Sustainable supply chain management is not just a popular expression in the business world but is in fact becoming ever more important for companies. Why is this? It is because companies are increasingly being held accountable for the environmental and social impacts of their upstream processes. This starts with raw material extraction, and is followed by individual processing steps and the transport of goods. The negative environmental and social impacts of supply chains include inefficient resource use, loss of biodiversity, risks to workers’ health and safety, child and forced labour, greenhouse gas emissions, and health and environmental damage from the use of hazardous materials.
7 steps to a sustainable supply chain
So as to avoid these hazards or deal properly with them, companies can make sustainable supply chain management a part of their business strategy. There are seven steps to make a supply chain more sustainable:
(1) The company maps its supply chain to get an overview of the value creation process.
(2) It then identifies significant environmental and social impacts, assesses related risks, and prioritises action areas.
(3) It identifies gaps and develops measures to improve its performance where necessary.
(4) Consequently, the company adapts internal structures and processes, and
(5) formulates supplier requirements regarding sustainability and makes them binding. An important part of this step is to create a supplier code of conduct that can be integrated into a supplier contract.
(6) The company then evaluates the sustainability performance of suppliers by checking their self-assessments or by directly auditing them. To ensure that suppliers meet the company’s expectations in the long run, it is important to develop the suppliers’ capabilities -- for example, by providing regular training on sustainability issues.
(7) Finally, the company should disclose information on its sustainable supply chain management activities as part of its reporting.
Process steps of sustainable supply chain management (Source: step-by-step guide to sustainable supply chain management, German Ministry for the Environment (BMU) and Environmental Agency (UBA), 2017)
Following these steps to a sustainable supply chain can not only improve the company’s environmental and social performance, but also provide business advantages such as a better public image, reduced risk of legal non-compliance, acquisition of new environmentally aware customers, and improved productivity.
EMAS promotes sustainability in the supply chain
But where is the connection with EMAS? Sustainable supply chain management and EMAS share the same philosophy: improving the performance of the organisation. EMAS helps companies to evaluate, decrease and report their environmental impacts through a systematic approach that is similar to the seven steps mentioned above. In fact, EMAS already requires companies to aim for an environmentally sustainable supply chain. Since the revision of the annexes of the EMAS regulation in 2017, organisations have had to consider their environmental impacts from a life cycle perspective. This means they have to improve the design and production of their products or services, taking into account environmental impacts from the procurement of materials (supply chain) to the disposal of products after use by consumers. EMAS and sustainable supply chain management strategies thus have a similar objective but slightly different scopes. EMAS focuses on environmental impacts and the whole life cycle of the product or service, while sustainable supply chain management only covers upstream processes, but considers social impacts as well.
As one of the first steps in becoming EMAS-registered, companies perform an environmental review: they analyse the direct and indirect environmental aspects of their activities, processes or services. While direct aspects include air emissions and waste production related to the company’s daily operations, indirect environmental aspects take the environmental performance of contractors, subcontractors and suppliers into account. The company can influence these factors, but it cannot direct control them. To deal with negative impacts in the supply chain, specific objectives and targets should be established and included in the environmental programme of the company, which can then work on implementing measures with suppliers.
It might be difficult for companies to change their suppliers’ processes. They can, however, set minimum performance requirements when purchasing, audit suppliers to verify their claims, and identify options for improvement, or they can use other types of assessments to raise suppliers’ awareness of environmental issues. Companies could even go further by requiring their suppliers to be EMAS-registered and to target the key environmental aspects they have identified.
EMAS frontrunners provide inspiration
There are already examples of companies making their supply chains more sustainable through EMAS.
One of them is the 2017 EMAS Awards winner, Martin’s Hotels. This hotel operator has established a sustainable purchasing policy. It gives preference to local, natural, recycled/recyclable and seasonal products, and encourages suppliers to adhere to its code of conduct. Suppliers commit to a number of rules: respecting laws regarding child labour, working conditions and environmental protection; combatting corruption; and monitoring their environmental impacts in terms of water, energy, and waste, and setting targets to reduce them. Suppliers with a high level of environmental impact are supposed to commit to implementing a recognised environmental management system such as EMAS. 80% of the recurring suppliers of Martin’s Hotels have signed the code of conduct.
The EMAS-registered company Werner & Mertz Group, which manufactures cleaning and care products, has a similar strategy. The company uses specific criteria when assessing suppliers of raw materials, packaging or equipment to give preference to those who support and comply with certain sustainability measures. Suppliers are regularly surveyed about their environmental and sustainability management practices. The company also favours local sourcing. 49 per cent of the packaging and cardboard it uses are produced directly on the factory premises and another 16 per cent are purchased from suppliers within 100 km of the factory.
Weleda, a company producing beauty products and medicines, is also a good example of an EMAS-registered company integrating sustainable supply chain management into its core business. A special position has been created in the purchasing department to monitor and promote sustainability in the supply chain. Complete traceability of raw materials has been mandatory since 2013, and the organisation has assessed the sustainability of its suppliers using the Union for Ethical BioTrade (UEBT) standards. In 2017 it received an award for “Responsible Supply Chain Management” from the German Federal Government.
Are you interested in making your own supply chain more sustainable with EMAS? Complete information on EMAS implementation can be found in this EMAS presentation. The following resources can also help you learn more about sustainable supply chains:
- Step-by-Step Guide to Sustainable Supply Chain Management, BMU and UBA, 2017
- Environmental supply chain management: A guide to Danish companies, Danish Environmental Protection Agency, 2010
- Sustainable Supply Chains: Resources & Practices, United Nations Global Compact 2018
- Empowering Responsible Value Chains, World Economic Forum 2015
Please do not hesitate to contact the EMAS Helpdesk with any questions you may have.