Richard Edwards

The World Bank has handed Brazil a $1.3bn loan in an effort to encourage one of the world’s biggest polluters and most popular low-cost sourcing destinations to clean up its act.
 
Brazil, which has become a magnet for companies looking to source from the commodity-rich country in recent years, has some of the most bountiful resources of any nation on earth.

However, the country, which is home to one-third of the world’s tropical rain forests and the largest reservoir of fresh water, has been dogged by ethical questions over the continuing deforestation of the Amazon.

Successive crackdowns by a Brazilian government keen on attracting foreign investment have failed to bring an end to persistent deforestation – which increased in 2008 for the first time in four years – but it’s hoped the new cash injection will force the country to take serious action.

Speaking exclusively to Sustainable Sourcing, Rene Duvekot, CEO of Miami-based sourcing advisory firm Duvekot Corporation, said he believed that the World Bank’s influence in the country could prove to be a turning point.
“It surprises me that Brazil is receptive to foreign funds for this purpose, so it appears that the country is finally getting serious about protecting its natural resources, especially the Amazon rain forest,” he says. “It’s refreshing that a foreign organisation (World Bank) will be looking over Brazil’s shoulders.”

For those organisations already sourcing from the country, Brazil’s action also offers proof of the country’s willingness to improve its patchy sustainability record. “Brazil has made enormous progress in making manufacturers adhere to higher standards, and the growing numbers of ISO certifications (both 9 and 14) is a testament to that,” Duvekot says. “For buyers a key concern is assurance of continuity, and buyers are increasingly requesting proof of supplier compliance with local (Brazilian) working and environmental regulations.”

However, the loan has already caused controversy, with some environmental groups expressing fears that the new money will be used to finance a number of controversial projects – including the building of several large dams in the Amazon basin.

The World Bank, however, insists that the loan will be handed out in two installments, with the second tranche of $500m being paid only when a series of project goals have been hit.

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.  

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.