Tag Archives: ISO

Comparing U.S. and U.K. Government Approaches to Green Procurement & Supply Chain Management- Which is Better?

21 Nov

Two news items caught my eye this week, not only for what they were attempting to achieve but for the (possibly?) vastly different approaches being taken.  Two governments- one the U.S, the other the U.K.  Both governments have been progressively stepping up efforts to engage federal contractors and vendors to support government green spending efforts, but by different approaches.  First let’s start stateside.

Last week’s GreenGov conference in Chicago generated a lot of buzz.  One notable outcome was the creation by the White House Council on Environmental Quality and US General Services Administration-led effort called the GreenGov Supply Chain Partnership and Small Business Pilot.  The primary goal of this voluntary collaboration between the federal government and its suppliers to enhance the federal governments compliance with Executive Order 13514 by creating frameworks for a greener, more efficient supply chain.  One primary goal of EO 13514 “to establish an integrated strategy towards sustainability in the Federal Government and to make reduction of greenhouse gas emissions (GHG) a priority for Federal agencies.”  The EO goes beyond just focusing on reduction of greenhouse gas emissions though, encouraging suppliers and vendors to take a proactive approach to environmental management (even going so far as encouraging voluntary certification to standards such as ISO 14001)

According to Council on Environmental Quality Chair Nancy Sutley, “The Federal Government purchases $500 billion in goods and services annually, so you could say the Federal supply chain represents an enormous opportunity to support a clean energy economy.  Through our new GreenGov Supply Chain Partnership, Federal suppliers can agree to voluntarily measure, reduce, and report their greenhouse gas emissions to help GSA design an incentive-based approach to developing contracting advantages for companies that share our sustainability goals.  We’ve already partnered with 60 small businesses for a pilot program that will explore the benefits and challenges of measuring greenhouse gas emissions for small business participants.”

Participating companies will share their experiences to help GSA develop a phased, incentive-based approach to developing contracting advantages to companies that track and disclose their greenhouse gas emissions.  Small Business Pilot Program participants will receive technical assistance through GSA to measure, report and reduce their greenhouse gas emissions as a part of the effort. More information on the GreenGov program is available at www.whitehouse.gov/greengov.

Meanwhile, “across the pond” (I love saying that), the British government recently made a similar announcement, but the tactics are quite different.  In October, the Department for Environment, Food and Rural Affairs (DEFRA) published its “Action Plan for Driving Sustainable Operations and Procurement Across Government”. In this document they state that  “The Government is committed to becoming the ‘greenest ever’ and will lead by example in its operations and procurement”. This  is a sweeping program to green government (very much like the US. plan,  but going well beyond greenhouse gas emissions reduction).  In planning to achieve these goals, DEFRA has established “Government Buying Standards”.  The Suppliers guide provides detailed standards and best approaches to sell goods and services to DEFRA .  Other agencies in the British government have developed similar standards as well.  In  each case, robust approaches haven been developed to engage suppliers,  educate them on environmentally and socially responsible practices.  But thanks to information provided to me on a chance Twitter encounter with fellow Twitterer @garethkane,  many U.K. agencies are now scoring suppliers and giving them points (as  much as a 10% edge) for enhanced green practices as part of the tender  process.

Whereas the U.S. GSA approach on the surface appears collaborative and designed to create a robust procurement process, the downside in my view is that progress will be slow (I view this as the “carrot” approach).    The U.K. approach is more of the “stick”.  In both cases, transparency and collaboration are keys to success.  But I cautiously view the GSA approach as somewhat unnecessary and it does little more than slow down the inevitable.  As GSA says, it wants “design an incentive-based approach to developing contracting advantages”- OK, then do it, just like the British government did.  And while I like the small business “pilot”, is it really necessary to make efforts “voluntary” for larger businesses?

Perhaps the U.K has been at this a while longer, though I doubt it.  Greening of the U.S. government has been in slow motion (almost glacial) progress since President Clinton signed Executive Order 13123 in 1999.  What are your thoughts?  Are you in favor of the carrot or the stick?  As I recently said, private industry needs to stop procrastinating on green supply chain management or risk losing customers.  Why delay the inevitable so you can get it just right.  Perhaps my message to the GSA and U.S. policy makers is to also stop procrastinating and (as they say in Texas) “git ‘er done”.

ISO 26000 Social Responsibility Guidance May Offer Supply Chain Opportunities to Small-Mid Sized Manufacturing

4 Nov

Amid the pre- and post-election haze here in the U.S and the taking of the World Series by the San Francisco Giants (first since 1954), comes ISO 26000, Guidance on Social Responsibility. This guidance document from the International Organization for Standardization (ISO) integrates international expertise on social responsibility (SR), detailing what it means, what issues organizations need to address to operate in a socially responsible manner, and what the best practices are for implementing SR effectively and efficiently. ISO 26000 is designed to assist public and private organizations, and Small to Mid-sized Enterprises (SME) in particular by establishing common guidance on social responsibility concepts, definitions,and methods of evaluation.

