The Green Supply Chain Challenge: Corporate Sustainability Management

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substainableCSM, or "green strategies," can run the gamut as to what they are, how they can be implemented, and the various scales at which they can be targeted. The successful CSM strategy should marry business practices with both social and environmental practices. But how do you actually develop a workable CSM plan that will be adopted and then be sustainable itself?

 

 

 


Corporate Sustainability Management (CSM) has become a more common agenda item for businesses across industries. However, in many cases, the combination of environmental, social, and economic aspects of CSM has stalled plan implementations. Certainly, the ideas, beliefs, and strategies behind acting "green" or in a sustainable manner are not difficult to list nor to imagine, but putting them into action at the corporate level, versus the individual level, really has its challenges – despite the many advantages.

Putting CSM into practice

As a case study in CSM, Houston-based Smith & Associate's green choices and strategies present an opportunity to share how one corporation's green path was paved with both small and large steps, as well as the pauses that we all encounter. Building and maintaining momentum for corporate sustainability management is something that we all need to address, an idea Smith has pushed for years, and a topic that recently was reported in a joint study with MIT Sloan and The Boston Consulting Group (BCG). As the detailed MIT-BCG study quantifies, and as our feet-on-the-ground work within our company and with the City of Houston has shown, an effective approach to CSM can start with an understanding of the small steps that foster successes and build confidence to achieve bigger goals. As the collaborations between the City of Houston, Smith & Associates, and other leading corporations have demonstrated, successful, long-term CSM fosters improved internal business success and opens new market opportunities.

Green intersection highlights benefits and challenges

At both ends of the CSM model, individuals are the driver. Of course individual sustainability-focused acts are ones that we are used to and probably don't really think about; it is a balance that we manage daily through our choices. When it comes to our behavior as residents and consumers, we make environmental, or "green," demands of other people, businesses, communities, and cities. At the same time as we try to meet our own environmental or "green" goals, we are also the people who work in the businesses, communities, and cities that are providing green(er) services. Here, there are two issues to appreciate about CSM: first, sustainability is, inherently, about making improvements for people and the environment; and, second, to make social, cultural, economic, and environmental improvements not only improves the world for others, but also for oneself as both an individual and as a business, from all aspects and measurements, simultaneously.

Perhaps because CSM, or "green strategies," can really run the gamut as to what they are, how they can be implemented, and the various scales at which they can be targeted, the challenge to successful CSM rests in how these strategies are implemented. More specifically, how do you actually develop a workable CSM plan that will be adopted and then be sustainable itself. This question is a real challenge for those just starting on their CSM path. There are scores of "how-to's" for enacting CSM, but at the core of those resource guides is what Smith echoes as the crux: all individuals in the corporation, from upper management through the general employee ranks, need to have a way to come together with an equal sense of ownership, collaboration, and agreement on the goal(s), and with the ability to see that a difference is being made (and that even more is attainable). Implementing such a CSM ensures that change will happen and progress can be made.

From Smith’s experience, building a CSM plan should involve both top-down and bottom-up commitment and ownership. Just as sustainability is a two-way relationship between the individual and the wider business and community domains, the successful CSM strategy should include means to successfully marry business practices with both social and environmental practices. By attending to this two-way relationship in sustainability management, CSM metrics for success and profitability can be identified and measured in both traditional business fiscal terms and in the improvements and benefits to the individuals, communities, and the environment. Most businesspeople would agree that successful CSM occurs when the goals of reduced costs and reduced carbon footprints are achieved simultaneously.

The CSM road is paved with single green bricks

Having a broad framework to pull the larger goals and smaller steps alike into a tangible, coherent CSM strategy is essential so that progress is not stalled after the plan is formed. As we have seen at Smith, and as the MIT-BCG report also points out, the real challenge to successful CSM comes after the initial set of implementations. The challenge is not starting but keeping the momentum going once the initial hard work of identifying the sustainability goals and drilling down into action points is complete. As MIT-BCG underscores, this is the point of moving beyond the initial sustainability steps into the realm of the more-significant ones where "[…] the disconnect between thought and action" separates organizations along doing, trying, and simply talking about CSM (p.10).

