When Walmart jumps, the retail world shakes. So when Walmart says it’s going to work with its suppliers to cut 20m tonnes of emissions from its supply chain, is it too far to say it’s a leap in the sustainability revolution?

While Copenhagen stuttered and drew plenty of ire from an exasperated media, these types of announcements represent the best opportunity for progress on any meaningful scale at the moment. And while many sensible and effective schemes might fly under the public radar, the success and the influence of statements like this are key to driving the agenda forward.

Consider the potential. According to the Financial Times:

“Walmart estimated the direct footprint of its global store operations in 2008 at about 21m tonnes of carbon dioxide equivalent, and the total has continued to rise as it continues to expand its stores. Its footprint is forecast to grow by more than 10m additional tonnes over the next five years even as it pursues its new supply chain goals.”

Removing the proposed amount is roughly equivalent of taking 3.8 million cars off the road for a year, according to the energy collective. But that doesn’t begin to factor in the influence that Walmart has on retail business in general – imagine the figures if its global competitors followed suit.

USA Today’s Greenhouse blog presents a necessarily tempered view. It quotes Elizabeth Strucken of the Environmental Defense Fund which is working with Walmart to help its suppliers reduce both emissions and costs: “Is Walmart moving the earth? No, not yet,” she says.

There is, as you might expect when a global company announces just about anything, plenty of harsher criticism to be found. One of the biggest sticking points with sceptics is that by placing the emphasis on the suppliers, Walmart is deflecting away from its own responsibilities.

Now, here at Procurement Leaders, we’ve been as cynical as the rest at times, especially with regard to Walmart. We’ve also seen a lot of sustainability initiatives being done right. And they do have an impact.

Walmart, and the trend of globalisation, isn’t showing signs of going anywhere and international governance isn’t yet up to the task. So, saying that it’s a deflective measure simply will not do – taking these targets to the supply chain, in the instance where the weight is very much with the buyer, forces the issue.

There are plenty of reasons to keep a close eye on Walmart’s CSR policies – not least its continuing hunger for growth and the sustainability issues that will entail. But this is one where pragmatism should prevail: leveraging companies’ purchasing power to drive down emissions should be one of the big tools for the green movement.

Scepticism is well and good and will be crucial going forward. But seeing this as greenwashing alone, is simply not being realistic about the importance of being aggressive in managing supply chain emissions.

What we have here is the blueprint for a drastic change.

Unilever has dumped another major palm oil supplier in a move that could cause a further split with the industry body charged with cleaning up the commodity’s reputation on the global stage.

According to an Indonesian industry official, the consumer goods giant has instructed dealers not to source palm oil from Duta Palma, after a BBC documentary uncovered damning footage of the company clearing tracts of rainforest for its oil palm estates.

The move is a further blow to the Indonesia’s highly lucrative, yet often controversial, palm oil industry.

As reported by Sustainable Sourcing, Unilever pulled the plug on a $33m supply contract with the country’s leading palm oil producer PT Smart, at the tailend of 2009, following an independent audit of all its palm oil suppliers.

And its latest decision could have serious repercussions for the Roundtable on Sustainable Palm Oil (RSPO), of which both Unilever and Duta Palma are members.

“It creates a lot of suspicion between the two groups,” said an unnamed RSPO official in Malaysia. “But it highlights the difficulty of trying to stay green, especially when the Indonesian government is handing out concessions to develop oil palms.”

It also creates a potential supply crisis for Unilever, which uses as much as 1.3m metric tons of palm oil each year and has pledged to source 100% of its palm oil from sustainable plantations by 2015.

The Principles and Criteria for sustainable palm oil production, were ratified by the RSPO in November 2007 – but have been dogged by a mixture of in-fighting and heel-dragging ever since.

In November, Kenneth Richter, a biofuels campaigner for Friends of the Earth, claimed that attempts by the RSPO to finally address emissions arising from the clearing of land for palm oil plantations had been “frustrated by roundtable members representing Indonesian and Malaysian palm oil growers”.

Two of Holland’s largest companies have announced plans to link bonuses to sustainability in a move that looks set to shake-up remuneration packages in senior management circles.

