Tag Archives: ISO 14001

“First Movers” Use Materiality Analysis to Link Sustainability, Supply Chain Management & CSR

25 Jan

By Dave R. Meyer (SEEDS Global Alliance)

Note:  this is the second of a three-part series exploring “materiality” and  the intersection of supply chain management, sustainability and  corporate social responsibility.

My first post in this series suggested that there was an intersection or cross-walk between sustainability, corporate environmental responsibility and supply chain management.  This “sweet spot” can be found in conducting “materiality” analyses.  Although the concept of materiality in the finance sector has a long track record in accounting circles, its application in the sustainability space is much newer.  Whereas financial reporting has taken a more short-term view and approach to handling performance and risk, sustainability generally factors in a much longer, strategic planning and implementation horizon.

Businesses have learned that in a world that has grown more transparent, they need to clearly identify what is material to their operations and stakeholders, and communicate this in trustworthy and convincing ways in order to drive creativity and innovation.  Materiality determination is a lot like the aspects and impacts analysis that is common to ISO 14001 based Environmental Management Systems.  ISO 14001 seeks to identify those elements of their activities, processes, services and products that have the greatest impact on the environment.  Materiality analysis does not only that but dives deeper into operations and stakeholder issues.  Let’s take a moment to explore materiality’s origins in the sustainability space.

Roots of Materiality in Sustainability Reporting

In 2003, The UK- based think tank, AccountAbility developed the  AA1100 Standard.   AA1000AS (2008) assurance provides a “comprehensive way of holding an organization to account for its management, performance and reporting on sustainability issues by evaluating the adherence of an organization to the AccountAbility Principles and the reliability of associated performance information. It also provides a platform to align the non-financial aspects of sustainability with financial reporting and assurance through its understanding of materiality”.    The framework for a materiality assessment is depicted in the adjoining graphic, jointly developed by AccountAbility, BT Group Plc and LRQA (The Materiality Report- Aligning Strategy, Performance and Reporting- November 2006).

The AA1100 Standard was revised in 2008.  In it, the AA1000 Materiality Principle requires that the “Assurance Provider states whether the Reporting Organization has included in the Report the information about its Sustainability Performance required by its Stakeholders for them to be able to make informed judgments, decisions and actions.”  Materiality norms taken into account by this standard are:

(a) Compliance performance (considering those aspects of non-financial performance where a significant legal, regulatory or direct financial impact exists).

(b) Policy-related performance (considering identification of aspects of performance linked to stated policy positions, financial consequences aside).

(c) Peer-based norms (considering how company’s peers and competitors address the same issues, irrespective of whether the company itself has a related policy or whether financial consequences can be demonstrated; and

(d) Stakeholder-based materiality (taking into account stakeholder behaviors and perceptions).

The Global Reporting Initiative has developed a framework for materiality determination as part of the G3 Sustainability Reporting Guidelines The GRI considers materiality as “ the threshold at which an issue or indicator becomes sufficiently important that it should be reported.”  The GRI defined a series of internal and external criteria to be considered when performing a materiality analysis.  Later in 2009, the GRI convened a to evaluate and create more specific guidance for determining materiality.  The draft content recognized that materiality analysis was one of the “least systematized aspects of reporting”:

“Identification of material issues and boundaries are core challenges for any standard risk assessment process. Despite the importance of these challenges to good reporting processes, they represent the most difficult and underdeveloped areas for most companies.” – Draft Report Content and Materiality Protocol, page 2.

The draft Report Content and Materiality Protocol review period closed last fall and is in review at this time.

Materiality “First Movers”

A number of companies have taken a “first mover” position in documenting materiality in their corporate sustainability reports.  Most have used a format similar in scope and criteria as the GRI or AA1100 frameworks, with some modifications.  Companies that have reported on materiality and that reach out to stakeholders what they find to be material to their interest and have some “reasonable control” over include companies from diverse manufacturing sectors such as automotive (Ford[1], BMW, Volvo), communications (BT), energy development (Exxon, Mobil) pharmaceuticals (Novo Nordisk, Pfizer, Johnson & Johnson), electronics and control Systems (Cisco, GE, Omron), consumer products (Gap, Starbucks) and mining (Holcim, Rio Tinto), among many others.  One such company is Danisco A/S.

