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Case Studies | Monday March 9, 2015

Anheuser-Busch InBev: Empowering Procurement Professionals toward Sustainable Procurement

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The Challenge

With a vast spread of teams and projects conducted around the world, AB InBev saw the opportunity to understand how category procurement teams could enhance their everyday purchasing decisions by aligning more closely with the company's broader social responsibility environmental objectives, known as "Better World."

AB InBev partnered with BSR's Center for Sustainable Procurement (CSP) to explore how to improve the way sustainability is integrated into procurement activities. The term "sustainability" has a broad meaning and can often be misunderstood. Therefore, AB InBev decided to enhance awareness around how its procurement teams can contribute to the company's Better World actions by providing direct value—in particular, by lowering environmental and social risks across the value chain.

The Strategy

In 2013, led by AB InBev’s Responsible Sourcing function, the company began creating awareness training to improve the level of understanding of sustainability among procurement professionals around the world. The training sought to link the procurement team’s daily activities and responsibilities with:

• Efforts conducted by AB InBev’s Better World department, which manages the company’s social responsibility programs
• AB InBev’s external-facing Better World goals and how they are relevant to specific procurement categories
• The relevance of AB InBev’s social and environmental compliance efforts across key procurement categories

During the training, procurement teams learned about key sustainability issues, as well as local laws and regulations relevant to their areas of responsibility. Procurement teams were also taken through facilitated dialogues and brainstorming exercises to think through how they could apply a sustainability lens on different procurement categories and still have an impact on traditional business drivers (e.g., cost, efficiency, compliance).

A key goal of the training was not only to inform procurement teams about relevant issues and regulations, but also to spur ideas on potential alternatives to bringing business value through the procurement function and, ultimately, complement the financial business case.

The Impact

During 2014, more than 150 procurement professionals were successfully trained worldwide, creating greater awareness of the value of sustainability to procurement. The training also helped improve cross-functional relationships and communication between the sustainability teams and procurement teams, which, for example, has led to a project that studied the potential impacts and value of more sustainable packaging. In addition, AB InBev’s global environmental goal owners for barley water management, packaging reductions, eco-fridges, and logistics conducted focused awareness and training activities to support goal achievement.

Procurement teams are now using the concepts and ideas learned in the training to regularly challenge procurement categories, recommend new opportunities and procurement alternatives that simultaneously deliver business value, and contribute to the company’s Better World goals.

Lessons Learned

While it may be too soon to understand the full impacts of the training and the increased awareness of sustainability among procurement teams, the guidance, resources, and partnership with the CSP has opened new discussions internally about the value of sustainability, which will serve the company well in the months and years to come.

Ultimately, AB InBev aims to change category strategies by incorporating sustainability criteria more explicitly into procurement processes. Doing so will link internal policies and practices to the potential actions of suppliers, and will empower category managers with more evidence and avenues to enhance their procurement decisions. This will be especially meaningful to millennial procurement professionals, who have shown an increasing awareness for corporate social responsibility issues and transparency. 

AB InBev will also continue to explore ways to improve its sustainable procurement practices by joining CSP’s Procurement Leadership Group, a collaborative initiative that will enable companies to share common challenges and successes, as well as develop and advance industry standards and best practices.

Case Studies | Monday February 9, 2015

Cathay Pacific: Enabling Procurement Teams to Choose More Sustainable Plastics

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The Challenge

Cathay Pacific’s 20/20 sustainability commitments include reducing waste by 25 percent and sourcing all Cathay Pacific-branded products from more sustainable materials. Both of these goals link closely to the disposable plastic used for in-flight services, and present a challenge for Cathay Pacific’s environment and procurement teams. The second target in particular raised key questions around what constitutes a “more sustainable” material; the question is particularly difficult to answer for plastics. The environmental footprint of plastics is spread across the production, transport, use, and disposal phases, and across multiple impact dimensions such as carbon, water, energy, and volume of waste generated. This complexity makes it difficult for procurement teams to readily identify and select which material is most sustainable.

Cathay Pacific partnered with the Center for Sustainable Procurement (CSP) to define what “more sustainable” means in the context of single-use plastic items, and to create tools and procedures that can steer procurement decisions toward plastics with lower environmental impact.

