Tag Archives: sustainability

Where have all the ethics gone?

fingers crossed

From time to time I write on procurement ethics, but today I question where the business ethics have gone. In the past two weeks, we’ve seen:

  • Volkswagen’s Chief Executive Martin Winterkorn resigns after it was disclosed that Volkswagen will repair up to 11 million vehicles and overhaul its namesake brand following the scandal over its rigging of emissions tests.
  • Martin Shkreli, CEO of Turing Pharmaceuticals, acquired the rights to Daraprim, which was developed in the 1950s. The drug is the best treatment for a relatively rare parasitic infection. People with weakened immune systems, such as Aids patients, have come to rely on the drug, which, until recently, cost about $13.50 a dose. But when the price was raised to $750 a pill, a more than 5,000% increase, Mr. Shkreli’s brash defense of the decision has made him a pariah among patients-rights groups, industry spokespersons and politicians, making him one of the most disliked CEOs in America.
  • Stewart Parnell, the former CEO of Peanut Corporation of America, was sentenced to 28 years in prison. He had a role in concealing a 2008 and 2009 salmonella outbreak that sickened more than 700 people and killed nine.

It seems that we are seeing integrity breaches in business every day. There is a code of ethics for all business that true procurement leaders have always followed. I believe this is an area that sets apart leaders from the crowd; it’s obvious that these three CEOs lacked the integrity and leadership to do the right thing.

On a personal note, I had a mentor and boss in the early 1980s who gave me some advice and coaching that set a standard for how I operate. When I made a decision in the best interest of my company, several corporate executives wanted me to compromise my ethics and give an unfair advantage to a business owned by someone with political influence. I held my ground and my mentor said “I can’t help you and you may get fired, but there are worse things than getting fired for having integrity.” He also said “Remember, you can never put a price on integrity.” These were wise words and some advice that these three executives either never received or chose to ignore when faced with the choice between profit and principles.

I must not be alone in questioning ethics; this morning’s HBR Management Tip of the Day is Know When to Speak Up About an Ethical Issue. Is it time for your firm to think about reinforcing the company ethics standards and conducting an integrity audit?

Does your reputation have a price?

Earth Day: Does your company make the grade?

 

New-Life

On this Earth Day, it is appropriate to dedicate this blog to sustainability. There is no doubt now that sustainability will be a performance indicator for future investors in companies and it’s interesting to read corporate reports dedicated to green , sustainable priorities. While many corporations give lip service to sustainability, unfortunately, when it comes to funding such efforts many companies fall short. Fortunately, more companies are making the investment, like these that warrant mention:

  • Alcoa’s executive compensation is tied to safety and environmental leadership, which includes greenhouse gas emissions.
  • GE uses it in resources department to integrate sustainability into the company’s culture.
  • Coca-Cola has committed to reduce water use by 25% and hired an external audit firm to monitor these results.
  • At its shareholder meeting, Starbucks CEO Howard Schultz discussed the company’s efforts to work with suppliers and local communities investing in sustainable farming and ethical sourcing.
  • Dell integrates recycle materials in its product and packaging and considers end-of-life recycling.

All are examples of leadership in sustainability that starts in the board room and becomes part of a company’s DNA.

Since sustainability is becoming important to investors, many firms are measuring corporate sustainability and ranking them according to their criteria. One notable firm is the Toronto-based Corporate Knights, who publish a list of the top 100 most sustainable companies.

For sustainability to be effective, there must be a deliberate strategy, commissioned by the Board of Directors, mandated by the CEO and driven to be part of the culture.

Is sustainability part of your company’s DNA?

Sustainability is key

If any suppliers needed more evidence of the importance of sustainability in the sourcing decisions of huge consumer goods companies, they certainly got it in spades over the last several weeks.

General Mills’ executive vice president of supply chain operations John Church announced a new corporate climate policy to track and reduce GHG emissions as part of its commitment to environmental stewardship and sustainable agriculture. In his blog post, he said this new policy requires key ingredient suppliers to demonstrate environment, social and economic improvements in their supply chains.

Shortly afterwards, Coca-Cola increased its investments in Africa to support, among other activities, key sustainability initiatives and programs there. The company also signed a letter of intent to launch Source Africa, an initiative to secure more consistent, sustainable local ingredient sourcing for its products, in partnership with the New Alliance for Food Security and Nutrition and Grow Africa.

On the heels of Coca-Cola, Tata Global Beverages announced their plans for 100% sustainable sourcing by 2020. A major focus of its sustainable sourcing strategy is sustainable agricultural practices, including reducing the use of Plant Protection Products in the tea industry.

Suppliers, take note.

Source Responsibly

Consumer pressure for sustainability has become so powerful that even a company that is dedicated to celebration and partying – Bacardi –  is taking a socially responsible position on sourcing. It has released a very detailed list of actions it’s taking.

These actions range from sustainable packaging to recycling waste to building a green-certified distillery in England. Bacardi even exclaims its goal to obtain 40% of the sugarcane-derived products used to make its rum from certified, sustainable sources by 2017 – and 100% by 2022.

Bacardi is using social media to promote its branded initiative, artfully called “Good Spirited.” So it obviously believes the initiative has marketing value. That tells us two things:  One. Sustainable sourcing is generally accepted as good for the company. Two. It’s still considered something that’s unique enough to set Bacardi apart.