I recently had the opportunity to visit with Mr. Jeffrey Hogue (@jeffreyhogue) of Danisco.  Mr. Hogue is Sustainability and Corporate Social Responsibility (CSR) Global Leader at Danisco A/S.  Danisco is a worldwide manufacturer of food and beverage products, including cultures, emulsifiers, gums & systems and natural sweeteners.  The company does business with the world’s largest food manufacturers.  Daniscos’ 2009/2010 Sustainability Report is extremely comprehensive and has been awarded some of the highest honors for corporate social responsibility reporting in the past year.  The company looked deeply into materiality issues in its report and has developed  strong operational programs to manage its supply chain in a proactive manner.  It’s web site indicates that they have developed and implemented a “new supplier management system…to strengthen our global supplier and material assessment programme through better audit portfolio management tools, detailed assessments, prioritised audits and improved collection of supplier and raw material data.”

Danisco catalogued and assessed stakeholder input from a variety of internal and external surveys and other sources, then indexed them according to their impact on its business. Issues emerging from the data were ranked according to their impact on the business and the degree of importance to stakeholders, forming the basis for the Materiality Matrix (see Figure 1 below).  The company strategically decided to address sustainability risks and opportunities identified as having “medium-to-high impact” on its business and being of “medium-to-high” interest to our stakeholders.


I asked Jeff if he could shed some insight on the company determined materiality and its resulting high ranking for supply chain (criteria, indicators etc).  I also asked Jeff if he’d share his thoughts on the critical nature of supply chain management relative to triple bottom line based materiality (as well as risk management).

“I think that there are three dimensions of this subject and why our supply chain is very important to our success.


Risk reduction – With a supplier base of over 3000 key suppliers it is crucial for us to manage any risk that may be present in our upstream value chain to eliminate the impact on our operations and our customers.  Therefore it is a baseline requirement that we scrutinize our supply chain and develop robust and systematic programmes to address and mitigate risk. Most of our customers expect it — and although it is in a lot of ways a compliance programme, we do derive value in knowing that we will maintain consistent raw material quality, avoid issues related to labor and human rights, and supply security.  We also have the ability to anticipate and mitigate other sustainability related endpoints like the impacts on agricultural raw materials from climate change, water scarcity, regulation, etc.

Opportunity harvesting – We also see the need to understand the potential synergies between our organization and our suppliers.  In many cases we do this to provide shared value in terms of capacity and livelihood building for our suppliers alongside our need for more secure raw material sources.  We often do this on a case by case basis — mainly on a regional level where it makes sense

Value chain pressures and expectations – We are experiencing a world where retailers and our largest customers see these issues in the light of their entire value chain and are actively seeking ways to reduce their indirect impacts.  This of course is cascaded down their supply chains through our organization to our suppliers.  We also see a tremendous opportunity in this area to be first movers and to act now based on how the retailers are moving.  This will put us in a position where we can be proactive and are faster to respond to value chain pressures.”

Materiality in CSR Reports of the Future

I also had the pleasure of several e-mail exchanges with Ms. Elaine Cohen (@elainecohen).  Elaine is a well known CSR consultant, Sustainability Reporter, HR Professional (and self-avowed ice cream addict).  She’s  the Founding partner at BeyondBusiness Ltd (www.b-yond.biz/en) and consults to companies on CSR strategy, processes and sustainability communications. I asked Elaine what trends she has seen in CSR reporting these past few years where supply chain has been classified as having “high materiality” to a company’s operations and to their stakeholders.

“I believe supply chains have been becoming increasingly more important over the past few years, as the effects of inadequate supply chain accountability are more and more visible in our market place. We can split these issues broadly into two: the human rights issues in supply chains and the sourcing issues in supply chains.  The HR issues surfaced mainly with the apparel issues in the late 90’s. But the last five years have been characterized by significantly greater transparency  due to the spread of the internet and ease of access to information.”

“… Additionally, I believe the increasing focus on Human Rights and the work of John Ruggie [Special Representative of the United Nations Secretary-General on Business & Human Rights], have been clear about squarely placing the responsibility for clean supply chains on the manufacturer. There is almost nothing more material for apparel suppliers than human rights in their supply chains – just take a look at some of their Sustainability reports. Regarding sourcing, this has also become a major issue – Starbucks and Ethiopian coffee farmers, Unilever and others in palm oil issues, Nestle and the Greenpeace KitKat campaign . Manufacturers are getting clearer that sourcing decisions are now much more visible than in the past, and much more risky. So for these companies, raw materials sourcing is most definitely high materiality. Sustainability reports are reflecting these trends and the space allocated to human rights, responsible sourcing and factory auditing is significantly greater that it was some years ago.”

Trending forward in 2011, I asked Elaine to read the tea leaves on supply chain management, CSR and materiality.

“I believe these issues will continue to maintain high-profile and ultimately move towards cross sector alliances to resolve issues that affect all players in a sector such as the Round Table on Sustainable Palm Oil , work done by the apparel sector and the electronics industry  to determine common standards. We might see multi-company collaboration on third-party factory inspection and evaluation. We might see a set of industry wide agreements on core issues….countries such as China and India are also aware of risks, and greater legislation and enforcement in these countries may help resolve some issues.