The Strategy

First, CSP representatives met with four key Cathay Pacific teams: Procurement, Product Design, Inflight Services, and Environmental Affairs. These teams cooperate closely to formulate Requests for Proposals (RFPs) for potential suppliers and score the responses. Together, Cathay Pacific and CSP identified a specific case to tackle: salad bowl covers of economy class meal trays.

CSP worked with Cathay Pacific to modify the supplier RFP to include the following:

• More explicit inclusion of sustainability language throughout the RFP document, clearly stating Cathay Pacific’s environmental targets and expectations.
• Requests for quantitative data on plastics production, such as polymer type, weight, recycled content, energy and water used, and carbon emitted during production.
• Calls for qualitative data on supplier initiatives and suggestions for how to reduce the environmental footprint of transport and packaging.

CSP then developed a tool for procurement teams to compare the relative sustainability merits of different plastic types proposed by suppliers based on the information those suppliers provided. While not performing a full Life Cycle Analysis–which would be ideal, but requires extremely costly and technical software–the CSP tool introduces elements of lifecycle thinking that enable a more analytical and consistent scoring of supplier proposals. The tool produces a user-friendly, numerical, and graphical output that aggregates data from the following three inputs.

• Weight of the item as a proxy for the amount of waste generated. Reducing the volume of waste has a direct environmental impact, and aligns with Cathay Pacific’s goal of 25 percent waste reduction. Moreover, it is likely to have a progressively significant cost implication, as the Hong Kong government is scheduled to introduce a waste-charging scheme soon.
• Energy and water used, and CO2 emitted as proxies for the upstream impacts of plastics production. CSP included a preference for recycled content as a factor that reduces the impact of production.
• Recyclability and “compostability” to represent the “option value” of choosing materials that have the potential to be taken out of landfill waste streams in the future, if and when operational constraints change.

The plastics comparison tool can be used to rank the relative sustainability merits of materials proposed by suppliers, thus enabling a more informed supplier selection by Cathay Pacific’s Procurement Department.

The Impact

Procurement teams are using the strengthened RFP language and data requests to spark engagement with suppliers about Cathay Pacific’s expectations. In response, more than 60 percent of invited suppliers disclosed environmental footprint data as requested, and about 30 percent provided complete data sets, as well as commentary on how to further improve the sustainability characteristics of Cathay Pacific’s in-flight products.

The plastics comparison tool is being used in the assessment of different plastics materials options, and allowing Cathay Pacific to evaluate environmental impacts against more traditional procurement criteria of cost and quality. Subsequently, procurement teams have gone one step further, taking the initiative to request environmental footprint data on all plastic items in the RFP, not only the single-use ones. This demonstrates how the CSP’s frameworks, templates, and tools for the integration of sustainability criteria into purchasing can be extended effectively to other items in a company’s supply chain.

In addition, the CSP project enabled Cathay Pacific’s Environmental Affairs Department to gain a better understanding of the needs and constraints faced by various teams involved in procurement decisions. It also helped Cathay Pacific leaders get a better sense of how the company can incorporate these considerations into sustainability efforts overall. 

Through its analytical and practical approach, CSP also supported Cathay Pacific’s Environmental Affairs Department to demonstrate to procurement professionals the value of integrating sustainability criteria into purchasing processes. For example, by monetizing the plastic items’ landfill waste footprint with the HK$500/per ton charge proposed by the Hong Kong government in 2016, CSP showed how procurement decisions that result in lower waste production can also lead to reductions in waste charges.

Finally, the CSP project at Cathay Pacific provided the company with an entry point for measuring and tracking performance against its sustainability goals on waste and “more sustainable” materials.

Lessons Learned

While plastics have complex environmental footprints that cannot be compared easily, requesting data from suppliers yielded valuable information and sparked a dialogue about ways for Cathay Pacific to reduce its environmental impact.

In general, suppliers were willing to cooperate with data requests and interested to engage about the sustainability implications of the material selection. A large share of suppliers already are proficient in measuring and disclosing environmental footprint data, with some even offering the customers technical advice on the sustainability merits of different polymers.

Life Cycle Analysis software may not be practical for procurement teams with capacity constraints, but these teams still can integrate life-cycle thinking approaches progressively into their policies, tools, and scorecards. The CSP’s plastic comparison tool is an example of how this can be done.

