December 5, 2013 1 Comment
Alexis Hickman Bateman is a Postdoctoral Associate, MIT CTL, firstname.lastname@example.org.
Whether it is a risk management precaution, an eco-efficiency cost savings approach, or a genuine belief in the need to increase corporate commitment to green initiatives, companies are paying more attention to improving the environmental performance of their supply chains.
But where do they start? And what matters the most in this highly nebulous space of sustainability?
On November 21st, 2013, a group came together at an MIT CTL roundtable to address issues like these, and talk about related opportunities, barriers, and complexities. Twenty-six participants from 16 different companies and MIT researchers attended the event. The discussions were centered on five topic sessions: metrics, partnerships, transparency, innovation, and scaling environmentally sustainable supply chains.
The event highlighted a number of great opportunities to improve performance, as well as the trials and tribulations of working in the sustainability area.
One of the challenges that came under the microscope was how to set appropriate goals, collect the right metrics to measure progress against those goals, and report progress to customers and the public. A hot topic that emerged during the metrics discussion was whether sustainability metrics are linked with job performance. The attending companies were split 50/50 on this issue.
Many enterprises live in fear of their practices being attacked publically by NGOs or external stakeholders. However, there was an active discussion on the role of NGOs and consortia in providing both expertise and dialogue forums around practices to increase environmental sustainability in supply chains. A few companies have strategies for choosing partners, while many called these collaborations a “leap of faith.” Others dismissed such partnerships as a waste of time and money. The overall sentiment was the need to strategically select partners that are aligned with the overall company mission.
Companies increasingly need greater supply chain visibility to understand environmental impacts and risks, and to protect themselves and improve their environmental standing. Many enterprises at the event have good visibility into tier 1 suppliers, but very limited contact or knowledge when it comes to tier 2, 3 or deeper suppliers. While some companies are mapping their operations voluntarily, impending regulatory requirements such as conflict minerals tracing measures in the Dodd-Frank Act, are forcing enterprises to establish more transparency in their supply chains. This class of regulation encourages companies to better understand the depth of their supply chains beyond conflict minerals.
There were exciting discussions about innovative approaches to moving the needle on environmental sustainability. For example, a consumer products manufacturer has actually opened up its IP on an innovation in order to promote wider adoption, increase economies of scale, and reduce the price. Conversations around the innovation topic included the move towards radical transparency and intra-industry sharing of methodologies, and the embedding of environmental sustainability in product design and across the supply chain.
The day concluded with a discussion on how to best scale initiatives across large, multi-national companies. Many organizations are stuck at transitioning from nuts and bolts compliance of environmental regulation to fostering support for these efforts through measuring incremental improvement. Of the numerous ideas that emerged throughout the day, some concluding thoughts included the need to have top management support, build internal expertise, engage the right external partners, and develop a supportive corporate culture.
The frank exchange of ideas was highly valuable for all attendees. And there is clearly a need for more forums of this kind. One of the attendees plans to make such discussions a regular part of corporate gatherings. Another participant commented: “It’s not very common that this many powerful individuals from major companies come together to have a discussion about environmental sustainability.”