Center for Corporate Climate Leadership
Climate Leadership Award Supply Chain Winners
EPA recognizes organizations that have their own comprehensive GHG inventories and aggressive emissions reduction goals and can demonstrate they are at the leading edge of managing GHGs in their organizational supply chains.
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The following leading companies provide examples on how they have chosen to engage their suppliers in managing GHG emissions. The information presented below is based on interviews conducted by EPA's former Climate Leaders program in 2010.
Alcatel-Lucent • American Electric Power • Anheuser-Busch Companies, Inc. (PDF) (16 pp, 993K) • Applied Materials • Dell • Exelon Corporation (PDF) (8 pp, 644K) • IBM • Intel • Johnson & Johnson • Kimberly-Clark Corporation • PepsiCo • Steelcase • United Technologies Corporation (PDF) (13 pp, 370K)
Alcatel-Lucent set a goal to reduce its carbon footprint by 50 percent of 2008 levels by 2020, including reductions in its supply chain. As part of its responsible purchasing policy (PDF) (1 pg, 123K, About PDF), the company employs a combination of direct and indirect engagement with suppliers about managing their GHG emissions. It works directly with its larger suppliers and contract manufacturers to ensure that they are measuring their GHG emissions, have a 2009 emissions baseline, and begin reporting their emissions in 2010.
Alcatel-Lucent also engages its other suppliers indirectly through its partnership with a third-party platform that manages a supplier survey and database, to implement a rating system that assesses suppliers' sustainability performance. Initially, it is focusing on a few hundred suppliers accounting for 75 percent of spend. Through the survey, Alcatel-Lucent began asking these suppliers in 2010 if they are measuring their GHG emissions and if they have an emissions reduction target. The survey responses allow the company to identify gaps in GHG emissions management and help suppliers develop a GHG emissions management plan. Alcatel-Lucent uses information on how suppliers are measuring their GHG emissions as a proxy for how they may be accounting for and managing other environmental impacts. As Alcatel-Lucent's representatives acknowledged, sustainability metrics are fast becoming incorporated into their own customers' procurement decisions.
American Electric Power (AEP)
To engage its suppliers on managing their GHG emissions, AEP works with the Electric Utility Industry Sustainable Supply Chain Alliance, a collaborative utility industry platform which, working through CAPS Research, administers a survey to AEP's top 100 suppliers based on spend. The survey asks suppliers if they have a plan for managing GHG emissions, as well as other questions related to sustainability metrics. Suppliers can elect whether or not they allow their responses to be shared with nominating utility customers.
Based on information gleaned from the survey responses, AEP strategically approaches key suppliers and helps to engage them in external programs aimed at measuring and reducing their GHG emissions.
AEP's website provides additional information about how the company is working with its suppliers.
Applied Materials initially focused on suppliers that are both ISO 14001 certified and represent their top spend to assess how they manage their GHG emissions. It uses a supplier Sustainability Self Assessment scorecard, which includes GHG emissions management as one aspect of the scoring system, to determine which suppliers may need additional assistance or training in managing their GHG emissions. In 2009, 75 percent of suppliers responded to the self assessment. Applied Materials found that asking suppliers how they are measuring and managing their GHG emissions provides a high level indicator on how they are managing other environmental impacts, such as waste generation or water consumption.
In addition to its own supplier questionnaire, Applied Materials leverages its participation in EICC's Carbon Reporting System to request GHG emissions data from numerous additional suppliers common to other electronics companies.
Applied Materials' website provides additional information about the company's supply chain initiatives.
Dell requires suppliers that comprise 90 percent of spend for production-related materials to report their emissions to CDP Supply Chain and the Electronic Industry Citizenship Coalition's (EICC) Carbon Reporting System. Dell also requires key suppliers to publicly disclose their GHG emissions and GHG reduction goals as part of their quarterly performance reviews. To complement these efforts, Dell also asks its top 25 suppliers of non-production goods and services to measure their emissions and report them to the EICC Carbon Reporting System. Finally, Dell requires its logistics suppliers in the U.S. to participate in EPA's SmartWay program to reduce the carbon footprint of its product transport systems.