Takeaways on Materiality in the Supply Chain.

Jeff related to me that a key NGO with a critical stake in Daniscos’ supply chain affairs remarked that supply chain management and sustainability go hand in hand and is basically a foundational aspect of business operations and risk management.   The challenge, according to Jeff, is in finding the “shared value proposition” that is often difficult to achieve, especially across multiple layers of an often globally distributed supply chain.  Finding localized suppliers and establishing multi-stakeholder collaborations hold promise as models where stakeholder interests and large-scale products manufacturers can find the needed common ground to advance supply chain sustainability.

Elaine summed up our dialogue with the following suggestions: “For manufacturers, don’t underestimate the importance of high-quality supply chain management – get it right before it gets you right, learn from the mistakes of others, think of supply chain management as a core business issue which goes to the heart of strategy and brand decisions, not just something that is tacked on to a new project as a deliverable…In terms of materiality, make sure you “engage, engage, engage” at [the] local level with a wide range of stakeholders, so that you are not demanding deliverables which are not reasonably  feasible. Report transparently on all aspects of supply chain because, if nothing else, this will assist in identifying hidden costs and areas of potential risk.”

Thanks Elaine! I couldn’t have said it better myself.

In Part 3 of this series, I’ll lay out the business case for materiality assessments to strengthen supply chain management and a straightforward framework for materiality analysis.


[1] Ford’s 2008/09 Sustainability Report includes an interactive materiality matrix that categorizes issues based on two dimensions: the degree of stakeholder concern and the extent of the current or potential impact on the company.

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The Quest for Personal & Organizational Sustainability- The Path to 2011 & Beyond

24 Dec

A great article was brought to my attention this past week by sustainability colleague and sage Gil Friend (@gfriend) this week.  The article by Peter Shallard talks about ditching New Years resolutions and reminding yourselves that you are on a journey- a quest.

“The holidays give you the window of opportunity to do this important thinking – not the date on the calendar. Take advantage of the time you’ve got to review the past and be grateful. Then, think of the future and be excited….Dismiss the date. Embrace the introspection.”- Peter Shallard

For individuals, organizations and communities, sustainability can be a walk in the forest, a chance meeting or a seminal event that jogs the mind, creating an urgent call to action that is transcendent.   For me at least, this shift towards sustainability has truly been a quest- sometimes a quiet, almost transparent change, other times a deliberate, “in your face” awakening. Either way, questing for sustainability involves embracing whole systems thinking that allows us to view ourselves and the business relationships that we have with others differently perhaps as a value chain of innovation and creativity.

My Journey

A few moments come to mind in my journey toward sustainability and my professional path (dates are approximate) that I’d like to share- come along with me please- read on:

Riding the Range (South Central Montana, 1964)- that's me on the left with my Dad & brother

1964: My family takes “The Great Western Road Trip”- one month in a loaded Ford Country Squire, exploring the wide open Western U.S., riding horses in Montana, exploring the Colorado back country, and marveling at Yellowstone National Parks natural wonders.  I vow to move west one day. I eventually do in 1977 to finish out my college education in natural resources ecology and management.

1969: Memories of recycling glass, plastic and newsprint with my Dad at the huge new recycling center in my hometown (Highland Park, Illinois).  I liked the shattered glass sounds.

1972-1976: Camping in Wisconsin’s Northwoods and making a conscious decision while on a “walk in the woods” to pursue a natural resources career.  I read Rachel Carson’s Silent Spring and Ed Abbeys Desert Solitaire and am changed forever.

1982: I developed and unveiled a groundbreaking employee environmental training program that changed the way of thinking for hundreds of coal miners in Utah.  Their changes in behavior and proactive efforts led to a stellar number 1 environmental compliance ranking and state-wide recognition.

1983: I watched the groundbreaking movie Koyaanisqatsi: Life out of Balance while I was working for a coal mine in New Mexico.  As I saw smoking, exposed coal seams from the surface mining activities, I began questioning if who I was working for was contradictory to my belief in natural systems, conservation and environmental protection.  So I reached out to Amory and Hunter Lovins (@hlovins) at the newly founded Rocky Mountain Institute for advice on how to manage my moral and ethical environmental center.  Their sage wisdom enabled me to continue my environmental work.  I embraced  internal change management, policy development, environmental awareness and education,  advocacy for proactive compliance management and supporting land conservation and  site restoration.