Case Studies | Tuesday November 4, 2014

Microsoft: Embedding Human Rights Across a Global Technology Company

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The Challenge

For Microsoft, implementing the UN Guiding Principles on Business and Human Rights posed three main challenges:

First, the technology sector can affect a number of human rights positively or negatively, from privacy and data security considerations in cloud computing, to how human rights might be portrayed in video games.

Second, while company leaders believe the information and communications technology industry plays an important role in advancing free expression and human rights, the public narrative often is focused much more on the risks to freedom of expression and privacy than on the industry’s positive contributions.

And third, there was a need to clarify which human rights issues are most salient for Microsoft.

To address these challenges, the company asked for BSR’s support in creating one cohesive, global strategy for Microsoft’s human rights management—a partnership that began three years ago and continues today.

Our Strategy

First, we reviewed Microsoft’s operations and identified potential risks and opportunities based on the full universe of human rights so that we could identify the most significant risks, impacts, and opportunities for the company.

With this short list of relevant issues, we interviewed key experts and more than 40 employees working directly with Microsoft’s business groups to understand how Microsoft considers human rights in its product development and operations.

After analyzing these interviews, we developed a new global human rights framework that outlines Microsoft’s commitments. The framework is focused on proactive due diligence to avoid risks, maximizing the benefits of technology and responsible engagement, and clearly articulates the company’s point of view on human rights.

Through this process, we also identified areas that needed further review. To address these areas, we have begun the next step of human rights impact assessments on specific aspects of Microsoft’s business.

Our Impact

Based on our in-depth assessment, Microsoft has been able to embed human rights considerations throughout the company. Major business decisions, such as entry into a new market or selection of a new joint-venture partner, include human rights due diligence and are guided by the company’s global human rights statement.

This has helped employees across business groups develop a common understanding of Microsoft’s approach to human rights. The new Microsoft Technology and Human Rights Center provides a platform to further advance research and debate on human rights and technology. The center has hosted several events, including roundtables on privacy, data security, and freedom of expression and government surveillance at the World Economic Forum in 2013 and 2014. The center also has commissioned research to advance the field.

Lessons learned

The early success of this project reinforced our belief that meaningful consultation of internal stakeholders generates buy-in and helps employees across companies understand their role in protecting human rights when making critical decisions.

We also learned that approaches to human rights assessment are most successful when tailored to the company’s culture. For instance, at Microsoft, an assessment with broad-based internal engagement fit with the company’s culture of collaboration across disciplines.

Finally, we were reminded of the importance of executive leadership, which is instrumental in the success of this long-term work.

Case Studies | Tuesday November 4, 2014

Managing Greenhouse Gas Emissions in Chinese Supply Chains

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The Challenge

For manufacturing companies, the supply chain typically accounts for 70 to 80 percent of lifecycle greenhouse gas emissions. Much of these emissions are found in China, which contributes to approximately a quarter of global emissions annually, as well as the majority of emissions from products for export. For these reasons, many companies that are serious about addressing climate change are seeking to manage supply chain emissions, with a focus on this region.

But they face obstacles, many of which are common among emerging markets: Suppliers’ ability and readiness to manage emissions vary widely, making it hard to rely on a standard approach with all suppliers. In addition, policy incentives are not sufficient to encourage factories to upgrade inefficient equipment and systems. And climate change often takes a back seat to other, more visible supply chain agendas, including labor conditions, worker safety and fires, and toxic spills.

Our Strategy

Over the years, BSR has led a series of initiatives to reduce supply chain emissions, working with brands and their suppliers to use BSR’s local networks in China.

In 2008, we launched this work in a project with Walmart and the Environmental Defense Fund: To help Walmart meet its corporate commitment to reduce the emissions of 200 Chinese factories, we led outreach to suppliers and determined individual energy profiles and trends. Through this initiative, BSR identified four key priorities for suppliers to address energy challenges: preliminary diagnostic evaluation, management and technical training, on-site energy audit and opportunity assessments, and development of action plans.

Reflecting on lessons learned, we developed the Energy Efficiency Partnership (EEP), a coalition of 10 companies working with 100 suppliers in South China to coach and share information on energy efficiency. Through our work together, one significant partner, HP, has developed energy-management action plans for 20 factories. We helped HP identify current opportunities for motivating energy efficiency while segmenting and targeting suppliers for different kinds of interventions—with some focused on making the business case, and others focused on providing detailed energy audits. We complemented this by interviewing HP suppliers’ managerial and technical staff to understand how to address individual challenges.