For more information, see "Addressing Climate Change" in Dell's 2010 Corporate Responsibility Summary Report (PDF) (50 pp, 5.8 MB) and Climate Action: A Lifecycle Approach to Supply Chain Leadership (PDF) (13 pp, 535K).
In 2009, IBM invited 121 of its top suppliers to respond to the CDP Supply Chain questionnaire. These 121 suppliers represent approximately 80 percent of IBM's spend with production-related suppliers and also includes key suppliers in service categories such as logistics and third-party data centers. Of the suppliers that received the questionnaire, 73 percent responded. Survey responses showed that about one-third of both production and service suppliers had GHG emissions reduction plans. The response rate and current availability of emissions reduction plans indicate that many companies are just beginning efforts to develop a detailed understanding of, and management plan for, their energy use and GHG emissions inventories.
In February 2010, IBM introduced new requirements for its suppliers to develop, deploy, and sustain a management system to address their corporate and environmental responsibilities. Suppliers must measure performance and establish voluntary, quantifiable environmental goals addressing, at a minimum, energy use, Scope 1 and 2 GHG emissions, and waste management. They must also publicly disclose results associated with these voluntary environmental goals and other environmental aspects of their management systems. IBM further required its suppliers to extend the same requirements to their suppliers.
In addition, as a member of the EICC, IBM is part of the Environmental Working Group that is developing a sector-wide strategy for electronics industry suppliers to inventory, disclose and reduce their GHG emissions. The EICC Environmental Working Group has developed education modules to assist suppliers in tracking their energy use and developing their GHG inventories, and has created a system for suppliers to disclose their GHG emissions to EICC Members.
IBM's website provides more information about the company's supply chain initiatives.
Intel uses both its own Supplier Continuous Quality Improvement program and the EICC Carbon Reporting System to manage its supply chain GHG emissions. For Intel, 50 of its top production and capital suppliers that comprise approximately 80 percent of its total purchasing spend report their emissions through the EICC. Intel has also engaged these select suppliers to participate in its Supplier Continuous Quality Improvement program, which uses Intel's supplier management tools and processes to drive improvements in suppliers' performance through feedback from process assessments and site visits. Intel participates in the EICC Environmental Sustainability Work Group and will continue working with its suppliers to understand the carbon disclosure data that they must begin reporting.
In 2008, Intel asked its key suppliers to examine their operations and identify areas with the greatest environmental impacts, including those resulting in significant energy use and GHG emissions. In 2009, Intel asked these suppliers to set goals for reducing their environmental impacts and, beginning in 2010, will evaluate its suppliers on sustainability, as well as metrics based on availability, cost and quality.
To communicate Intel's corporate responsibility expectations most effectively to its suppliers, Intel's commodity managers and buyers that manage top tier suppliers are required to attend an internal supplier corporate responsibility training course that covers environmental sustainability.
Intel's 2011 Corporate Responsibility Report provides more information about the company's supply chain initiatives.
Johnson & Johnson
Johnson & Johnson's consumer-facing business unit, while responsible for only approximately one-quarter of the company's revenue, is helping to drive supplier engagement across its pharmaceutical and medical device divisions.
In 2008, Johnson and Johnson began encouraging its key suppliers to report their GHG emissions to the CDP Supply Chain initiative. By 2009, more than 80 percent of the suppliers it approached chose to participate in the CDP. In 2010 Johnson & Johnson continued to foster participation from a larger group of suppliers. Currently, Johnson & Johnson asks its suppliers if they are publicly reporting their GHG inventories, setting GHG emissions reduction goals, and publicly reporting those goals. Rather than collecting their suppliers' GHG emissions data directly, Johnson & Johnson is setting expectations for its suppliers to publicly manage their own GHG emissions.
To help its key suppliers measure and reduce their carbon footprint, Johnson & Johnson shares with them its internal GHG management tools and resources to demonstrate how it first measured its energy use and subsequently reduced its own GHG emissions.