Emergency Site Cleanup-Utah, 1986

1984-1990: I called this period ” the Tyvek Years”.  I had numerous transcendent experiences conducting high profile federal and state-led hazardous waste site investigations and emergency cleanups.  It was sometimes very nasty work.  The experiences left me wondering how to prevent future environmental calamities like the ones I was helping to clean up.  This  led me toward developing proactive compliance and environmental management frameworks for clients and take a more active role in community planning groups.

1990: Captain Planet and the Planeteers debuts on Turner Broadcasting.  The Captain Planet Foundation still exists to support hands-on environmental projects for youth in grades K-12.

Mr. Science goes to pre-school for Show-and-Tell (1991)

1991: My four-year old son brings me to pre-school as his show and tell project.  He introduces me as follows: “This is my Dad- he saves the Planet”.  What a better way to spend the lunch hours in enlightening the next generation about environmental issues and the wonders of science.

1993:  I participated with an international team in a solid waste facility siting project in Barbados.  The political process trumps good engineering and science, and demonstrates lack of value placed on natural parklands and sustainable development.  The government ignores all technical recommendations made by the team following years of study and eventually sites the project in the middle of a proposed national park.  Really!?  I leave the island tanned but disillusioned and even more committed to advance science in effective sustainable development policy-making.

1995: I complete my Masters degree in Environmental Policy and Management as a charter member of University of Denvers groundbreaking and pioneering post secondary education curriculum.  My Capstone Project, an “Environmental Policy Toolkit” becomes available to hundreds of small to large businesses through the Denver Metro Chamber of Commerce.   While the younger grads are passing alcohol filled bota bags at graduation ceremonies, my professional colleagues and I are passing “Tums” around!  My son gets to see his Dad who “saves the planet” walk up to accept his diploma- that was cool.

1996: Recalling my talk in 1983 with the Lovins’, I was confronted by an old time miner while working at my company’s booth at a mining expo in Spokane.  He saw that I worked for an environmental services firm and said: “so I see you’re an environmentalist- so, are you ‘fer or ‘agin mining!?”  I answered ” I’m ‘fer environmentally responsible mining”.  That stumped him but he said he’d “accept that” answer.  I gave him trinkets for his five grandkids, and he left happy.

1998: I had the pleasure of planning and developing several successful and industry groundbreaking ISO 14001 environmental management system (EMS) certifications (the first of more than three dozen I have installed since).  Bubble shattered in 1999 by a retired Washington state Senator, who quipped to me on a Washington D.C. street that environmental policy is not science-based.  I am dumbfounded (post script: last week the Obama administration finally released its  long awaited “scientific integrity” policy statement).

City of San Diego Water Department ISO 14001 Champions (I'm in the 3rd row)

1998-2004: The public sector years.  During this time I assisted major water, wastewater and solid waste utilities in implementing award winning ISO 14001 EMS’s, improving operations and saving taxpayers millions in real and avoided environmental liabilities.   I knew I could flush, drink water and recycle in confidence knowing that my city operations were “doing the right thing”.  After my latest utility client successfully received its ISO 14001 certification in 2004, one of  the organizations chief protagonists quietly pulled me aside to thank me “for getting us to do what they would not have done themselves”.

2010: I finally seek out and find the link between my Jewish identity and environmentalism.  I become a Bar Mitzvah and find that the Torah and Jewish scholars have taught extensively about environmentalism over the past 5771 years- guess I was a little late to the party!.  Many Talmudic themes specifically center around the concept of “sustainability”. Here in the U.S., the Coalition on the Environment and Jewish Life (COEJL) has helped tens of thousands of Jews make a connection between Judaism and the environment.  There are even green tips to have an ‘eco-kosher’ New Year.

A quest is superior to a goal because the journey itself is rewarding. It’s an epic ongoing voyage which will immediately go down in folklore as a story worth telling.  Ditch your goals in favor of choosing the journey that you want to go on. Pick a quest that will necessitate the accomplishment of your goals along the way.

So that’s my story….or at least some of the highlights.  There’s more to share but that’s perhaps another chapter in this journey.  I hope you found this first story worth the telling.  As you can see, sometimes its the little things that (when I take the time to think about it) have slowly moved me forward, or sometimes the events have been larger and have catapulted me further .

A Call to Action

Mr. Shallards piece distills preparation for a successful quest as a series of four essential steps.

…focus on equipping yourself for your journey.  Ask yourself:

  • What kind of person do I need to be to be the hero in this story?
  • What beliefs and values do I need to hold?
  • What capabilities do I need to develop?
  • What habits and behaviors do I need to master?

The suggestions by Mr. Shallard can easily be adapted to an organizational  and supply chain level when considering best methods to transform a “business-as-usual” organization into a sustainability-minded one, or instill changes in policy and implementation at the community level.   A few other ideas to turn your organization toward a “top-line”, first mover one can be found here as well.