Our Impact

Through this work, companies like HP have gained a greater understanding of where and how they can drive greenhouse gas reduction in factories by gaining support from suppliers’ senior management and by understanding the barriers suppliers face.

Following our initiative, which catalyzed more than 100 new energy-efficiency projects, HP became one of the first companies in the world to announce a greenhouse gas reduction goal for supply chain, where it committed to driving a 20 percent decrease in its first-tier manufacturing and product-transportation-related greenhouse gas emissions intensity between 2010 and 2020.

This work also has contributed to our broader Business in a Climate-Constrained World initiative by developing a significant body of knowledge about how to harness supply chains in China and other emerging markets to reduce greenhouse gas emissions and adapt to climate change.

Lessons learned

Companies can—and should—have goals for greenhouse gas management in their supply chains. To do this in a way that is effective and manageable, companies should:

1. Understand suppliers’ level of ambition and assumptions about the business case for investing in energy efficiency.
2. Be judicious in asking for data requests in an era of survey fatigue by focusing on information that is actionable.
3. Help suppliers improve their ability to manage greenhouse gas emissions by providing expertise and technical resources to suppliers and sharing in investments for energy efficiency.

Case Studies | Tuesday November 4, 2014

Clean Cargo Working Group: Measuring and Improving the Environmental Performance of Ocean Shipping

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The Challenge

The ocean shipping industry, which transports 90 percent of what we own, contributes approximately 3 percent to global greenhouse gas emissions, which contribute to climate change, sea and land acidification, and poor air quality. The industry also affects the oceans’ environmental health through chemical cargo residues, cleaning agents, and nonindigenous species from ballast water.

Ten years ago, few standards existed for quantifying the environmental impacts and performance of shipping, so a small group of BSR member companies asked BSR to help them capture the environmental footprint of their products’ journey.

Our Strategy

In 2004, BSR, the U.S. Environmental Protection Agency (EPA), global brands, and global container cargo carriers came together to establish the Clean Cargo Working Group (CCWG) to develop standardized tools that meet the needs of both shipping customers and cargo carriers to measure, report on, and evaluate environmental impacts.

First, CCWG identified the metrics and qualitative factors to track, and then we developed tools to report on carbon dioxide and other emissions; the use of environmental management systems; and best practices for transparency and for the management of waste, water, and chemicals. The transport providers and their brand customers meet twice yearly to refine tools and share best practices on improving environmental performance. For five years, we have published an “Emissions Factors” report, which has revealed that cargo transport providers have reduced carbon-dioxide emissions by up to 22 percent in that time.

To remain relevant and influence the development of groups across other modes of transport, CCWG also engages with other sustainability initiatives in the sector and aligns with global standards.

More recently, we have been working to integrate our tools with procurement systems to streamline use by brands, and we have been working with leading academics to analyze our data set—one of the largest of its kind on transportation environmental metrics—for operational decisions that can improve environmental performance.

Our Impact

Today, more than 85 percent of the container ship industry uses CCWG methodology to report environmental performance. In addition, the majority of global buyer members—including companies such as Electrolux, IKEA, Marks & Spencer, and Nike—have used CCWG metrics and tools to improve environmental performance in their supply chains.

Given the group’s industry recognition, CCWG engages regularly with the World Shipping Council as well as regulatory bodies such as the European Commission, as they seek to develop a globally recognized legal framework for maritime companies to measure, report, and reduce carbon-dioxide emissions. Already, the U.S. EPA and other transport sustainability initiatives have used our methodologies and results as the standard for environmental performance in ocean container transport.

On an ongoing basis, CCWG has provided a unique platform for peer companies to share best practices, for buyers to work with transportation providers on appropriate expectations for environmental performance, and for brands to influence latest developments across the entire transport supply chain.

We are now working to expand our reach as a global initiative by considering a merger with the Clean Shipping Initiative that, if successful, will launch a single industrywide platform for environmental performance measurement and reporting across more ocean goods such as oil, commodities, and finished vehicles.

