare relative performance and identify hotspots and thereby enables anyone to make sustainability decisions.
The model also enables improvement targets to be set by product type or by brand and establishes a database of sustainability performance data which, in turn, enables the identification of opportunities and reporting or analysis, at an individual product, brand or company level.
By adopting a lifecycle approach, Boots ensures that sustainability work is focused on those areas that offer the greatest potential for improvement.
This is vitally important because the location of the greatest impact within the supply chain varies from product to product. In some cases, for example, the largest part of a product’s carbon footprint is in the use stage, so strategies to improve the overall footprint will have to address these issues through product design and consumer education.
Supply chain sustainability at Boots
The Boots holistic approach is exemplified by a wide range of initiatives within its supply chain logistics operations. Blythe explains: “We want a cost efficient, time efficient, emissions efficient warehousing and distribution system. One of the ways we can do that is to simply avoid the delivery of air. We do this by optimising packaging design, by using square packages and reusable crates, by using a variety of double-deck trailers, by utilising the latest picking and consolidating technologies in our warehouse, by using vehicle return journeys to pick up more products or return materials for recycling, and by sharing space with other businesses in delivery vehicles for the more remote areas in the UK.” Alongside, modern fuel-efficient lorries; driver training in eco-efficient driving techniques; in-cab driving-style monitoring equipment; policies and processes to minimise air freight, all adds up to an operation that’s good for business as well as doing the right thing for the environment.
Boots products are also sourced and manufactured outside of Nottingham and in several regions of the world. It therefore operates supply chain verification teams in the UK and Asia. These teams have four key objectives:
1. To enforce the Boots code of conduct for ethical trading
2. To improve the sustainability of the supply chain
3. To cascade sustainability further down the supply chain
4. To help suppliers find ways to improve
The Boots audit team routinely visits suppliers, sometimes unannounced, and occasionally conducts a ‘deep dive’ – visiting suppliers further down the chain.
It can be very difficult or impossible to identify the provenance of commodity goods that have been stored or shipped in large containers. Andrew Jenkins works on the sustainability of the materials sourced by Boots. He says that “the main problem with running our own supply chain for commodity ingredients is that, due to the wide range of products, we require small quantities of lots of ingredients. This makes managing our own supply chain for a particular commodity impractical. The key to improving the sustainability of commodities is to establish partnerships with organisations that are seeking the same goals.
“Take palm oil for example; the most widely used vegetable oil in the world, for which there are concerns with issues such as deforestation, biodiversity and human rights. By working with others we can substantially improve the sustainability of palm oil from both an environmental and an economic perspective.
“We are a member of the RSPO (Roundtable on Sustainable Palm Oil) and have been working with suppliers to use only Certified Sustainable Palm Oil (where palm oil is a listed ingredient) by 2014, or to use alternative sustainable materials.” Producers of Certified Sustainable Palm Oil are able to register a quantity of their output with the GreenPalm programme which awards them one GreenPalm certificate for each tonne of palm oil which has been sustainably produced and these certificates are tradeable.
Boots is also a member of the WWF Forest Trade Network, which seeks to improve the management of the world’s production forests by using the purchasing power and influence of UK businesses.
Just as stakeholders within business need to be fully engaged in internal sustainability work, so external stakeholders need to be engaged in supply chain sustainability.
It has been the experience of both ADAS and Boots that a partnership approach offers the best way forward. Improvements to the sustainability of supply chains deliver financial advantages but they also produce more resilient supply chains and create a more reliable source of supply.
Many companies are now looking to improve the sustainability of their supply chains and the ADAS sustainability team has been expanded significantly to accommodate this heightened demand. At Boots, Ian Blythe says: “There is still an enormous amount of work to do, but we are on the right path – our customers expect nothing less.”