Building the Green Supply Chain

Going green can drive environmental and bottom-line benefits at the same time, but it takes an organizational culture change and a long-term perspective


Public pressure clearly is playing a greater role in pushing companies toward meeting broader social obligations as well. In a recent survey by consulting firm McKinsey & Co. of 391 CEOs at companies around the globe, 95 percent of the respondents acknowledged that society has higher expectations for how companies will meet "public responsibilities" than five years ago, and more than half said that those expectations will rise in the next five years. "Many of the CEOs we interviewed observed that satisfying the shareholders is no longer good enough: consumers will punish companies that don't fulfill their public responsibilities, causing their market shares to decline," write Debby Bielak, Sheila M.J. Bonini and Jeremy M. Oppenheim in an article about the survey for the October 2007 issue of The McKinsey Quarterly.

Building a Culture of Green

This grassroots pressure, in turn, is prompting companies to start looking at the environmental impact of their supply chains and how they can start pushing green upstream to their suppliers. Mega-retailer Wal-Mart, for example, recently announced that it would start measuring the energy used to create products in its supply chain under a partnership with the Carbon Disclosure Project. Schneider National works with its tractor supplier on ways to improve the insulating capabilities of the tractor and to integrate new cab-cooling technologies. These projects will help Schneider National meet its own objectives for reducing the use of air conditioning in its tractors in the summertime. "We work very closely with them as we test components or different products to let them know how we think those products are stacking up, and we provide testing for some of their new products to validate the savings, too," Damman explains.

Yet while the drive toward a greener supply chain appears to be gaining momentum, the companies that are actually making steps in this direction remain in the minority. So while 59 percent of the CEOs in the McKinsey survey said they believed that their companies ought to incorporate environmental, social and governance considerations into how they manage their supply chains, only 27 percent said they currently do so. The primary obstacle, as the CEOs saw it, was the difficulty in changing practices at their companies' suppliers.

But executives working around green supply chain issues suggest that the place to start a green initiative is inside the four walls of the enterprise. One of these executives, Mark Buckley, vice president of environmental affairs at Staples, the Framingham, Mass.-based office products retailer, says that the way to incorporate green into the supply chain is to first integrate green values into the broader culture of a company. Buckley's company has adopted a set of internal business guidelines dubbed Staples Soul, focused on diversity, commitment to the local community, business ethics and the environment. "The whole idea of Staples Soul is that it speaks to the culture of our business," says Buckley, who has been with the company for 17 years, the past five in his current position. "We're trying to embed this idea of sustainability into the way that we operate our business at every level and across every division of the company."

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