I can’t begin to reel off the names all of the family, friends, colleagues, teachers and organizations that have made such a huge difference in my quest  of the past 50 plus years on this planet.  Suffice it to say that it takes many wings to fly in this world and I am indebted to each and every one of you who’ve made a small or large contribution to my quest along the way.   I will thank Gil Friend though for bringing Mr. Ballards perspective to my attention.   Meantime, I’ll just simply say that if you are reading this, I truly appreciate your continued support and interest in my ideas and experiences this past year.

I’d love to hear your stories too and hope you’ll share them in the comments below!

Here’s to a very happy, health, sustainable & prosperous 2011!

Paz- Dave

Organizational Collaboration, Transparency, and Metrics CAN Foster Sustainable Change

20 Nov

In an earlier post I mentioned the soon to be availability of “The Portland Bottom Line: Practices for Your Small Business from America’s Hotbed of Sustainability”.   Well, the book has arrived and I am more proud than ever to be a contributor to this publication.  The short 400 word essays by myself and over 50 contributors explores how small businesses can effectively and efficiently shift toward sustainability and thrive in a challenging economy. Contributors collectively chose, by vote, the local community organization Mercy Corps Northwest, which supports the launch and growth of sustainable ventures, to receive 100% of the profits from the book’s sales.

You can buy the book now on Lulu for $16.95 (paperback) or $6.95 (download).   www.portlandbottomline.com

My excerpt from the book can be found in Part 3- Prosperity and is included in its entirety below.  Enjoy, buy the book and make a contribution to the growth of sustainable enterprise!

A few years ago, I assisted a water utility in implementing a sustainability focused initiative based on the International Organization for Standardization (“ISO”) 14001-2004 Environmental Management System standard. Many public and private organizations operate in functional silos, often don’t coordinate well, communicate effectively or run efficiently. Creating a triple bottom line-focused organization requires that all parts work together—like organs of a living being. This utility was inefficient with taxpayer dollars and under intense public scrutiny to improve its operations. It was not healthy. Through the two-year journey with the [utility], I worked hard to know each of its parts, how they interacted, where the trouble spots were, and where good health was. The goal was to build a holistic, sustainable organization that capitalized on its best assets: the staff.

To be truly optimized and efficient, it was vital to shore up operational weaknesses. The program focused on new communication techniques, champion-building, public environmental awareness, and creating a culture of continuous change management. Public agencies are often stuck in a business-as- usual (“BAU”) mindset. The ISO 14001-2004 program and other internal performance turn-around initiatives required moving beyond the BAU mindset. Key steps and measures that contributed to the turnaround included the following spheres:

  • Environmental: Early establishment of cross-functional performance improvement teams that focused on key measurable indicators, e.g. energy efficiency, resource management, and waste reduction.
  • Operational: Collaborative fact-finding, problem resolution and decision-making around staff utilization and scheduling, resource optimization, asset management, emergency response, and predictive maintenance.
  • Social: Proactive external public education and awareness campaigns at city-run facilities to engage community support related to natural resource management and watershed conservation efforts; employee initiatives that encouraged buy-in and financial rewards for cost saving measures and led to a reduced environmental footprint.

The organization achieved its ISO 14001-2004 certification, garnered prestigious national awards, and saved the City over $100 million in 5 years. After the certification award, a 30-year veteran of the department approached me. He hadn’t believed in the programs value at the start—maybe because of his BAU approach, or maybe he didn’t like change. He said, “Dave, I want to thank you. You made us do something that we would not have done ourselves”. That is what cultural change is all about. For once, I was speechless.

The keys to the success of this sustainability program and others like it are: cross-functional collaboration and employee input (early and often), early stakeholder collaboration, and metrics. These ingredients alone will go a long way toward laying the foundation for long term success of your organization’s sustainability initiatives and going beyond business-as-usual.

Green Supply Chain Gets a Boost from ULE 880- Draft Sustainability Standard for Manufacturing Organizations

14 Sep

Today marked the end of the initial 45 day comment period for ULE 880 – Sustainability for Manufacturing Organizations. [NOTE: the comment period has been extended until September 21st]. This draft sustainability standard is the culmination of a partnership between UL Environment (ULE), a division of Underwriters Laboratories, and Greener World Media.  The standard for businesses and other organizations, focusing on their environmental and social performance, was designed “to create uniform and global metrics for customers, stakeholders and trading partners”, essentially ‘harmonizing’  the wide variety of standards, guidelines and specifications for driving sustainability in organizations.