Dutch life sciences giant DSM, and postal operator TNT, have unveiled schemes similar to those at a number of other companies based in the Netherlands, as Dutch firms look to put a price on environmental and ethical progress.

This kind of incentive scheme was pioneered by Akzo Nobel which based its long-term bonus payment structure according to its position in the Dow Jones sustainability index for chemical companies.

Now, after the Dutch paint company changed the landscape of sustainability bonuses, DSM and TNT staff look set to cash in.

And according to the chief executive of Royal Dutch Shell – another company to have embraced a similar system – it’s a process that has won widespread support, from the staff themselves through to shareholders.

“There is a risk if rewarding for performance is your value, you put all your eggs in one basket,” Hans Wijers, chief executive of the oil giant said in a recent interview with the Financial Times.

“The sceptical parts of the company (in terms of their perception of sustainability) now think, ‘Hmmm, this is interesting.”

So far companies based in the Netherlands seem well ahead of their European counterparts when it comes to adopting such an innovative scheme, but others could follow.

“We are convinced that strong corporate values, including care for the interests of employees, customers and the environment, are a strong precondition for stable, long-term, above-average results for a company,” said Carola van Lamoen, pay expert at Robeco.

But while the idea undoubtedly holds an appeal for senior figures in supply chain and procurement, the age-old conundrum of measuring sustainability performance could provide a stumbling block.

DSM and TNT are using a series of metrics, unrelated to the sustainability index, and covering areas such as employee and customer satisfaction, greenhouse gas reduction and energy use.

Whether these parameters are any more successful than the others already trialed remains to be seen – but if bonus targets are hit then competitors could be left green with envy.

A leading figure has called on global industry to take immediate action to address the shortfall in talent in the area of sustainability in the supply chain management sector – or face the consequences.

In an exclusive interview with Sustainable Sourcing, Nicole Gaiziunas, Managing Director, Executive Education, Supply Chain Management Institute (SMI), part of the European Business School, said that although sustainability was fast becoming a key driver in procurement, its progress was being hindered by an ever-widening talent gap.

“Our experience shows that even the best strategies for optimising supply chain management are fruitless if there is no talented staff to put them into practice,” Gaiziunas told Sustainable Sourcing. “Currently we are facing a serious shortfall of such experts worldwide.”

As reported by Sustainable Sourcing in December, sustainability is forming an increasingly important part of the modern-day MBA curriculum. But although it is now enjoying a far higher profile now than in the past – and despite an increasing number of companies placing it at the heart of their own training programmes – it’s taking time for that talent to filter through. And it’s this lag that is putting procurement on the back foot.

“Designing an effective supply chain management is of key strategic value for every company,” says Gaiziunas.  “It is high time that the top-level decision-makers in companies realize this and take vigorous measures to resolve this situation.”

Some of the world’s largest chemical companies are throwing away billions of euros a year through their toxic sustainability performance, a new study has claimed.

The report, ‘Sustainable value creation by chemical companies’, examined the sustainability efforts of nine major chemical firms from across the globe between 2004 and 2007 – and revealed significant discrepancies across the industry.

Published by a European research team involving academics from Queen’s University Management School in Belfast, the study took into account a range of sustainability metrics in an attempt to link a “Sustainable Value” to the way the nine companies utilised their respective resources.

BASF – ranked one of the 100 most sustainable companies in 2009 – along with Paris-based giant Air Liquide were the two top performers, using their resources up to five times more efficiently than competitors such as Dow Chemical, which was ranked at the bottom of the pile.

The researchers estimated that the sustainability performance of these two companies equated to roughly €1bn in cash flow – an enviable sum in the current economic climate and a figure that will doubtless have their competitors desperately seeking improvements.

According to the research, Dow generated a negative sustainable value of –€2.2bn although, despite these findings, the company will point to the enormous strides it has made since 2007.

Unsurprisingly for a company that receives an annual energy bill in excess of $25bn, efficiencies in this area are at the top of the company’s agenda.

In 2008 Dow Chemical saved around $7bn in energy costs – a saving that also cut out around 70 million tons of CO2 emissions.