The "how-to" - Smith's implementation of CSM

To be honest, it is not that Smith's CSM has always been defined at a granular level that produces ongoing, step-by-step action items that proceed as planned. It hasn't; at Smith, we found that accepting that sustainability and adherence to the CSM goals throughout the organization are both fluid goals is vital to keeping the overall momentum. Maintaining momentum while allowing for flexibility along our CSM path is how we have been successful. Just as quality and agility in the semiconductor and electronics supply chain are critically important and necessary to succeed in the marketplace, the same is true when it comes to sustainability strategies.

One point where failure can occur is in not appreciating the need for (and patience with) agility. For Smith, one key to success is accepting that the goals for CSM are broad, but the steps to achieving those goals are discrete and so they can be done at different paces and through different venues as the appropriate timing and opportunities arise. As Smith's Chief Operating Officer, Matthew Hartzell, expressed, "To Smith & Associates, the road to truly having a green company is long, but it is well worth the effort. We are proud of the commitment of our employees as well as the recognition and support that we have achieved thus far […]."

What are some initial steps?

Taking small CSM steps first is rational and the most "doable." The efficiency of the workplace setting itself is an opportunity for immediate CSM success in terms of cost-savings and reduction in wasteful uses of natural resources. More specifically, whether you own or lease your facility, it is possible to make a number of relatively low-cost changes and build momentum for CSM. The most recent project that Smith completed, just before Earth Day 2013 (which was also tied into our overarching CSM progress), was the renovation of our trading floor. Interior renovations are typically part of a corporation's plans, whether in an owned or leased facility.

Among the one-by-one, small steps that Smith has taken over the recent years (which are appropriate for leased and owned facilities) are the following:

  • Installation of video-conferencing capable phone systems at employees’ desks to reduce travel and carbon-footprint through easy and accessible use of VoIP teleconferencing;
  • Energy-efficient lighting (conversion to LED technology);
  • Sensors for lighting, water, and room controls to avoid waste;
  • Increased use of recycled paper, paper napkins, and other products;
  • Installation of campus-wide recycling stations, including recycling bins, waste bins, and paper recycling bins;
  • Elimination of disposable cups for all employees by providing reusable company cups, mugs, and utensils, with use encouraged by Green Bag Lunches and speaking events;
  • Switching to environmentally-friendly cleaning products and pest control services;
  • Employee of the Month incentives include the free use of a corporate-owned Chevrolet Volt Electric Vehicle (EV) for each of two employees, with reserved parking in dedicated Level 2 recharging spots with PV shading; and
  • Establishment of Smith Sustainability Group (SSG), an employee-directed green team comprised of employees and managers from across the corporation.

Maintaining green momentum

To successfully maintain CSM momentum, the opportunities for measurable and decisive key performance indicators (KPIs) must be identified and shared. These KPIs should span business cost-savings, environmental impact, community support, and employee and customer satisfaction to meet the goals of all stake-holders in the CSM. Unfortunately, full-scale adoption and implementation of CSM across corporations continues to lag, stuck around a 35% adoption rate, according to the MIT-BCG December 2013 report. As their in-depth study underscores (regarding the problem of increasing momentum for CSM and acting sustainably):

There is little disagreement that sustainability is necessary to be competitive – 86% of respondents say it is or will be. Sustainability's next frontier is tackling the significant sustainability issues – or, in the parlance that is gaining currency, 'material sustainability issues' – that lie at the heart of competitive advantage and long-term viability. Yet many companies struggle to match their strong level of sustainability concern with equally strong actions. They still wrestle with settling on which actions to pursue and aligning around them.

However, some companies are moving forward. They are making links between significant sustainability issues and business value and forging ahead along five fronts: sustainability strategy, business-case development, measurement, business model innovation and top management support. (p. 15)

The MIT-BCG study offers a critical message to those finding themselves either stalled or having not yet initiated CSM plans, one which global corporate leaders such as Domtar's VP of Sustainability, David Struh, echo. "Understanding what we can do to improve our relationship with the environment can be a well-spring of business innovation. […] Companies that eschew waste, prize efficiency and innovate are the ones that will make it in the long run." (ibid, p. 16)

As we can understand, maintaining CSM momentum is just as challenging as setting forth the CSM strategic plan itself. One important way to keep momentum is to demonstrate through KPIs that the steps being taken are, in fact, making a difference across and beyond the company. As Hartzell also offered, regarding Smith's CSM steps: "Our mission is to make Smith & Associates the greenest that it can be, we continue to take steps to change how we think, companywide. Smith knows that in order to be environmentally responsible, recycle programs and thoughtful choices need to be made on a global scale, one office at a time. Our changes in Houston are the first of many more to come."