According to the draft document preface, “Our vision is to create a uniform, globally applicable system for rating and certifying companies of all sizes and sectors on a spectrum of environmental and social performance characteristics. ULE 880 will fill a major void in being able to consistently understand and measure how, and how well, a company is doing in understanding, addressing, and communicating its environmental and social impacts. It will also provide a standardized mechanism that allows organizations and their stakeholders to factor companies’ environmental and social performance into their core decision-making processes, thereby elevating the importance of these issues within companies.”

At its core, ULE  880 is designed principally as a procurement tool, allowing companies,  public agencies, and institutional buyers to assess the performance of  their supply chains and trading partners. It is intended to complement  existing and future product procurement specifications throughout many layers of an organizations supply chain.

ULE 880 covers five domains of sustainability:

  • Sustainability Governance: how an organization leads and manages itself in relation to its stakeholders, including its employees, investors, regulatory authorities, customers, and the communities in which it operates
  • Environment: an organization’s environmental footprint across its policies, operations, products and services, including its resource use and emissions
  • Workplace: issues related to employee working conditions, organization culture, and effectiveness
  • Customers and Suppliers: issues related to an organization’s policies and practices on product safety, quality, pricing, and marketing as well as its supply chain policies and practices
  • Social and Community Engagement: an organization’s impacts on its community in the areas of social equity, ethical conduct, and human rights

The 60-plus page draft standard contains 102 questions (or “indicators”), including 18 in Governance, 45 in Environment, 15 in Workforce, 15 in Customers and Suppliers, and 9 in Social and Community Engagement. Each of the indicators has certain “weightings” and not all of them equally distributed.  The Environment, for instance covers 80 points, Governance and Customers/Suppliers 40 points each, and Workplace and Social/Community 20 points each. In addition, there are also 18 “Innovation Points” — 3 points each for 6 different indicators — that reward companies for going above and beyond the standard.

Sustainable Supply Chain Elements

Direct sustainable supply chain elements mentioned in Section 6.5.3 of the standard include requirements and related point allocations for:

  • Supply Chain Policy
  • Tier 1 and Tier 2 Supply Chain Inventory (why not Tier 3 or Tier 4?)
  • Supply Chain Monitoring and Assessment (not a great deal of detail in this element)
  • Supply Chain Reporting

Also, like other elements of the proposed standard, ‘Innovation Points’ are allocated for Training and Targeted Continual Improvement Metrics.  In addition to this specific clause of the standard, there are specific elements associated with Environmentally Preferable Purchasing and ‘greener’, more efficient transportation planning and logistics…all of which represent vital parts of the sustainable supply chain.

The ULE 880 standard offers promise to take sustainability to a whole new level e.g. organization based certification, and acknowledges that supply chain considerations are vital to a ‘sustainability-focused’ organization.  The next step for the standard will be a peer-reviewed response to the more than 600 commenters from over 30 countries that have requested and reviewed the document to date.  In coming phases, a small set of manufacturers will be engaged to pilot  the standard and the verification/certification delivery model, prior to wider release and market implementation. Stay tuned!

This post was originally published on my New Green Supply Chain Blog, which can be found at https://community.kinaxis.com/people/DRMeyer/blog

Saying is One Thing, Doing is Another: Implementing Sustainability Programs with Success

30 Jul

NOTE: You can read the entire guest column as it originally appears in Sustainable Business Oregon

If you have a tween or teen living under your roof, you’ll be able to relate to this: When I tell my daughter to clean up after herself, I can pretty much expect that it will not get done.

On the other hand, when I lead by example and help build a culture of cleanliness, this becomes self-gratifying and I get the critical mass I need to have a clean house — that makes my wife happy too.

If you work for a well-meaning company that talks a good sustainability talk but lacks on the execution, well, you may be able to relate too.

Getting to “Git ‘er Done.”

I have written about the foundational aspects of the triple bottom line and sustainability and the strategy of planning for it. But once the talking is done and the planning is complete, it’s time for the heavy lifting, time to “git ‘er done.”

It’s at this point that your staff might scurry for shelter like when the lights come on and the mice scramble to their hidey holes — unless you’ve already established a culture of change. It’s been proven time and again that when a company says that it’s going to implement a sustainability initiative, but lacks the cultural framework or inertia for stakeholder “buy in”, it’s less likely to succeed.

Why? First, in Bob Doppelt’s Overcoming the Seven Sustainability Blunders, organizational traps that can lead to implementation failures often stem from weaknesses in cross-organizational communication and empowerment. In this 2003 article, Mr. Doppelt (who is executive director of resource innovations with the Institute for Sustainable Environment at the University of Oregon) discusses the “Wheel of Change Toward Sustainability.”  This process shows how seven interventions can systematically deflect those blunders, and form a continuous reinforcing process of transformation toward sustainability. Communication, feedback loops and transparency are key elements to successful transformation.