Lessons learned

CCWG’s effective collaboration is a result of several factors:

• A consistent focus on mission
• Flexibility that meets members’ needs
• Time spent building trust among parties
• Appropriate incentive mechanisms for environmental data collection, reporting, and management

Case Studies | Tuesday November 4, 2014

Global Network Initiative: Protecting Human Rights in the Digital Age

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The Challenge

The rapid growth in global internet and telecommunications services has resulted in significant gains in our ability to communicate freely. However, this growth has been accompanied by government efforts to restrict user access to content, acquire personal information, and interfere with private communications.

For many years, information and communications technology (ICT) companies were caught between government requirements and the users’ expectations and rights—lacking international standards to apply when governments made demands that might result in human rights infringements. To determine best practices and create these standards, BSR partnered with the Center for Democracy and Technology in 2006 to design and facilitate a multistakeholder process to fill this void.

Our Strategy

BSR worked with the group to write the foundational documents—principles, implementation guidelines, and a governance charter—that shaped the work of the Global Network Initiative (GNI), which launched in 2008 as the first group of its kind that included representatives from ICT companies, civil society groups, investors, and academics.

BSR served as the co-facilitator during this process, helping with negotiation and conflict resolution to generate consensus during debates. We also undertook the work of the GNI until it became its own legal entity in 2010. Following this, BSR wrote a public report for GNI on “Protecting Human Rights in the Digital Age,” outlining the main freedom of expression and privacy risks at different layers of the ICT value chain.

Since 2010, the GNI has had a full-time secretariat in place, and BSR no longer facilitates the organization—which reflects BSR’s occasional role as an incubator of innovative, collaborative efforts that are then implemented by others. Today, the GNI focuses on advancing its principles, recruiting new companies, sharing best practices, engaging in policy debates, and implementing its accountability mechanism.

Our Impact

The sustained success of the GNI is an indication of BSR’s own story of impact.

Partly as a result of this work, the GNI’s five member companies, which together serve more than 2 billion users, have implemented new global standards on freedom of expression and privacy. In 2013, nine global telecommunications companies launched a set of principles focused on free expression and privacy.

The GNI’s work also helped build understanding among experts from the ICT industry and from the field of human rights—two groups that previously did not regularly work together. This has helped build a growing community of experts in ICT and human rights—a significant development given the increasing importance of technology in our pursuit of human rights today.

While exact cause and effect is difficult to pinpoint, ICT companies’ increased transparency about their relationships with law-enforcement, and companies’ reformed approaches to surveillance and data collection, are among the GNI’s recent successes.

Lessons learned

The multistakeholder approach and emphasis on accountability standards has enhanced the credibility of the GNI among human rights organizations, and it is unlikely that the depth of collaboration between companies and human rights organizations would have happened without it.

However, the GNI has faced challenges expanding its corporate membership base, which has grown from three to five major internet companies. That said, because of the GNI’s open standards and multistakeholder approach, other companies that have not joined the GNI have deemed the GNI’s founding documents highly credible, and have adopted key features of the underlying principles.

Case Studies | Tuesday November 4, 2014

Electronic Industry Citizenship Coalition: 10 Years of Impact in the Electronics Supply Chain

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The Challenge

The rapid growth of the information and communications technology (ICT) industry requires an expansive manufacturing supply chain that needs to address a range of labor, health, safety, and environmental challenges, including excessive working hours, growing carbon emissions, and inadequate living conditions for workers.

In 2004, it became clear that efforts to address these challenges would be more powerful if different players across the ICT value chain—brands, assemblers, and component manufacturers—formed one collaborative initiative. They enlisted BSR’s help.

Our Strategy

In 2004, a small group of ICT companies came to BSR with a simple request: Help us establish and grow an organization to implement the new Electronics Industry Code of Conduct through shared tools, collaborative approaches, and innovative methods. That same year, at the annual BSR Conference, the group officially launched the Electronic Industry Code Compliance, which in 2008 became the Electronic Industry Citizenship Coalition (EICC).

As a neutral facilitator, BSR helped the group establish sustainable approaches to governance, management, and membership growth. This included the launch of the EICC as an independent legal entity in 2008, and the recruitment of full-time secretariat staff in 2013.

As an expert on supply chain responsibility, we helped develop approaches to some of the industry’s most intractable problems, including conflict minerals, excessive working hours, water quality, and carbon emissions.

