FocusRetailers step up supply chain audits

28 January 2008 17:19  [Source: ICIS news]

By Doris de Guzman

NEW YORK (ICIS news)--Consumer preference for greener and more environmentally friendly products, as well as tightening regulatory pressures are driving retailers to look more closely in their supply chains’ sustainability practices, according to analysts and industry sources.

The trend will have major implications for the chemical industry, they said.

Last week, the international nonprofit organization Carbon Disclosure Project (CDP) under its Supply Chain Leadership Collaboration (SCLC) program added cosmetics company L'Oreal, soft drink giant PepsiCo, consumer products company Reckitt Benckiser, and computer makers Dell and HP to its member list of global purchasing giants that already included the world’s largest retailer, Wal-Mart, consumer products companies Procter & Gamble and Unilever, British grocer Tesco, and food and beverage giants Cadbury Schweppes and Nestle.

Members of the SCLC program aim to assess the greenhouse gas (GHG) emissions of their supply chains, which include agriculture, chemicals, transportation, buildings management, packaging and electronic components, using one single standardized methodology.

The project will start in May and CDP said more companies are expected to join the program.

“By bringing together the purchasing authority of some of the largest companies in the world, CDP will encourage suppliers to measure and manage their GHG emissions,” said CDP CEO Paul Dickinson in a statement. “This will enable large companies to work towards measuring their total carbon footprint, as this is the first step to managing and reducing it.”

Another major driver for these sustainability audits is for consumer businesses attempting to achieve competitive advantage, said Darrin Duber-Smith, president of Nederland, Colorado, US-based consulting firm Green Marketing, which recently launched its sustainability and corporate social responsibility audit services.

"The greening of the consumer market is a long-term trend and shows no signs of abating," said Duber-Smith. "It's important to have a sustainability plan [which stems from the audit] before incorporating anything into a company's very visible marketing program. You have to look at the entire picture, both inside the business and out, in order to make an accurate assessment of what is needed."

In the retail sector, Wal-Mart has been in forefront of supply chain regulation, according to one industry source. Wal-Mart, which joined CDP in late October, said it will even, in some cases, pay more for suppliers that meet their sustainability standards.

“Paying more in the short term for quality will mean paying less in the long term as a company,” said Wal-Mart CEO and president Lee Scott, at their annual US stores meeting last week. “We want to work with our suppliers to help them use less energy too. We believe our suppliers can reduce the amount of energy they use to make our products by 20%.”

With regard to chemicals and packaging, the "big-box" retailer expects to reduce 5% of its global packaging by 2013, use more sustainable and renewable packaging materials, and phase out chemicals considered toxic and hazardous by environmental activists.

Wal-Mart has already announced that it will replace polyvinyl chloride (PVC) in private-brand packaging, and expects to take steps by the third quarter. Other retailers such as Target and Sears Holding have announced similar initiatives.

In a statement, Sears said its long-term goal in packaging is to use bio-based polymers that are sustainably sourced, have higher recycled content, and can be reused, recycled or composted.

Electronics and consumer product manufacturers are already starting to comply with their retailers’ demands. Computer and software makers Microsoft, Apple, Dell, Lenovo and Hewlett Packard (HP) have all stated their intentions to phase out PVC in their products. Apple, Dell and HP have also promised to phase out the use of brominated flame retardants in their electronics and computers.

A spokesman for SC Johnson said it eliminated PVC from its packaging since 2002. The multinational cleaning product company also phased out in 2006 the chemical propoxur in its insecticide products as well as the organophosphate insecticide DDVP in 2004.

Wal-Mart said it has been asking its vendors to replace propoxur, permethrin – also a chemical found in insecticides, and the surfactant nonylphenol ethoxylates in cleaning products. Target will phase out the industrial surfactant perfluorooctanoic acid in its apparels with stain management properties by mid-2008.

For a more extensive discussion of the greening consumer market, be sure to check out the 11 February issue of ICIS Chemical Business.

ICIS Copyright © Reed Business Information 2009

Author: Doris de Guzman
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