Also, in William Blackburn’s indispensable Sustainability Handbook- The Complete Management Guide to Achieving Social, Economic and Environmental Responsibility, he points out three key elements needed to achieve the critical mass for sustainability program execution:

  • Deployment into the rank and file.
  • Integration with existing tools and resources.
  • Alignment across the entire organization.

These critical factors place organizations in a position where all parts are pulling together. While top management commitment is vital to the success of any organizational change, it will fail without proper execution.  The foundation for implementation success then rests first on selecting a “cross functional” team, consisting of one or more talented and motivated individuals from across all organizational departments. This team will be well versed in the system elements, mechanics and will essentially be the “champions” by which the system can be deployed.

The rest of the guest column appears in Sustainable Business Oregon

Choose the Right Flavor: Ice-Cream, Sustainability & Business Innovation

27 Jul

Do you like your ice cream soft served or hard scooped?   What is your favorite flavor?  Do you like it straight up or with sprinkles on top?

So I heard on a very hot day recently with the kids at the ice cream “shoppe”.  This made me dwell over how my clients view sustainability.  You see, while a great deal of change has occurred in business over the years, sustainability is to the uninitiated as flavorful as the worst ice creams ever invented (http://bit.ly/aIuKYD).  Ironic that most of those flavors originate in Japan, the home of Lean, Quality Management Systems, Six Sigma, The Toyota Way, and all things continual improvement. Oh, BTW, there really ARE plenty of tasty ice creams and gelatos that are sustainably made (locally sourced materials, organics, community based giving programs http://bit.ly/dfGiaC).

The “look” and “feel” of sustainability then, depends on the level of enlightenment that a company has, the desired “end state” and on the depth of its resources to execute the change (see Joel Makower’s recent post in Two Steps Forward http://bit.ly/aTbzVz ).  So it’s important to note that while the main focus these days is on the environmental part of sustainability (i.e. “green”), that’s not the whole story.  ‘Sustainability’ embraces the legal, financial, economic, industrial, social and behavioral aspects of organizations as well as the environment.

In a new open source book, The Sustainable Business, by Jonathan Scott (http://bit.ly/bGhyu6), he describes seven key elements and criteria needed for organizations to evolve and meet the truest definition of a sustainable organization (the 7-P application model).   Briefly, the 7-P’s of sustainability are:

  1. Preparation – setting the stage for change (both physically and psychologically) and understanding what the reformer is up against when trying to implement profitable, long-term business practices while accepting the breadth and depth of this subject (e.g.: the financial implications of sustainability and the fact that it is not about being independent).
  2. Preservation – encompasses two areas: internal (collecting and displaying real-time measurement) and external (keeping ahead of laws, pending legislation, trends, and developments).
  3. Processes – sustainable belief systems, philosophies, business models, and thought patterns that help match a business with customer demands, core capabilities, and best practices.
  4. People – accepting the importance of training and education and working diligently to avoid the wasting of people, specifically: employees (who seek security and motivation), stakeholders (who want a return on their investment), customers (who want safe, value-laden products), and the world community – including the two-thirds of humanity who are currently left out of the global economic loop (who desire jobs and inclusion) and who represent an economic force all their own.
  5. Place – the buildings and places where work is performed and/or products are sold.
  6. Product – ensuring that goods and services are free from unnecessary waste (‘non-product’) and toxins – and designed so that the materials, energy, and manpower that comprise them (and their packaging) are treated as investments and continuously reused.
  7. Production – the physical, mechanical, biological, and chemical processes used to transform raw materials into products or services – and transport them.

Building on his Scotts multi-dimensional perspective on sustainability program development, three principal objectives of a sustainable organization must, at a minimum:

  • Minimize Resource Consumption, and
  • Avoid Damage to the Environment, while
  • Meeting Business Goals, Human Needs and Stakeholder Aspirations

So how does one get to there?  One way is through a systematic framework like an ISO 14001-based Environmental Management System (EMS).  While ‘sustainability’ is a guiding principle to keep organizations on track as an EMS is executed, an EMS is the framework – a set of processes and tools for effective mission accomplishment.

Supposing as Scott and Makower suggest that an organization wants to go beyond the environmental leg of sustainability and include the social and financial aspects as well…all good!  However, without the resources to make the leap and a systematic process to keep on track, the outcomes could be disappointing.  So before you leap, plan ahead.  Build a system to plan, implement, measure and check progress of the initiative.  Look for the quick wins.  Build an innovation-based culture and reward positive outcomes.  Measure, manage, report and build on the early wins.  Build the initiative in manageable chunks.