To ensure that this work was meaningful to business globally, we worked with companies and suppliers in all regions, and invited companies at all layers of the ICT supply chain to participate.

Our Impact

Now that the EICC has a full-time secretariat, BSR no longer facilitates the group. However, we do regularly participate in EICC events, and maintain a dialogue on best practices in supply chain management.

The EICC grew from seven companies at its launch to almost 100 companies by its 10th anniversary in 2014—which means the EICC now influences responsible business practices at companies representing more than US$2.6 trillion in revenues.

The most powerful way the EICC influences companies is through its code, which sets out minimum requirements on ethics, labor, health, safety, and the environment. As of the end of 2012, 100 percent of EICC member companies were applying the code at their suppliers’ facilities, and more than 80 percent were using EICC tools to conduct supplier risk assessments.

Additionally, the EICC ensures that lessons are shared across its membership by reviewing industry audit results and designing collaborative methods to address the most significant findings. This has allowed the group to create industrywide approaches to issues like conflict minerals, through the EICC’s Conflict-Free Sourcing Initiative, and water quality in China, by working with China’s leading environmental organization, the Institute for Public and Environmental Affairs.

Lessons learned

Bringing different parts of an entire industry’s supply chain together into one organization presents both opportunities and challenges.

On issues such as conflict minerals, environmental management, carbon emissions, working hours, and student workers, the industry has been able to develop solutions much more rapidly and effectively.

However, different parts of the ICT supply chain can have competing interests, and this creates challenges in decision-making, governance, and prioritization. Companies continue to seek evidence of how participation in the EICC will deliver measurable business benefits, and different membership tracks have allowed companies to make progress at different speeds.

At the same time, there are limitations even for an industrywide group such as this, due to core business factors and challenges associated with the ICT industry, such as pressures on price, quality, and delivery timelines, or the lack of government enforcement of legal requirements. Nevertheless, collaborative approaches have significantly increased the leverage of individual companies in the face of these challenges.

Case Studies | Tuesday November 4, 2014

Sanofi: Using Materiality to Build a Strong, Focused CSR Strategy

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The Challenge

Since 2010, Sanofi has used the materiality principle to ensure that its CSR strategy addressed the issues of greatest importance to both business success and stakeholders. Sanofi’s first materiality analysis in 2010 resulted in 12 priorities for action, and while Sanofi has continuously revised and improved the process since then, the same 12 CSR priorities have remained.

In 2013, Sanofi decided that after three years, it was the right time to review its materiality priorities. The company enlisted BSR’s help to explore whether these 12 issues had shifted in relative importance, whether there were additional issues to consider, and how best to focus the company’s resources.

Our Strategy

Sanofi and BSR partnered to rank, map, and analyze a list of 50 potential issues, ranging from pricing of drugs, to responsible marketing practices, to emissions, to water, to talent development.

BSR’s materiality methodology has evolved since its creation in 2006, and in this case our methodology included a qualitative and quantitative dimension—engaging more than 100 internal and external stakeholders across Sanofi’s nine categories of stakeholders and across all major geographies through desktop research, phone interviews, in-person interviews, and online surveys. We also stretched our methodology to incorporate questions that helped us understand and highlight levels of management, actionable items, risks and opportunities, and upcoming trends.

This new approach to materiality gave Sanofi a deeper understanding of the company’s priority issues, which allowed the company to narrow the list down to six CSR priorities that are closely linked to its core business. Some items were kept, such as access to healthcare and patient safety, while the scope of other issues, such as business ethics, was clarified.

On environmental issues, stakeholders were divided. One stakeholder with a strong knowledge of the pharmaceutical sector described these issues as “less important, as they are not specific to the pharmaceutical industry.” While this overarching comment was shared by several stakeholders, many clearly identified “pharmaceuticals in the environment” as a growing risk, and because of BSR’s robust methodology, Sanofi felt confident in including this issue in its final list.

Our Impact

Materiality is used to inform strategy, so the immediate impacts are in changes to the company’s CSR approach. This more focused list of issues is now helping the company sharpen its strategy, rebalance the allocation of resources and attention dedicated to advancing each issue, and work toward the objective of amplifying the company’s impact in the coming years.

Lessons learned

This project confirmed two key concepts of materiality.