The core areas of ISO 26000 (see Figure 1, courtesy of http://www.desarrollohumanosostenible.org) address potentially contentious and volatile issues such as human rights, labor practices, the environment, fair operating practices, consumer issues, and community involvement and development.   According to the ISO, ISO 26000 provides guidance for all types of organization, regardless of their size or location, on:

  1. Concepts, terms and definitions related to social responsibility
  2. Background, trends and characteristics of social responsibility
  3. Principles and practices relating to social responsibility
  4. Core subjects and issues of social responsibility
  5. Integrating, implementing and promoting socially responsible behavior throughout the organization and, through its policies and practices, within its sphere of influence
  6. Identifying and engaging with stakeholders
  7. Communicating commitments, performance and other information related to social responsibility.

ISO 26000 is unique, not because it’s taken six years to get it finalized. It’s mainly because it’s a “guidance” and not a certification standard like the more well-known ISO 9001 quality management and 14001 environmental management standards.  That may be part of its weakness.  Most skeptics believe that ISO 26000 will not be the “magic bullet” which suddenly replaces all corporate social responsibility (CSR) initiatives in the Supply Chain. While the guidance is not a certifiable standard, it attempts to harmonize itself with UN Global Compact guidelines for ethical business practices and a number of existing practices, principles and guidelines devoted to social responsibility, like the Global Reporting Initiative (see recent crosswalk). Other recent studies (admittedly a very small survey group of less than 60 entities) by the International Institute for Sustainable Development (IISD) prior to the final release established that ISO 26000 may increase awareness, provide definitions and add legitimacy to the social responsibility debate.  However, as stand-alone guidance, ISO 26000 may not contain the practical guidance to enable SMEs to turn theory in practice.

Another recent post by Business for Social Responsibility, entitled ISO 26000 Approved for Publication. Now What?while not holding out great hopes for ISO 26000 stated that the guidance:  “… has the potential to increase the adoption of responsible business practices by all types and sizes of organization around the world—not just corporate entities. In bringing social responsibility to all entities, it may be a useful guide for engaging your supply chain in social responsibility issues. ISO 26000 can provide a first point of call for companies to understand the concepts and implementation tools for a social responsibility program, such as advocating stakeholder engagement and issues assessment methods to define priorities.”

In fact, doing a cursory review of the Final Draft International Standard published in July found many references to supply chain management issues, especially in the areas of “environment” and “fair operating practices”.  I believe that innovative,leading SME’s can successfully apply some of these guidance materials in a productive and cost effective manner.  Doing so begins to institutionalize “triple bottom line” thinking into their supply chain practices.

Turning Theory into Practice- Tips for Supply Chain Integration

Environment

  1. Practice life-cycle management – consider all the steps of a manufacturing process, and all the links in the supply chain and value chain right to the end of a product’s life and how it is disposed of;
  2. Seek way to integrate sustainable resource use and management to make manufacturing steps as environmentally friendly as possible (especially with regard to electricity, fuels, raw and processed materials, land and water);
  3. Test innovative technologies as a way to reduce the product environmental footprint

Fair Operating Practices

Promote social responsibility throughout the supply chain; and stimulate demand for socially responsible goods and services:

  1. In procurement and purchasing decisions, use criteria that select ethically and socially responsible products and companies;
  2. Examine your value chain/supply chain and be sure that you are paying enough to enable your suppliers to fulfill their own responsibilities;
  3. Promote broader adoption of social responsibility through networks of manufacturing associations and business sector colleagues;
  4. Seek business to business and peer network support to collaboratively develop best methods and approaches, leverage resources and document benefits
  5. Treat suppliers and customers/consumers fairly and equitably.

Like my recent posts discussing the supply chain benefits of two other draft sustainability and green product specification standards (ULE 880 and GS-C1), large to small organizations can strive to be ISO 26000-compliant, stay ahead of the curve and grab the “leader” advantage.  Or conversely, companies can risk being a “laggard” and lose vital business opportunities.

Large corporations are realizing the importance accountability, transparency, ethical conduct, and respect for stakeholders’ interests, human rights, rule of law, and international norms of behavior in managing internal and external stakeholder expectations.  Why not apply the same principles wholistically through ones supply/value chain at the SME level?

If you are an owner/operator of a SME, think about your values and principles of operation.  Believe me when I say that doing good can also mean doing well.

Using Sustainability Metrics to Drive Business Performance, Innovation and Stakeholder Satisfaction

12 Jul

Environmental metrics were not much of an issue when I started as a young environmental coordinator at a Utah coal mine 30 years ago. The few environmental metrics I used were mainly driven by regulatory-agency permits, inspections and audits.  How many spill occurred this month?  How many fines did we get this quarter?  Did we exceed waste water discharge requirements? Our entire environmental compliance philosophy was driven by permit limits, rules and regulations.  My company was actually more concerned about environmental pollution and managing impacts of operations on the environment than most companies in a large western state at that time.   But at that time, there was a major disconnect between environmental performance and business performance. Environmental protection was seen by management as a cost “sink”, and not as an integral part of conducting business. Metrics weren’t designed to optimize our environmental performance or to understand the long-term impacts of our decisions on either our business or the environment. All decisions were made within a limited point of view.