For Smith, some of our KPIs for the above list of sustainability initiatives include the following:

  • 38% reduction of energy use since 2008
  • Doubled recycling of waste from an average of 2.21 tons per month in 2008 to an average of 6.30 tons per month in 2011
  • Increase in average waste diversion to 95%
  • Elimination of paper cups (53,000 paper cups saved annually)

Art Figueroa, Smith's VP of Global Operations (formerly Smith's Environmental Director), summed up the impact of our CSM strategy. "Smith pledges to think, act, and operate green. […] Our willingness to adopt innovative technologies, combined with the day-to-day commitment from our employees to meet our goals for sustainability, make Smith a pioneer in green practices for the City of Houston."

Green renovations and asset disposition

Having actionable events that fold into your CSM are important and support initiating (or reinvigorating) CSM projects. Smith's trading floor renovation was a "Level Two Green Initiative" for Smith. This internal workplace green renovation was rooted in a needed update for the trading floor, but we intentionally chose sustainable furniture, appliances, paints, and lighting fixtures for the renovation. Including green and sustainable choices into renovations is made easy by working with contractors who use environmentally-aware materials and nontoxic and Low VOC paints and ceiling tiles; support layouts to increase the use of daylight over artificial lighting; and use recyclable and recycled content in carpets and furniture.

The next step in a green renovation is the disposition of materials (furniture, fixtures, carpeting, etc.), which opens another opportunity for sustainable action. Taking the mindset of asset disposition versus "trashing" allowed Smith to reduce landfill waste while supporting local community organizations that could reuse those fixtures, furniture, etc. Direct donations support the economic and social sustainability of local community members while protecting the environment, forging more progress toward CSM goals that reach into the community. As Figueroa pointed out, "Over the past five years, we have established our continued dedication to operating in a sustainable manner; one that conserves and sustains the earth's resources. Our employees enjoy working in a sustainable environment and knowing that the materials used in our buildings support a nontoxic work place. Likewise, our customers can rest easy knowing that working with Smith means supporting earth-friendly practices such as reduced landfills and transportation waste."

Green e-waste solutions

Another CSM disposition opportunity for leased and owned facilities is the asset disposition of electronics. How we handle and dispose of outdated electronics is a significant environmental, social, and supply chain issue. Not only do all corporations face the question of properly discarding electronic waste, but these choices readily fit into CSM actionable plans and goals. We can enlarge our CSM goals, as organizations and corporations, through making green choices in how we handle obsolete electronic equipment, as well as by providing a local drop-off for community electronic waste (e-waste). Facilitating proper e-waste management is a natural follow-on step from the recycling of paper, bottles, cans, etc.; the processes are similar yet both uniquely and highly impactful.

Of course, when handling disposition-waste, secure data disposition must be addressed so that HDDs and memory are completely erased per industry standards for those data. Then the proper disposition of the hardware itself can be safely and easily handled while protecting the environment and supporting the social, economic, and health concerns of people in developing nations where toxic waste continues to be dumped. Recall, though, that there are secure and green choices to disposition beyond scrapping. For example, Smith has donated phone systems, handsets, and our corporate electronics (upon complete, industry-standard wiping and reloading) to local organizations rather than scrapping these reusable electronics. One example is providing computers for school-age children. Not only does this promote our efforts to eventually reach a zero-landfill goal, but it also meaningfully supports our local community.

In 2011, Smith was named an "e-Stewards Enterprise" by the Basel Action Network, which recognized Smith's contributions to confronting global environmental injustices and to actively improving the economic inefficiency of toxic wastes, products, and technologies. Smith has expanded our asset disposition service offerings within the company itself, but especially for our customers worldwide to support the data-secure, economically sound, and environmentally aware repurposing, recycling, and/or destruction of used electronics equipment and components.

The big CSM steps

In preparation for the September 2012 U.S. Environmental Protection Agency (EPA) announcement of the Sustainable Materials Management (SMM) Electronics Challenge, Smith began to focus and intensify our CSM efforts that had been underway since 2008. The new focus for Smith's global headquarters in Houston (a company-owned building, land, and facility) was a complete "Greenovation."