First, a materiality process that involves robust methodology and a thorough data and input collection process can do more than identify priorities. It can provide a baseline assessment of risks and opportunities, and it can address management performance and even identify rising trends.

Second, materiality is more than the sum of its parts. It can provide an opportunity for stakeholders to influence a large company, for a company to continue existing dialogues or start new ones with stakeholders, for corporate teams to engage with executives, and for the company to bring focus and create more value for the business and its stakeholders.

Case Studies | Monday August 25, 2014

Procurement of Display Units as an Opportunity for Improved Sustainability in Stores

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The Challenge

Best Buy has more than 1,000 stores in the United States, all of which have many in-store displays. In 2012, the company partnered with the Center for Sustainable Procurement (CSP) to explore ways that it could improve its procurement process for displays and define the criteria for making them more sustainable in the future.

The display lifecycle intersects a range of functions at Best Buy, from design and vendor management to store operations and disposal, making it a useful test case. Additionally, this work was well-aligned with the company’s commitment to reduce its stores’ environmental impacts and with earlier efforts to ensure that all Best Buy displays comply with the California Air Resources Board (CARB) requirements to reduce toxic emissions from composite wood products.

From the beginning, Best Buy expected that supplier engagement would be essential to support the development of more sustainable displays, whether through validating and implementing design choices or helping to identify options for preferable components at competitive prices. Internal supporters for this work included the procurement lead responsible for sustainability and the sourcing manager responsible for construction and displays, as well as senior leadership responsible for sustainability and corporate responsibility across the company.

CSP identified several challenges, including educating both staff and vendors about the desired sustainability improvements, unclear incentives for change, unknown cost implications of changing display components, and limited information about the sustainability, availability, and durability of alternative components.

Our Strategy

CSP interviewed key internal stakeholders and decision-makers related to display procurement and management and researched the materials used in displays to understand the options for environmentally preferable alternatives.

Through this analysis, CSP identified a set of opportunities across the lifecycle of displays, starting with design, vendor selection, manufacturing, and deployment and carrying through to in-store use and display end of life. CSP then recommended that Best Buy gather information from select suppliers and outside experts about environmental opportunities and areas where suppliers are considering the environmental impacts of display materials. These discussions would be designed to identify current activities and to clarify specific opportunities for short-term actions to improve the procurement process or displays themselves.

CSP also recommended that Best Buy investigate targets or preferences for more sustainable materials, principally focused on availability and cost, while also documenting other sustainability benefits or concerns. One example of implementation might be setting specific component goals, such as making sure that at least 75 percent of all the wood and wood composite components used in its displays is certified by the Forest Stewardship Council (FSC). Another example could be working with existing suppliers on methods to meet sustainability targets and including these targets in procurement criteria with new suppliers through the request for proposals (RFP) process. Best Buy could also establish a time line for making these shifts in display procurement.

Our Impact

This research led Best Buy to engage directly with its key suppliers of metal and wood-based displays to execute the recommendations. In discussions with them, the company found that several suppliers were already addressing potential improvements, including:

• Light-weighting of display components (design enhancements to reduce materials while retaining structural integrity)
• Use of recycled content
• End-of-life recovery of electronic components in displays
• Use of environmentally preferable materials and techniques in transport packaging

By engaging directly with suppliers, Best Buy learned about product improvement opportunities and began realigning its goals to account for them.

However, it was unclear whether it was feasible to make immediate changes to display materials or disposal processes. While some options or activities, such as light-weighting and improved packaging, help reduce costs and improve environmental impacts, other environmentally preferable options or activities, such as using FSC-certified wood or reusing components, are less immediately viable based on their cost. CSP recommended that Best Buy continue to explore these options because of their environmental benefits and their potential for positive business impacts.

Lessons Learned

Although this study did not uncover immediate opportunities for changes to displays, Best Buy now includes questions about relevant environmental issues in its display procurement process, which has resulted in deeper discussions with suppliers about their activities and possible, related sustainability opportunities. These discussions also have enabled Best Buy to emphasize to its suppliers how much the company values environmental sustainability, particularly in relation to the products it purchases.

The value of integrating environmental issues into supplier engagement for displays suggests that this approach could be applied in other areas at Best Buy. By regularly engaging with suppliers on specific sustainability opportunities, such as the use of FSC-certified materials, as well as posing open-ended questions about other opportunities for social and environmental improvements, Best Buy can identify new opportunities and act on them in the future.

