Sustainability and green initiatives are being pushed in supply chains, but are they aggressive enough?
A 2012 North Carolina State University report noted key sustainability issues in the electronics industry.
Fueled by growing demands in both mature and emerging markets, electronics are in high demand. This demand coupled with intense competition for the lowest price creates many challenges for companies as they outsource and offshore to chase profits and supply. Couple this with ever shortening product life cycles and sustainability begins to become even more critical for this industry.
Major steps in a corporate sustainability practice include:
- Establishing a sound and credible foundation within the company for sustainability
- Training sustainability into corporate culture
- Communicating with all stakeholders (the board, investors, customers, suppliers, regulators, etc.) about your sustainability practices
- Setting sustainability metrics and goals
- Working with your supplier base and manufacturing processes
- Creating end of life disposal alternatives for electronic components and devices
The results have been mixed. At some companies, sustainability managers are appointed but given short shrift when budgets are decided or when corporate priorities take shape. These organizations make slow progress in sustainability, but they justify this slow progress by citing a need to manage budgets carefully in a margin-sensitive business. In other cases, companies pursue sustainability aggressively, because not doing so creates brand and reputation risks they do not want.
In 2013, for instance, Apple conducted a sustainability compliance audit. It uncovered 147 facilities that were not properly storing or handling chemicals, 85 establishments did not compliantly label hazardous chemicals, and 106 suppliers that were not properly disposing of hazardous waste. Thirty-five companies in its supply chain did not efficiently manage and prevent stormwater contamination, while 96 facilities did not sufficiently monitor and control air emissions. This occurred despite Apple requiring suppliers to treat emissions, conduct regular inspections, maintain total legal compliance, and identify avenues of emission reduction.
The Apple case is well taken, because managing multiple tiers of suppliers in extended supply chains is extremely challenging.
To address the issue, the North Carolina State report says, Nokia “reports so much more about their operations than what is required by regulation.” It issues annual reports for the Global Reporting Initiative, the Carbon Disclosure Project, the Global Sustainability Initiative, and UN Global Impact. The reports are independently audited. Just as significantly, Nokia has worked with its supplier base; now 66% of its suppliers publish similar reports.
Intel's Design for the Environment principles strive to minimize environmental impact of products at all phases of the product lifecycle — from development, production, and use to ultimate disposal. Since 2008, Intel has linked a portion of every employee's compensation to the achievement of environmental sustainability metrics.
IBM has pursued product redesign concepts, best practices for sourcing the right raw materials, new ways to configure manufacturing so less energy and water is used, more efficient inventory management, partnerships with suppliers that understand supply chain social responsibility practices that include sustainability, and shrink packaging that requires less energy to produce or recycle. In one year, according to its website, the IBM packing team eliminated 2,277 metric tons of waste and saved $16.1 million by doing things like using air-filled dunnage to reduce package weight.
More progress is needed, but it appears that the electronics industry is making sustainability inroads — and it can't come too soon.
“Consumers increasingly want innovative, eco-friendly products, and our industry is really delivering,” Gary Shapiro, president and CEO of the Consumer Electronics Association, said in a press release on its 2013 sustainability report. “Leveraging the brightest minds in our industry and working collaboratively with a broad range of stakeholders, CEA and our industry partners continue to launch initiatives and forge partnerships that provide innovative and sustainable solutions for consumers, communities and our planet.”
Let us know in the comments section what your company is doing or should be doing in this area.
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