Like the mining company I worked for, and like most businesses today, it’s clear that the ship has turned.  Companies are looking strategically at how environmental performance can have a direct impact on the bottom line of an organization.  Some are even taking a top-line approach to business success by accounting for social, natural and financial capital (http://bit.ly/93VBWG). Drivers such as globalization of markets, customer and shareholder preferences, regulatory pressures and business process re-engineering can claim a role in this sea change of decision-making.  This approach has fundamentally changed the way companies operate, design, manufacture, and distribute products.

Why Measure Anyway?

Well, the two old axioms state that “you are what you measure” and “what gets measured gets managed”.  Without a way to establish an internal benchmark for continual improvement, it becomes harder to innovate, advance and proactively respond to stakeholder expectations.  Key advantages to monitor and measure environmental and organizational performance include:

  • Setting Effective and Value-Added Priorities
  • Benchmarking to Continuously Improve
  • Encouragement of Bottom Up, Organization-wide Innovation
  • Reinforcing Personal and Organizational Accountability
  • Strengthening Strategic Planning and Goal-Setting Processes
  • Improved Internal and External Communication

Metrics can do one of two things: They can tell you what you should do, or they can tell you what you should have done. If you use them to tell you what to do, you’ll be using them to measure your successes. But if you use them to tell you what you should have done, you’ll be using them to measure your failures. So clearly it’s the first approach, not the latter, that forward-thinking companies should focus on.

The Advent of Verification and Triple Bottom Line Focused Metrics

In the not too distant past, as I noted above, environmental performance was primarily based upon a company’s compliance with local, state or federal permits and environmental regulations. With the advent of the ISO 14001-2004 Standard and Specification and its companion guidelines over the past 15 years, companies are taking a broader look at the ways they measure environmental performance (http://www.iso.org/iso/iso_14000_essentials). In addition, the ISO 14031 Guidelines on Environmental Performance Evaluation provide for establishment of measurable and verifiable environmental performance indicators (EPIs) appropriate to any public or private enterprise.

Many of the potential benefits from linking environmental and economic performance depend on the ability to integrate environmental management practices into the normal course of a company’s operations.  The ability to quantify environmental performance in a meaningful way is critical to the effectiveness of this integration.

Adding to the mix of the benchmarks for environmental indicators are the Global Reporting Initiative (GRI)  (http://www.globalreporting.org), Global Environmental Management Initiative (GEMI) http://www.gemi.org) and the World Business Council for Sustainable Development (WBSCD) guidelines (www.wbscd.org).  Each of these measurements and reporting frameworks provide for reporting on the sustainability-economic, environmental, and social – dimensions of an organizations activities, products, and services.  More recently, Joel Makower (@makower) and the staff at GreenBiz.com (@GreenBiz) have been engaged with UL Environment to develop and commercialize a company-level standard for sustainability. This latest effort is being initiated in an attempt to harmonize all three of the above approaches and dozens of others into one global, measurable and verifiable third-party standard for sustainability (http://bit.ly/ajHxKy).

What to Measure and How to Frame the Message

Do your performance metrics have you tied up in knots?  Once organizations decide they have to do more measuring then the key question becomes: What do we measure and how do we measure it?  A few tips:

  1. Measure things that add value to organizational decisions. Measuring for the sake of measuring is a waste of time.
  2. Think about ways to measure things differently that your competitors.  Novel and unique metrics are just as important to differentiating you as your products.
  3. Measure at a minimum the same way others around the world were measuring, as this assures that globally focused metrics are harmonized.
  4. If you are a large company with multiple department, divisions or sites, the metrics of the individual parts must be able to be “rolled up” in a way that addresses the entire organization but still meets site or department specific needs.

When establishing appropriate measures (whether they are social, environmental, operational or financial), consider that metrics must be:

  • Representative
  • Understandable
  • Relevant
  • Comparative
  • Quantifiable
  • Time-based and Normalized
  • Unbiased and Validated
  • Transferable

Also, make sure that the metrics address the needs of all internal and external stakeholders in other words, your employees, customers, local community, government and shareholders.

Finally, good metrics if applied properly will foster innovation and growth.  Focus on continuous improvement as the primary driver for monitoring and measuring performance. If metrics don’t add value, they will not support continuous improvement and eventually will not be used.

Summary

Many of today’s environmental metrics evolved from the end-of-pipe command-and-control regulatory approach that has been implemented in a piecemeal fashion over the past 30 years since I joined the environmental profession. Why let regulatory agencies drive the key performance metrics that in turn drive business performance?  While compliance is a key benchmark for environmental performance, don’t stop there!

In this highly competitive, quickly changing and unstable business climate, organizational success requires agility.  Success also depends on having the correct set of metrics in place to gauge progress in meeting short and long-term business objectives.  Measuring performance with a sustainability lens is just one of the new responsibilities that companies can quickly embrace to nimbly drive organizational value.