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How full product transparency will revitalise managing sustainability in the supply chain

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How full product transparency will revitalise the bureaucratic approach to managing sustainability in the supply chain

The conventional approach to exercising corporate responsibility in a company’s supply chain is to draft a company supplier standard and then audit for compliance using that document. The process often begins with a questionnaire and is followed by audit visits to suppliers judged to be the highest risk. The better programmes also include an offer of ‘capacity building’ for suppliers – in other words, they provide training and support to help them raise and maintain their standards.

Positive and usually well-intentioned as this course of action is, the impact is inherently limited by the narrow scope of the dialogue and the teacher–student nature of the relationship. It might work well when addressing very problematic issues (such as child labour), but telling suppliers what they shouldn’t be doing misses an opportunity to foster their talent for commercial advantage and innovation.

The flaws of the 700-question supply chain questionnaire

The questions below are from a real example of a supplier questionnaire I was asked to fill in by a corporate customer. Let’s look at how little each question actually drives real environmental performance:

1. Does your organisation have an environmental policy in place?

Any company can write up a policy in a couple of hours, but this doesn’t mean the policy is being implemented or monitored. Policies by themselves don’t drive performance, so the creation of an environmental policy will not necessarily have any impact on the products you are buying from your suppliers. For non-sophisticated audiences, it looks so good to say that 80% of your suppliers have an environmental policy. But in reality it means next to nothing.

2. Does your organisation have an environmental management system (EMS) in place?

ISO 14001 and EMAS are management systems, not performance systems. They just require an organisation to have a policy, comply with legislation, determine its impacts, and have targets. There is no link with performance. The other issue is the scope of these management systems. In general, they have a purely internal focus – they don’t include the raw materials used to make products, nor do they look at the use phase impacts of those products. If your suppliers have an EMS in place, this provides little assurance that the products they are supplying have less impact on the environment than any others.

3. Has your organisation identified the specific environmental impacts associated with the products, services or works it provides and taken steps to minimise them?

The supplier can just answer ‘Yes, we have identified them’. But how do you know that the issues it has identified are the biggest and most important ones? The supplier can also respond with any amount of corporate spin – cherry-picking some initiatives from the fringes and thereby allowing itself to look good.

4. Does your organisation observe legislation with regards to environmental issues?

Shouldn’t this be taken for granted?

5. Does your organisation communicate its environmental policy to its suppliers?

What demonstrable impact can be gained from sending a piece of paper full of generalities to suppliers? It would be far better to ask suppliers for radical innovations on the issues you want to improve.

6. Does your organisation check the environmental policy and performance of its staff?

Even if your supplier does this, how much of a difference will it have on the products you are buying?

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6 comments

  1. May 17, 2013
    Hugo Skoppek said...

    I could not agree more. Having worked in certification myself for a good part of my career, some of the questions being asked do not make sense, let alone the answer they conjure up.
    Out of curiosity, I would love to see the other 694 questions (don’t worry, your comments are not necessary, I can fill in the blanks based on my own experience).

    • May 21, 2013
      Ramon Arratia said...

      Thanks Hugo. If I find them will post.

  2. May 20, 2013
    Monaem said...

    Ramon keep on this direction. You are seriously and officially cutting the fluff. I couldn’t agree more with all of what you said.

    • May 21, 2013
      Ramon Arratia said...

      Very kind. Thank you Monaem.

  3. May 28, 2013
    Dave Meyer said...

    While I agree in principle with Mr. Arratia’s point that many supplier questionnaires miss the boat in driving supply chain sustainability, I take exception to his points on the efficacy of ISO 14001 and other management systems in driving performance. As “continual improvement” is the central tenet in any management system, the ISO 14001 standard specifies that organizations develop reasonably achievable and meaningful objectives and targets to reduce their environmental impacts to their organizations.

    A 2001 U.S. study of 316 facilities in the electronics industry found that ISO facilities had reduced their toxic emissions below TRI (Toxics Release Inventory) reporting thresholds more often than had their non-certified peers. Having an EMS was a significant predictor of improved environmental performance regarding toxic emissions,

    A 2002 survey of Fortune 500 firms found that having an EMS led to lower toxic emissions per unit output, especially for firms that had high pollution intensity before adopting the EMS.

    In my 20 plus years in advising organizations on ISO and TQM initiatives, I have found that their efforts in engaging their external, key suppliers and critical environmental vendors has yielded measurable results, from fuel and water savings, waste and chemical reduction, among others.

    I will admit that many study results looking at improved performance of ISO certified organizations across different industries has been mixed. However, most organizations that put the time and effort into getting the most out of these initiatives have seen marked improvements both culturally and technically within AND outside their organizations.

    • May 30, 2013
      Ramon Arratia said...

      Hi Dave, you can always find ways relationships between companies that have ISO14001 and progress. The question is by how much. The TRI has been driven by legislation. And transparency played a key role. Just the facts that companies had to report publicly the TRI, forced many companies to reduce them because of reputation. Transparency by itself has much more power than having a system that its not focused on performance.

      My background is Quality and envrionmental management (9001, 14001) and I have been frustrated with the lack of progress. Companies should focus on redesigning their products looking at entire lifecycle impacts. That’s another flaw of ISO14001. Most impacts are outside company boundaries. In our case, around 70% is in the supply chain. LCA/EPDs much more transformative method.

      And how you differentiate between two companies both with ISO14001? Better to focus on products and compare apples with apples. For example in our industry (carpet) kgCo2/m2 is the magic metric

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