Roland Verdon has never been one to shirk a challenge but the man who has overseen the transformation of Estee Lauder’s procurement operation over the past 18 months admits that sustainability poses one of the biggest obstacles he has faced since he arrived at the company from Merck Serono in 2008.

The New York-based giant has been producing top class cosmetics since shortly after the end of the Second World War, but Verdon is facing another battle as he looks to ensure that the company gains the necessary visibility into its global supply chain.

And as the company’s VP indirect procurement EMEA, he believes that measuring the benefits that sustainability can bring to services procurement is often an area of great intangibility.

“We have to differentiate direct spend and indirect spend – it is probably easier to do it in the direct spend area because the benefits are more obvious when you buy raw materials,” he tells Sustainable Sourcing. “It’s easier to do in the shopping bags, in the paper, and in the printing, but when it comes to some services it’s more complicated.”

The indirect spend categories that Verdon oversees do, potentially, pose a considerable problem as Estee Lauder look to build a reputation for sustainability. Verdon himself cites the example of flight bookings as one of the reasons why firms like Estee Lauder can’t always make decisions based on green criteria alone.

“We can do it in our airline (booking) but the problem we have there is one of volume. You look at some airlines that have programmes in place that are pretty good in terms of reducing CO2 emissions but if you want to really play with these big guys you need the volume,” says Verdon.

“With 30,000 employees across the globe our volume isn’t that important at this level and does not really enable us to negotiate something good so it probably means that if we go this route we’ll pay more than using another airline.”

Verdon and his team are currently drawing up a draft series of sustainability guidelines aimed at qualifying the company’s vendors, particularly in Asia. It is, though, a work in progress, and Verdon is fully aware of the pitfalls that could lie in wait.

“In terms of visibility some vendors will play the game and will give us good visibility as they have nothing to hide, and on the contrary have something to sell in this area,” he says.

“Some vendors will be probably more reluctance because they have nothing in place or are on the borders of being unfriendly to the environment or have dubious labour practices.”

The world has certainly moved on since Estee Lauder first starting selling their goods in Saks Fifith Avenue in 1948. But the company’s former “faces”, which include the likes of Liz Hurley and Gwyneth Paltrow, would surely approve of Verdon’s long-term vision. Even if it does involve the rather unglamorous process of him getting his hands dirty.

British Airways is hoping a ground-breaking sourcing deal will take flight as it looks to waste to fuel a recovery.

Subject to approval, British Airways will start sourcing 500,000 tonnes of waste annually to create 16 million gallons of green jet fuel – enough to power all of its fleet at London City Airport.

The new deal, which will come into force in 2014, will see BA purchase all the “sustainable jet fuel” that US-based biofuel company, Solena Group, can produce from a plant sited in London.

British Airways, which refused to comment on the value of the deal, said that it aimed to obtain 10% of all its jet fuel from this process by 2050.

It’s estimated that the resultant fall in carbon emissions will be the equivalent of taking 48,000 cars off the road each year. It’s also thought the CO2  neutral plant will produce 20MW of electricity every year.

This is, of course, not the first that an airline has looked to biofuel as a means of reducing emissions and cleaning up the act of an industry that has been public enemy number one in the sustainability fight.

Virgin Atlantic, KLM, Air New Zealand, JAL and Continental have all completed biofuel-powered  test flights in recent years.

Fears do, though, persist over whether alternative fuel sources offer a viable long-term option for the aviation industry.

“For us, the jury is still well and truly out as to whether either synthetic or biofuels are yet capable of being either entirely fail-safe for aviation use or environmentally sustainable in the longer term,” said the UK-based Aviation Environment Federation.

That said, this current opportunity appears to be too good for BA to waste.

Ronald McDonald has never lost his smile but there have been times in recent years where McDonald’s rather flabby reputation has threatened to overwhelm the company. It reached its nadir in 2004 when Morgan Sperlock produced his now infamous ‘Super Size Me’ documentary where he ate nothing but McDonald’s for 30 days.

Now, with sales rising once more, McDonald’s is using sustainable sourcing as a means of attracting new customers and gaining the support of farmers and suppliers in the 119 countries it operates.