Additionally, Johnson & Johnson participates in the Pharmaceutical Supply Chain Initiative to help identify efficiencies within the industry and drive improvements in the supply chain through collaborative efforts.
Kimberly-Clark is comprised of multiple business units, and its global regions are managed autonomously. It solicited sponsorship from one business unit that believed in the importance of managing suppliers' GHG emissions and agreed to temporarily fund supply chain engagement across the entire company. Doing so launched the initiative to collect GHG emissions data from suppliers for the first phase of the program. Going forward, champions for the initiative within Kimberly-Clark are using demonstrated results to build more diversified support to ensure continued funding and success.
Kimberly-Clark asked its top suppliers to participate in the CDP Supply Chain initiative and EPA's SmartWay program. In 2010, it reached out to 60 of its key suppliers with emissions-intensive processes to report their GHG emissions through CDP Supply Chain. Going forward, Kimberly-Clark plans to ask more suppliers to report to CDP during the next two years, with the intent of eventually engaging suppliers that comprise a majority of spend. Kimberly-Clark also requires all of its logistics providers to participate in SmartWay to reduce the GHG emissions associated with product transport.
Kimberly-Clark's Vision 2010 calls for working with suppliers whose environmental programs are compatible with its initiatives and who can provide products and services that move Kimberly-Clark closer to its environmental goals.
Kimberly-Clark's website provides more information about the company's supply chain initiatives.
As part of PepsiCo's approach to working with suppliers on managing their GHG emissions, it first encourages its key suppliers to report their emissions through CDP Supply Chain. PepsiCo identifies these key suppliers based on spend, impact on total value chain emissions, and long-term and strategic partnerships.
PepsiCo then focuses on a smaller, select number of suppliers to help them reduce their GHG emissions. In 2008, it began a program to engage its 12 largest domestic contract manufacturers. PepsiCo emphasized to its suppliers the benefits of energy conservation and efficiencies, asked them to join the ENERGY STAR program, set energy reduction goals and helped them develop a plan to achieve their energy reduction goals.
PepsiCo also established "resource conservation specialist" positions to provide a full-time resource suppliers can use as they build capacity to reduce GHG emissions within their own organizations. It also developed trainings via webcasts, a Global Sustainability Summit, on-site training sessions, and access to PepsiCo's assessment tool that gives suppliers their top 10 to 15 opportunities for conserving energy. In the first year of the program, suppliers achieved a 6 percent reduction in energy consumption. Now PepsiCo's program boasts more than 60 suppliers, some of who have began voluntarily training their own suppliers on how to conserve energy.
PepsiCo's website provides more information about the company's supply chain initiatives.
To support supplier efforts to reduce their environmental impacts, including their GHG emissions, Steelcase's U.S. operations participate in the Green Suppliers Network, a program jointly sponsored by EPA and the Department of Commerce's Manufacturing Extension Partnership that provides third-party site assessments to help suppliers identify economic and environmental efficiencies and improvements. Steelcase also created its own "lean and green" program, named iFlow, to further embed sustainability into its own facilities and into the manufacturing and transportation operations across its value chain. Steelcase focuses on engaging its suppliers who are already providing data to support product sustainability certification efforts for the company and who are involved with its lean and green initiatives. These suppliers include high spend tier 1 direct material suppliers as well as finished product producers. To do so, initially, Steelcase asked 12 suppliers to participate in the Green Suppliers Network assessments and involved 30 suppliers in its iFlow program.
Steelcase is also working to reduce product lifecycle emissions by certifying its products under the new BIFMA e3 "level™" product certification administered by the Business and Institutional Furniture Manufacturer's Association. In addition, Steelcase is working with its suppliers to improve processes in order to assist in the certification of its products under the level(TM) program. Process improvements can include reductions in water and energy consumption, GHG reductions and reduced air emissions as well as other lifecycle impact areas.
Steelcase's website provides more information about the company's supply chain initiatives.