The question is, how long until sustainable practices are so widely adopted and universally expected that touting them isn’t even worth it. What do you think?

 

Sustainable Fashion – Japan a Driving Force?

You may or may not know that Japan in the middle of a major apparel upswing. In fact according to Apparel Magazine Japan expected to have a steady growth throughout the next decade. How is this possible? Because the target market consists of fashion conscious young adults in their 20s, with holes burning in their pockets (because most live at home with their families). Most importantly though, this population of young people cares about sustainability.

Japan is likely to help push sustainability reforms in the apparel industry because of the commitment young people are instilling in the market. The United States and Europe are the two leading forces in garment industry sustainability, will Japan be the third driving force?

 

Energy Prices in Flux

Where are energy prices going? We’re not really sure.  A recent forecast reports conflicting information.  U.S. crude plunged toward negative daily territory as the Energy Information Administration revealed worse than expected crude and refined products supply figures, signaling a strong bearish outlook.  The only bullish sign for oil was that supplies at Cushing, Oklahoma, dropped to the lowest level since October 2009.
Oil tycoon T. Boone Pickens, speaking at the ISM 2014 Annual Conference, suggested that new drilling technologies have radically changed the capacity of the U.S. to produce oil and gas over the long haul. He also said conversion from gasoline to natural gas in transportation fleets will come quicker than anyone else is predicting. He predicted those changes could keep domestic energy prices under control for the foreseeable future.

Takin’ it to the street

Frustrated with Procter & Gamble’s lack of urgency in finding sustainably sourced palm oil, Greenpeace literally took to the streets in Cincinnati and London in protest.  The activists, including two dressed as a tiger and an orangutan, unfurled banners on the side of P&G’s Cincinnati headquarters and erected barricades in front of its advertising agency’s headquarters in London.  At the same time, Greenpeace posted a video on You Tube mocking the “Thank you Mom” ad campaign and focusing on the plight of orangutans.

This is a good example of how non-governmental organizations like Greenpeace are ramping up their mass communications efforts to raise people’s awareness of important environmental issues and change their behavior, while governments lumber along, taking years to initiate and enact news rules and regulations.

While Procter & Gamble may have their dander up at the bad press, Unilever executives may be smiling for the way they stayed ahead of the curve. As we wrote in September 2013, Unilever’s goal is to source 100% of its agricultural raw materials sustainably.  In the way they managed their message about palm oil, Unilever stands head and shoulders above P&G.

Successful Supply Chains = Sustainable Oceans

When it comes to supply chains, you would think that fish would be easy. You figure when server delivers the platter of tilapia to your table, the entree was caught and cleaned, then frozen and shipped, and finally cooked and served.

Well, double those steps.  National Geographic recently posted the six stages required for an effective seafood supply chain. Their theory – from stage 1: compiling data to stage 6:  the sale of product – a collective effort is required to have sustainable fisheries and oceans.

From fisher to consumer, all parties along the way have the corporate responsibility to use sustainable practices so that each stage is completed with environmental consideration.

One  business competition “Fish 2.0” invites entrepreneurs to come up with innovative and sustainable technology/solutions to continually improve our oceans. More information can be found here www.fish20.org.

Managing supply chain sustainability at Target

On the heels of Mary Barra’s appointment as CEO of General Motors, we can’t resist sharing this GreenBiz.com interview with another female executive in the supply management world. Kate Heiny leads the enterprise-wide sustainability strategy for Target, a Fortune 50 company and one of the most important retailers in the US with the more than 1,700 stores in 49 states.

Early in her career Heiny recognized that industries would need radical transformation in order to be successful in the future, and she views sustainability as the business strategy critical to the long-term viability of Target.

She and her Sustainability Team are responsible for helping Target’s guests and team members live more sustainable lives and minimize Target’s impact on the environment.

For example, Target is a founding member of the Sustainable Apparel Coalition, a trade organization of brands, retailers, manufacturers, government and non-governmental organizations and academic experts who are working to reduce the environmental and social impacts of apparel and footwear products around the world. Target uses the Coalition’s Higg Index to gauge its environmental sustainability performance and make changes for improvement.

With its grocery items, Target is making long-term commitments to offer food that will be GMO-free by year-end 2014, increase its organic food offerings by 2017 and replace farmed salmon with wild salmon.

Collaboration, creativity and sharing are three words Heiny uses frequently to describe how her team is working to imbed sustainability into their team members’ day-to-day work at Target. “Sustainability needs to be a holistic way of working and operating, not just one initiative or team,” Heiny said.

Supply Chain as Marketing Message

We have talked a lot about how important supply management has become to advance the strategies of the overall enterprise, and here’s a case in point. Hotels now routinely promote their onsite recycling and energy conservation initiatives to guests. (e.g. “Please hang up your towel in the bathroom so we don’t have to wash it after one use.”) However, a San Diego Courtyard Marriott has taken that a big step further by promoting the sustainability of its supply chain. Here’s the release from the Courtyard San Diego Rancho Bernardo.
By promoting it with a news release, the hotel clearly calculates that one of the returns it expects to get from its supply chain decisions is more guests and more top line revenue.
The situation does raise issues about what the standards are for calling a purchase “sustainable.” When the term is being used as a selling point, there is always a temptation to relax the standards. But that’s an ongoing question. The message today is that the supply management isn’t always about lower costs — it’s also a driver of higher revenue.