In summary, the keys to unlocking value through implementing sustainability initiatives require positioning through:

  • Identifying marketplace trends that reward innovation toward sustainability
  • Optimizing the linkage between sustainability, environmental and business objectives
  • Creating a systematic process and  internal champions that can drive the system from the inside out
  • Establish a manageable performance measurement system that demonstrates ‘triple bottom line’ results
  • Building assurance systems for compliance and credible and transparent public disclosure.

Are you ready for that ice cream cone?   What’s your appetite?   Single or  double scoop?  Sprinkles on top?

A Green Supply Chain Starts with a Promise, But Needs Verification Too

26 May

In the past month, a number of large-scale products manufacturers (IBM, Ford, Intel, Proctor & Gamble, Puma) and service providers (Kaiser Permanente) have issued sustainability focused supply chain related announcements.  As noted by Green Advantages’ Andrew Winston, a common theme of each of these mandates focuses on “transparency” (http://bit.ly/a8Tjfq).  Also, new reports are emerging that companies are taking climate change programs to their respective supply bases (http://bit.ly/bbNCya) as means to support corporate responsibility reporting.

But, while a “Green Supply Chain” starts with a promise and a goal or two, what I have heard from many logistics and sustainability professionals that the hard work centers on actually requiring and monitoring supply chain compliance.  Most practitioners believe, as I do that sustainable sourcing and green supply chain effectiveness must include supplier monitoring and “verification” to truly be effective and sustainable.  This need was also underscored recently by reports out of China that many IT suppliers to major global electronics manufacturers were in “gross” violation of many of China’s environmental regulations (see China’s IT Poisons in the Huffington Post http://huff.to/a3mlcx).

That is why the mandates from IBM, Proctor & Gamble and Kaiser Permanente stand above the rest and offer great promise.  Each of these programs includes a verification element to supplier conformance.  In addition the IBM and Proctor & Gamble initiatives contain a component that rates individual vendors on the basis of maintaining a proactive environmental management system and other key environmental performance metrics important to each company.  This data in turn is rolled up to support company-specific corporate sustainability performance criteria.  Monitoring and verification through demonstrated performance metrics is strongly encouraged through implementation of proactive management systems (such as ISO 14001-2004 or other continual improvement based certifications).  This step assures that the information provided by suppliers is accurate (so as to not compromise what is reported and to avoid reputational risk in corporate social responsibility reporting).

There is no doubt in my mind that green supply chain management 1) improves logistics agility by helping company’s mitigate or leverage risks and speed innovations; 2) increases adaptability by fostering innovative processes and continuous improvements, and (most importantly) 3) promotes alignment, by creating a platform to negotiate policies between suppliers and customers, thus resulting in better alignment of business processes and principles.

Last month I spoke at the Aberdeen Research Group Supply Chain Summit in San Francisco (http://bit.ly/d7e856 )on strategic and tactical steps that companies can take to green their supply chain.  A key takeaway from many of the presentations at the conference was the critical importance and value of “collaboration” and optimized value chain management to leverage supply chain positioning.  These two elements are critical elements to successful supply chain “greening” as I recently noted (http://bit.ly/93C2Xp).  Three tactical tools that I discussed at the Aberdeen Summit include:

1) Prequalification of suppliers

  • Require/encourage environmental criteria for approved suppliers
  • Require/encourage suppliers to undertake independent environmental certification (ISO 14001)

2) Environmental requirements at the purchasing phase

  • Build environmental criteria into supplier contract specs
  • Incorporate 3BL staff on sourcing teams

3) Multi-tiered supply base environmental performance management

  • Supplier environmental questionnaires
  • On site supplier environmental audits and assessments

Finally in order to be successful in implementation of sustainable supply chain practices, it’s vital that suppliers are engaged early in the supply chain development process by : 1) working with industry peers to standardize requirements; 2) informing suppliers of corporate environmental concerns by issuing statements related to triple bottom line priorities to suppliers or distributing a comprehensive green supply chain management policy ; and 3) promotion of exchange of information and ideas through sponsored supplier events and mentoring programs.

I summed up my presentation (can be viewed here http://slidesha.re/9fY6mz) with a few key points, which I offer for your consideration:

  • Look for the win-win and make the business case, both internally and externally
  • Consider the holistic supply chain – engage your key suppliers that are most vital to your most important product
  • Consider all aspects of your business & innovate
  • Consider the Extended Enterprise both up and downstream of your organization (several tiers deep)

Perhaps most importantly, get started today and engage your supply chain to implement green practices.  Improving sustainability in the supply chain and implementing verification practices may be the key to pulling away from your competitors and establishing your company as sustainability-focused, “best-in-class”  leader.