Trucost Blog / 11 Jun 2014

Natural capital – understanding supply chain impacts

Companies often focus their sustainability efforts on operations, but for many sectors the biggest impacts are to be found in the supply chain.

Mobile devices have been an important part of BlackBerry’s history and remain one of its core focus areas, and the company has developed a supply chain typical of other electronics companies, with multiple links back to the sources of raw material.

While in the process of rebuilding itself for the benefit of all its constituencies, BlackBerry remains committed to strong principles of corporate responsibility, including its positions on issues such as security, privacy and human rights.

BlackBerry recognises that despite other business pressures, there are still expectations on the company to act responsibly in its supply chain operations, including environmental impacts. Encouraging environmental stewardship throughout the supply chain is also the right thing to do.

When addressing their environmental impacts, many companies will understandably initially focus attention on their own operations, where they have most immediate control. It is also what is largely accepted as the norm, particularly of large and global organisations, where impacts can be significant.  Companies are increasingly setting baselines for GHG emissions intensity, water usage and waste generation, and targeting reductions over time. Greater disclosure of environmental performance is also expected   through company reports or through external agencies such as the Carbon Disclosure Project, or both.

However, for companies with extensive supply chains this is where much of the overall environmental impacts are actually embedded. For example, for GHG emissions, anything up to 80 percent of an organization’s emissions can be embedded in the supply chain, yet typically only attract 20 percent of management attention. This situation is changing, though, as companies take a more holistic view of their value chain impacts, and as pressure for better oversight mounts from external stakeholders, including both business and consumer customers and environmental NGOs.

So where to start? First and foremost, BlackBerry has taken a very pragmatic approach to its environmental reporting efforts, to understand the scale rather than the minutiae, and focus on areas of material importance.

In contributing to its environmental reporting, BlackBerry initially wanted to assess its total supply chain’s dependence on natural capital, including an evaluation of both direct and indirect suppliers. This environmental performance data, accounting for more than 90 percent of total spend with suppliers, serves as a benchmark for BlackBerry to measure its performance in relation to the industry overall and to assess the impact of improvement strategies over time.

Beyond that, BlackBerry also wanted to understand the major impacts within its supply chain, indicating which product/service categories and which suppliers were contributing most to carbon, water and waste footprints.

To help them with this, BlackBerry worked with Trucost, which help clients understand the economic consequences of natural capital dependency.

Trucost applied their well-tested IO model combining BlackBerry supplier spend information with information from Trucost’s environmental database, actual and verified supplier data, and other publically available disclosure information. In a matter of a few weeks, Trucost was able to complete their analysis and provide BlackBerry with both estimates of absolute supply chain GHG emissions, water usage and waste generation, and also intensity levels measured as outputs relative to expenditure with suppliers. In addition, they were able to identify ‘hotspots’ within the BlackBerry supply chains, both in terms of the product/service categories as well as the suppliers contributing most to each of the environmental aspects.

Richard Mattison, CEO Trucost said: “BlackBerry worked with Trucost to quantify the natural capital impacts of its suppliers all the way back to raw materials, in order to build greater resilience into its supply chain. Trucost’s supply chain tool has highlighted that the majority of the impact resides with a small number of suppliers, enabling BlackBerry to target effective interventions to reduce the environmental impact of its products”.

The results showed that 10 suppliers contributed on average 40 percent to each of the aspects, and 100 suppliers approximately 90 percent. This enabled BlackBerry to quickly focus on the areas of materiality within their supply chains, and follow up with a supplier engagement programme. The initial purpose of this effort was to get an understanding of the top contributing suppliers’ existing environmental strategies, reduction targets and the plans that underpin them.

From a supplier perspective, this also created an opportunity to view where they were positioned relative to other suppliers of similar products to BlackBerry, thus creating actionable information to support internal business cases, and even perhaps introducing some healthy competition.

AT&S, a supplier to BlackBerry, comments: “Sustainable resource management throughout the supply chain is an important aspect within AT&S’s commitment to CSR. AT&S highly appreciates the collaborative work with BlackBerry towards sustainability and the efficient use of resources. Moreover, to further support initiatives throughout the electronic supply chain AT&S shares its know-how in environmental protection and energy conservation with other companies in industry-wide trainings as part of its social responsibility.”

In BlackBerry’s case, all of the top 10 contributing suppliers were at a mature stage in terms of measuring and managing their own, direct environmental impacts. Interestingly, there was little evidence of further upstream engagement, making this the new challenge. Lower tier suppliers must buy into the idea that by investing in resource efficiency can lead to a lower cost base, a more competitive operation, and more business opportunities, as well as contributing to a more sustainable environment.

To be really effective this requires collaboration throughout the supply chain between customers and suppliers, and even between competitors where there are common suppliers, through industry initiatives such as the Electronic Industry Citizenship Coalition. This is the approach BlackBerry is taking, and will encourage others to take as well, in leading to more resource efficient, more competitive, and more sustainable electronics supply chains.

Arnie Bawden manages social and environmental projects within BlackBerry’s supply chain responsibility programme. He has over 30 years’ experience in the telecoms industry, the last 10 in ethical supply chain management. He is an active participant in the work of the Electronic Industry Citizenship Coalition, of which BlackBerry are members. This article first appeared in Climate Change – The New Economy magazine for the G7 summit in June 2014.

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