Fundamental to the company’s recent success has been the creation of a companywide steering committee on sustainable supply chain.

“The group was comprised of global supply chain leadership as well as CSR leadership at McDonald’s,” says Jessica Droste Yagan, senior manager, sustainable supply chain. “We agreed on a vision for sustainable supply.”

Fundamental to that vision was the forging of a closer relationship of suppliers, in an effort to appreciate and understand the sustainability challenges faced throughout the company’s supply chain.

“We have a tool called the environmental scorecard that was created a number of years ago and is used by a lot our suppliers already to measure their use of water, their use of energy, their production of waste and the air emissions,” says Droste Yagan. “The idea is that they can use this tool to help themselves continuously improve over time.”

The company has also introduced a Sustainable Fisheries programme, inline with the principals set out by the Marine Stewardship Council, which set standards for the global procurement of wild-caught fish. Again, this has proved to be a massive success, with the company claiming that over 98% of its fish in 2008 came from fisheries with favourable sustainability ratings.

Sustainable sourcing has done more than simply improve sales in the company’s restaurants, however, it has also helped re-establish the McDonald’s brand. According to the Interbrand Best Global Brands list 2009, McDonald’s currently finds itself listed sixth – a two place jump on its 2008 placing, and a sure indication that the company is moving in the right direction.

“Having trust in McDonald’s doing the right thing is something that’s critical for the consumer,” she says.

By Stephen Hall, Senior Staff Writer

So Copenhagen was, shall we say, underwhelming. But here’s a new decade and many will keep the faith that business can make the difference and lead the progress toward sustainability. Plenty of companies have expressed good intentions, but maybe it’s time to look at something more concrete.

Look at Nike. Here is a brand that has had, and for some still does have, image problems. It announced its corporate responsibility report for 2007-09 in January.

“Sustainability is key to Nike’s growth and innovation,” proclaimed Nike president and CEO Mark Parker. Accordingly, the report is teeming with aims such as achieving zero waste in the supply chain, being ahead of the curve on governance and energy price increases, and using a web-based marketplace to share sustainable innovations.

Nike claims it cut 4% emissions from its supply chain between 2008 and 2009. However, unlike many other companies whose reductions corresponded with the shrinking business, Nike maintained, admittedly weak, growth throughout the period.  

While this is undoubtedly a minor triumph, its strategy is unusual in several ways. The company has no reduction targets. It also recently made the decision to stop purchasing carbon offsets.

A negative way of looking at this would be to say that these cuts are sufficient to help the brand turn a corner towards a more positive image. By setting themselves fewer targets, the company is able to dismiss any failures or indiscretions as it will be accountable only to itself.

But is that enough?

On one hand, sustainability undoubtedly slipped down the agenda for some during tough times in the economy and companies like Nike that have kept up the pressure should be recognised.

On the other, as recovery very gradually spreads over the Eurozone and the US, how companies respond to the challenge of increasing production whilst maintaining or even reducing those recession-period emission levels will be crucial.

If a few years down the line the majority of companies are able to back up their boasts about sustainability with consistent cuts, there’ll be clear evidence as to which schemes work, whether carbon offsetting and targets are necessary to drive transformation or whether the demand for ‘green goods’ alone is enough.

This then, I’d argue, is a tipping point.

Rio Tinto and Google are two notable absences from a list of the world’s 100 most sustainable companies.

The 2010 list, which is compiled by media firm Corporate Knights, is topped by General Electric – but issues relating to Google’s Chinese operations saw the US giant excluded from the list.

“To be considered sustainable, companies must squeeze four times more wealth out of every resource they use,” said Corporate Knight editor-in-chief, Toby Heaps. “Google was shut out of the top 100 because of privacy concerns and issues related to its China operations.”

Companies are ranked according to a number of different criteria, including environmental, social and governance performance metrics.

European companies featured heavily in the 2010 list, with Nokia, Siemens AG, Vodafone, Unilever, Smith Group, Geberit, H&M Hennes & Mauritiz and TntNy all earning a place in the top ten.

The UK has 21 companies in the list, placing them ahead of the US, which has 12, and Australia and Canada, which have nine each.