How businesses are greening their supply chains
From the farmers who harvest raw materials to the trucks that transport finished goods, a company’s suppliers have a great impact on the environment and society. Companies, consumers and other stakeholders increasingly demand that every link in the supply chain should adhere to the highest environmental and social standards.
How can this be accomplished? What are companies doing to improve sustainability in their sourcing and supply chains? At the Women’s Forum Global Meeting 2017 in Paris, business leaders offered some examples.
· Setting company policy on suppliers. Apple, for example, aims to help its suppliers transition to 100% clean energy in the next few years.
· Requiring a suppliers’ code of conduct. Many companies ask suppliers to sign an agreement on sustainable practices, and also provide training on these issues.
· Monitoring and conducting audits. Monitoring and audits help ensure that suppliers’ agreements are respected. PepsiCo, for example, conducted almost 800 audits in 68 countries last year, followed by action plans with timelines to correct any failings.
· Working with suppliers all the way down the chain. Some companies are able to address sustainability even at the bottom of the supply chain. L’Oréal, for instance, works with suppliers of shea butter in Burkina Faso and argan oil in Morocco to improve agricultural methods and production processes.
· Forming partnerships. Often it is more efficient for a company to team up with academics and NGOs on the ground to find solutions to environmental issues among suppliers. Diageo, for instance, has teamed up with Care International, and PepsiCo has worked with Cambridge University academics to increase water efficiency among UK potato farmers.
Supply chains, however, are often global and extremely complex. Direct suppliers may subcontract or outsource to other suppliers or to individuals — often women — in their homes. Supply chains in the fashion industry are notoriously difficult to monitor. “Most consumers don’t realize that a full half of the clothes we are all wearing are not actually fully made in regulated factories,” said Rebecca van Bergen, founder and executive director of Nest, which advocates for artisans around the world. “They are subcontracted legally or illegally to women in their homes.”
Fashion leaders and industry watchdogs are increasingly aware that fashion companies, like those in other industries, must ensure that suppliers respect social and
environmental standards. Achieving sustainability in fashion is critical: “Fashion is the world’s second-largest polluting industry, after oil and gas,” said Marie-Claire Daveu, Chief Sustainability Officer of Kering.
This story is drawn from sessions at the 2017 Women’s Forum Global Meeting.