This week’s World Economic Forum report into supply chain decarbonisation provides a deep look into the carbon footprint of the world’s corporate supply chains as well as ways in which it can be reduced.

Global carbon emissions amount to around 50 gigatonnes (50,000,000,000) annually with logistics and supply chains (from a small truck in India to global transport groups like DHL) contributing about 5% of that.

And according to Sean Doherty, associate director and head of the logistics & transport group at the WEF, the contribution which logistics and supply chains make to overall global carbon dioxide emissions could be halved. “The main message is that there’s considerable scope to reduce the carbon content of global supply chains, and not always in the ways that often pop up, such as road miles,” said Doherty. “What we tried to do was to quantify, of the 20 or 30 strategies, which ones had the biggest reduction potential and were also economically feasible.”

He explained how sourcing from a different location came top of that list, but that the manufacturing of the sourced goods must be taken into account as well as the transportation route. “In most supply chains, manufacturing is a large part of emissions,” he said.

Despeeding is another strategy which Doherty pointed to as key to reducing carbon emissions – and it is a strategy which has already been taken advantage of by many companies, not least in the automotive sector who were using ships as “floating warehouses”.

It’s a further example of how environmental and economic decisions often go hand in hand.

David Rae

SustainableSourcing has researched the world’s largest 500 companies to find those that have published a dedicated sustainable procurement policy and, for those companies that have, what information lies within. While many companies that cover sustainable procurement in their CSR reports deserve credit, we only have space for those with dedicated policies. 

The information below is intended to give procurement executives that haven’t developed a sustainable procurement policy the raw material to get started. It will also help those that have started to improve, collaborate and move forward.

To put forward your own companies sustainable procurement policy, email the editor.  

Next month, the iHollywood Forum will host a “Hollywood Goes Green conference, at which sustainable solutions will be discussed with studio chiefs who are under pressure to cut costs.

The news is likely to be welcomed by some of the silver screen’s biggest stars, many of whom are actively involved in environmental campaigns.

“While celebrities have long been environmental activists, studios and production companies have been cautious about adopting the green philosophy as it applies to their business operations,” said Zahava Stroud, of iHollywood Forum.

Many studios already have departments dedicated to reducing their carbon footprints, although the biggest challenge remains cutting down on the emissions caused by large-scale, but often temporary film sets.

Alexandra Cain

The logistics industry offers an excellent hunting ground for environmental improvements, with two of the world’s largest players involved in innovative sustainability projects.

DHL, the world’s largest logistics company, is spearheading a sustainable supply chain approach and has made a commitment to reduce its carbon footprint by 10% by 2012 and 30% by 2020. Some of the early initiatives DHL has embarked on include using recycled paper and packaging and local education campaigns to reduce energy and water use.

But this is really only the tip of the iceberg for DHL, which is looking at replacing aircraft and vehicles as part of its sustainability push.

Flight of fancy

Paul Graham, CEO of DHL Exel Supply Chain, Asia Pacific, said that upgrading aircraft and fleet shows a benefit in terms of cost savings, “which is important because we’re spending a lot on sustainability.”

Cost savings stem from fuel savings by using more fuel-efficient planes and lorries, although Graham acknowledges DHL’s sustainability program is a long-term commitment, with the company having had to invest hundreds of millions of euros upgrading its fleet.

Other sustainable initiatives by DHL include better management of energy usage and better water recycling, including increased use of grey water. It is also looking at replacing old air conditioning systems for far more efficient replacements.

In Asia, DHL is looking at installing solar panels on some building rooftops and in Europe, it’s exploring whether small windmill generators might be an appropriate energy source.

“Nothing’s off the table, we’re still at an embryonic stage in terms of our sustainable development,” Graham said.

DHL has operations in India, China and Indonesia which have relatively less robust country supply chains compared with more developed nations. “That’s where the sustainability model has less relevance,” said Graham. “These countries need more water and power, not to use less. But there are still things that can be done in developing markets and creating awareness of sustainability is a positive outcome.

The company is also setting up systems to measure sustainability data, with country-level data being fed back into a centralised repository for further analysis. Best practice local programs can then be established.

Blaze a trailer

Julie Gaskell, head of communication at transport and logistics behemoth Stobart Group, says the company is working hard to increase its sustainability push. An important project is a plan to increase the length of its trailers by one metre, allowing trailers to carry larger loads to increase efficiencies within its fleet.

“That has the potential to save three million litres of fuel a year from UK roads,” said Gaskell.

Another initiative was the introduction of a traffic light system to indicate whether lorries are fully loaded. The company has also invested in rail freight and its first service, launched in 2006 between Daventry and Scotland, is the equivalent of taking 30 lorries off the road each day, saving around 2.4 million litres of fuel a year.

Anne-Marie Saulnier at environmental management consultancy Optim Resources acknowledged that most logistics companies are still in the early stages of sustainable development.

“Sustainability is still in the process of being integrated into purchasing functions,” she said “At the moment, sustainable practices are parallel to traditional practices and politics. There is no integration. At the purchasers’ level, there is a real interest, but there is a lack of tools and models to help them to act,” she said.

BT is currently working towards a carbon intensity reduction target of 20 per cent by 2010 (a saving of some 200,000 tonnes of CO2), and it’s taking no prisoners – as some of its suppliers have already found to their not inconsiderable cost.

“We recently surveyed 1800 of our suppliers and graded them all on a scale of 0 (those who have no sustainability strategy in place) to 3 (those who are almost there),” Donna Young, head of environment and climate change BT Group, told Procurement Leaders in an exclusive interview. If you’re a zero then you won’t get on the tender list,” she said. “That’s not to say we then abandon them, part of what we’re trying to achieve here is that we work with them to get them started on the road to where we, and they, need to be.

“In terms of our supply base it has been a very positive piece of work, and hopefully we’re now starting to see an appreciation of what they can do within their orgainsation – not just in the products they sell and manufacturer but across their entire supply chain.

“We’re well aware that these suppliers aren’t only working with us, so anything we can do to set them on the road to a more sustainable future benefits everyone. We’ve got companies in all areas of the world that are doing well, we’ve seen some really good practices in China, for example, but generally it depends on the attitude of the individual company and it depends on the industry. Behaviours are the biggest issue right through the value chain.”

When you consider that BT has been involved in £2.2 billion worth of bids in the first ten months of 2008, the cost of neglecting sustainability has never been as high.

BT, which started measuring its carbon footprint in the early 1990’s, long before the majority of its major competitors followed suit, now builds environmental requirements into its procurement contracts as standard practice. And it’s this engagement with suppliers, along with BT’s 110,000 strong workforce that Young identifies as being crucial in the company’s quest to lead the field in an area which, she admitted is still seen elsewhere as a “nice little add on”.

“Sustainability is now on every person’s lips,” Young said. “And it’s certainly very much at the top of the agenda at BT – it’s on the whole board’s mind.

You have to make sure that it’s embedded into the organisation and I believe this is something we’ve been very successful at.”

Another factor occupying the minds of board members at the present time is cost, and in an industry as energy-intensive as BT’s, it’s little wonder that every penny counts.

Young said: “No-one in procurement needs telling that the cost of energy has risen considerably over the past 12 months, which is why it’s so important for us to do all we can to minimise our usage. If we can cut consumption then it obviously does far more than simply reduce our carbon footprint – it makes a lasting contribution to our bottom line.”

BT, like the technology it relies on, has come a long way, and Young appears determined to leave her mark – although you might struggle to see her footprint.