Executive Briefings

Staying Green in Tough Economic Times

Companies are aware of the issue, but many still lack detailed programs for tracing and calculating their carbon footprints over the extended supply chain, according to Luka Powanga, executive director of the Global Commerce Forum.

Many companies have yet to institute the necessary controls for measuring the environmental impact of their supply chains, Powanga says. Some 60 percent of Fortune 500 businesses have a means of tracking carbon emissions, but a much smaller portion of all companies have enacted strategies for promoting sustainability. Even fewer than that have actual procedures in place to address key "green" issues. In the end, he says, "only a handful of those have a way of tracing the sustainability of their own processes as well as those of their suppliers. There's lots of room for improvement."

One problem is the lengthy span of time required to implement green initiatives. Because they are new to most companies, such efforts tend to lack existing models for building business cases. And in a down economy, green projects often must take a back seat to programs that will deliver a faster return on investment. A company might cut back on the idle time of its trucks, or adjust delivery schedules to make more efficient use of equipment. But it's less likely to enact programs with a more sweeping impact, such as the retrofitting of fleets for natural gas, because of the up-front cost and time involved. "For us to really close the gap," says Powanga, "we need those long-term projects. And right now, we don't have that ability."

It's not easy to calculate the carbon footprint of an extended supply chain, but companies need to start somewhere. "You're not going to get it entirely accurately," he says, "but you can't just sit there." Companies need to reach out to their supply chain partners, to assess their combined environmental impact. Also needed is better coordination among the various entities addressing such issues. Businesses, communities and academia are all involved in some aspect of green programs, but they tend to work in isolation. As a result, they generate redundant efforts. "They're not leveraging the efforts already done by others," Powanga says. "They  need to start building on it, rather than duplicating it."

To view this video in its entirety, click here.

Many companies have yet to institute the necessary controls for measuring the environmental impact of their supply chains, Powanga says. Some 60 percent of Fortune 500 businesses have a means of tracking carbon emissions, but a much smaller portion of all companies have enacted strategies for promoting sustainability. Even fewer than that have actual procedures in place to address key "green" issues. In the end, he says, "only a handful of those have a way of tracing the sustainability of their own processes as well as those of their suppliers. There's lots of room for improvement."

One problem is the lengthy span of time required to implement green initiatives. Because they are new to most companies, such efforts tend to lack existing models for building business cases. And in a down economy, green projects often must take a back seat to programs that will deliver a faster return on investment. A company might cut back on the idle time of its trucks, or adjust delivery schedules to make more efficient use of equipment. But it's less likely to enact programs with a more sweeping impact, such as the retrofitting of fleets for natural gas, because of the up-front cost and time involved. "For us to really close the gap," says Powanga, "we need those long-term projects. And right now, we don't have that ability."

It's not easy to calculate the carbon footprint of an extended supply chain, but companies need to start somewhere. "You're not going to get it entirely accurately," he says, "but you can't just sit there." Companies need to reach out to their supply chain partners, to assess their combined environmental impact. Also needed is better coordination among the various entities addressing such issues. Businesses, communities and academia are all involved in some aspect of green programs, but they tend to work in isolation. As a result, they generate redundant efforts. "They're not leveraging the efforts already done by others," Powanga says. "They  need to start building on it, rather than duplicating it."

To view this video in its entirety, click here.