Case Studies | Monday August 25, 2014

Improving the Lifecycle Energy Impacts of Notebook Computers in the Production Phase

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The Challenge

Dell wanted to improve the lifecycle sustainability impacts of its notebook computers. Through its own work gathering lifecycle data from suppliers, as well as involvement in collaborative initiatives, such as the Massachusetts Institute of Technology’s PAIA (Product Attribute to Impact Algorithm) and The Sustainability Consortium, Dell had already identified the hot spots and other critical impacts that must be addressed to substantially improve the sustainability of notebooks.

Viewed through the lens of the product, these impacts constitute two types of sustainability attributes:

• Physical attributes: Material content, energy use (efficiency), and recyclability
• Embedded attributes represented by the sum total of production impacts (energy use, water use, waste production, social and labor effects, etc.) from extraction to component manufacture, assembly, and transport

Many of these impacts are related to the practices of suppliers, recycling partners, and transport and logistics providers. This is particularly true in Dell’s case, as all manufacturing and some elements of design and service are contracted out to a few original design manufacturers (ODMs). With respect to energy and emissions, for example, Dell has conducted lifecycle assessment (LCA) studies that suggest that half of the lifecycle energy use and related emissions for a typical notebook computer are found in the supply chain (extraction, manufacture, and transport), with the other half represented by product use.

While important progress is being made in these areas of supply chain performance, the sustainability team at Dell saw an opportunity to make its supply chain practices even more sustainable—and hence improve its notebooks’ overall sustainability profile—by working with the Center for Sustainable Procurement (CSP) to find new ways to engage and support ODMs.

The key decision-makers were Dell’s marketing and product development division, commodity team, supplier management division, operations, and its ODMs.

Our Strategy

To define the focus and scope of this case study, Dell and CSP first considered the following questions:

• What are Dell’s business and sustainability priorities for notebook computers?
• Where are we likely to find opportunities to improve sustainability performance that also create business benefits for our suppliers and partners?
• In what areas are suppliers most likely to have at least some of the capacity, data, and infrastructure needed to drive improvement in a reasonable time frame?

Dell and CSP agreed that, to be successful, any proposed improvements would need to be cost effective and scalable, produce real sustainability improvements, and maintain or improve quality—all without causing any delays in production. To achieve these objectives, Dell assembled an internal, cross-functional team that brought together key players in the overall product development process, especially the commodity purchasing teams responsible for determining the desired product specifications and the supplier management teams whose job it is to work with supplier partners to make sure that Dell product specifications and production standards are being met. CSP then engaged this internal team to ensure that it fully understood and was aligned with Dell’s broader sustainability goals, and specifically, to determine how they can approach and partner with ODMs to improve the lifecycle energy impacts of notebook computers in the production phase.

Our Impact

While Dell already incorporates environmental standards into product specifications and has robust processes in place to monitor and improve suppliers’ operating practices, the two have not historically been linked. Improving the total lifecycle sustainability performance of notebooks required Dell to connect the dots between the commodity purchasing teams and those who directly manage key suppliers. Through these internal engagements, the company has aligned these teams to support its sustainability goals.

These internal engagements also led to a pilot project with an ODM partner to better understand the supplier’s energy usage with the ultimate goal of understanding how the supplier can reduce its energy use and improve notebooks’ overall lifecycle impacts. The pilot’s goal is to collect available baseline energy data from ODMs, identify opportunities for energy reductions at the facilities level, provide guidance to the ODM to realize improvements, and then measure the phase’s energy use after the project has been executed.

The information gathered and lessons learned through this pilot project will ultimately help Dell to better manage its supplier relationships and drive decision-making around procurement that improve embedded energy in this complex product category.

Lessons Learned

The power of connecting internal teams that historically have not been linked was a key lesson learned. In the case of Dell, the commodity purchasing and supply chain management teams benefited greatly from first aligning on broad sustainability objectives. They then developed category strategies for notebook computers that incorporated specific sustainability attributes as a way to create business value for the company.

Stronger internal alignment also led to a more cohesive supplier engagement strategy, particularly with Dell’s long-term suppliers with whom the company must partner to realize sustainability gains, specifically as they relate to improving the lifecycle sustainability impacts of its notebook computers.