In 2011, Smith completed a major renovation of its Houston headquarters. Smith's "Greenovation," an environmentally-based, energy-efficient, green renovation, included structural as well as more corporate changes, as detailed in this National Geographic article. The following are some of the major green building innovations and sustainability management programs that were implemented step-wise and tied together under Smith's Greenovation project:

  • Changing out asphalt roof with eco-friendly materials (cool roof and solar TPO poly roof system);
  • Solar photovoltaic rooftop system that can generate 91.08KW of solar power;
  • Solar thermal rooftop system to heat 115 gallons of water/day up to 140 degrees for office use;
  • Solar photovoltaic parking system to provide shade and electric car recharging stations for employees;
  • LED interior and exterior lighting systems with motion and light sensors, respectively;
  • Replacement of compressed gas HVAC system with air-cooled chiller towers, exterior water pumps, and chill water air handling units;
  • Development of Smith Sustainability Group (SSG), an employee-directed sustainability group that meets weekly to monitor, promote, and implement green initiatives and sustainability management for Smith;
  • Smith provides two 2012 Chevy Volt electric-only cars for Smith employees as part of an incentive system in which high performers have full use of the car for one month. This raises awareness and familiarity of electric vehicles and smart transportation choices in a hands-on way for employees.

In April 2012, after the completion of this Greenovation project, the City of Houston recognized Smith as the winner of the first-ever Greatest Implementation of Green Building Innovations award. This highest honor, awarded by Houston's groundbreaking Green Office Challenge program, recognized Smith for its ongoing efforts to become fully sustainable and carbon-neutral in its campuses and operations at home and around the world.

"Being classified as an industry leader in sustainability is especially meaningful to us, as we dedicate a lot of effort to maximizing sustainability in both our offices and in our supply-chain operations worldwide," said Art Figueroa. "We're honored that Smith received such a highly-regarded award by the City of Houston, where we've had our global headquarters for almost three decades. Our goal moving forward will be to continue to expand our sustainable initiatives globally and to ensure environmental responsibility."

Within the first sixth months of participating in the Green Office Challenge, Smith had already exceeded many of the environmental goals it set for that period, including: 

  • 14% reduction of energy use
  • 42% diversion of waste

Collaborative success sprouts more green  

From our inception 30 years ago this year, Smith has never lost sight of our corporate sustainability goals, keeping resource and environmental protection at the forefront of our business. An important aspect to our success, we feel, is the recognition that sustainability action is a two-way street. At Smith, sustainability is not a single idea, nor is a sustainability strategy easily divided into a neat and clean set of issues that go only in one direction. Successful CSM recognizes that sustainability is part of the fabric of our individual, local, business, community, and global life, and that means it spans many aspects of life: economic, social, health, and environmental issues, to name the top four. While this is a fascinating aspect of sustainability and should give corporations many paths to choose from for action, it is exactly this complexity that poses problems for clear and clean business implementations for many organizations. But this needn't be the case.

Collaboration is a key to unlocking the stalled position that many have found themselves in when faced with developing, implementing, or furthering CSM strategies. As the City of Houston's recent Peer Leadership Workshop demonstrated, not only does collaboration across different types of businesses and organizations within and across communities strengthen the individual organizations' ability to move their CSM paths forward, but – by  working together – greater goals that impact the entire community and municipality can be achieved, as well. The City of Houston's workshop "is part of [Institute for Sustainable Communities] ISC's broader Sustainable Communities Leadership Academy (SCLA), a program that builds the capacity of communities – cities, towns, counties, metropolitan regions and rural areas – to advance, accelerate and scale-up local solutions to the global challenges of climate protection and sustainable development."

At Smith, although not every day nor every quarter may be earmarked with a major green success story, we maintain our philosophy that "we pledge to think, act and operate green," as Figueroa summarized. Continuing to collaborate internally through our Smith Sustainability Group (SSG), as well as continuing our collaborative work with local community organizations, other businesses, and – importantly – the City of Houston, we maintain the agility and innovation necessary to stay ahead as peer leaders in sustainability activities and thereby enable us to lead in our business sectors as well.

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