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Business and Climate
Change Efforts:
A Supply Chain Perspective
Mansour Hajbagheri
Erasmus Mundus Conference: Higher Education and Climate Change
Central European University, Budapest
26-27 Feb. 2009
Agenda
 Introduction
 Why Supply Chain?
 What is a Sustainable Supply Chain Management (SSCM)?
 Green Sourcing Principles and Values
 Corporate Practices for Green Sourcing
 Conclusion
 Discussion
2
Drivers of Going Green
 Legislations, regulations and standards for going Green
 Ethical obligations and social responsibility
 Financial incentives
3
Impediments to Going Green
 Lowers economic profits
 Imposes unequal costs among competitors
 Costs of going green will eventually be shifted to the
stakeholders
 Social issues are best solved by government. “Business of
business is business”.
4
Gap Between Knowledge and Action
Why Supply Chain?
 Profitability:
potential
to
It
has
create
the
value
Is this a
Green car?
(profit) for the business.
 Criticality: Firms cannot be
sustainable unless their supply
chains
become
sustainable
first.
6
Why Supply Chain? (Cont.)
 Synergic nature: “Networked” vs. Individual effort
7
What is a Sustainable Supply Chain?
“Management of raw materials and services from suppliers to
manufacturer/service provider to customer and back with improvement
of the social and environmental impacts explicitly considered”.
Adapted from Sarkis [1]
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Green Sourcing Principles & Values
 Best efforts to mitigate all
kinds of pollution:
 Air, water, land, noise,
etc.
 Avoid creating waste
whenever possible:
 Packaging – inbound and
outbound
 Environmentally friendly
chemicals
 Reduced disposal costs:
 Recycling waste
 Reusable packaging
 Lower operational costs
 Energy conservation
 High density lighting
9
Corporate Practices for Green Sourcing

Make Green part of the RFI/RFP process and filter out non-green suppliers
– What % of their waste stream is recycled?
– What % of their raw materials are from recycling?
– What $’s have they invested in Green initiatives?

Require or encourage suppliers to undertake independent environmental
certification , e.g. ISO 14000

Build environmental criteria into supplier contract conditions

Supply base environmental performance management

Conduct life cycle analysis in cooperation with suppliers

Coordinate minimization of environmental impact in the extended supply chain
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Corporate Practices for Green Sourcing (Cont.)

Cooperate with suppliers to deal with end-of-pipe environmental issues:
 Reduce packaging waste at the customer/supplier interface
 Reuse/recycle materials in cooperation with the supplier
 Launch reuse initiatives (including buy backs and leasing)

Reverse logistics:
 Give supplier an incentive to reduce the customer’s environmental load
 Waste by-products reused by the raw material suppliers
 Material ‘Life Cycle Management’
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Conclusion

Supply Chain is the most important issue that a green business should
address in its environmental efforts.

Greening the supply chain can potentially reduce costs and provide profit
opportunities.

Bringing sustainable practices into supply chain is a certain trend in the
future. Thus, those who start from now gain a competitive advantage.
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References
1. Sarkis J., Manufacturing strategy and environmental consciousness,
Technovation 1995,15(2),79–97.
2. Sarkis J., A strategic decision framework for green supply chain management,
Journal of Cleaner Production, 2003, 11, 397-409.
3. Institute for Supply Management (ISM) website: www.ism.ws
4. 2007 McKinsey survey of 2,192 executives on climate change:
http://www.mckinseyquarterly.com/Operations/Supply_Chain_Logistics/How_
companies_think_about_climate_change_A_McKinsey_Global_Survey_2099
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