THE BLOG
03/18/2010 05:12 am ET Updated May 25, 2011

A Key Private Sector Lever to Slow Climate Change: the Sustainable Supply Chain

The world's attention is focused on Copenhagen this week. Regardless of the outcome, businesses around the world have the opportunity to begin tipping the balance to mitigate climate change. We can and should take the initiative and make a difference.

Every aspect of business offers opportunity to be more sustainable and efficient -- using the least amount of scarce resources and having the smallest environmental impact. We all see the long term trends of increasing hydrocarbon costs and the challenges in handling and treating potentially toxic materials. Increasingly, there's alignment between what's good for the environment and what's good for business. Today, well-run companies focus on sustainability, and their results are better because of it.

A powerful way companies can drive change is through the supply chain -- the global network of suppliers, manufacturers and partners it works with to make and distribute its products. Optimizing a supply chain around environmental sustainability creates an effect far beyond the corporate headquarters.

My employer, HP, has a global supply chain that's more than $60 billion -- one of the world's largest. With a footprint that large, even modest improvements can have substantial impact. But more importantly, corporations of any size can make a proportional difference by focusing on three key strategies: Efficiency, Transparency and Collaboration.

Efficiency

While there isn't a generally agreed metric to measure the overall efficiency of a business, carbon footprint is becoming a proxy for the efficiency of an organization and its impact on the environment. Measuring and reducing carbon footprints will naturally lead businesses to increase their efficiency and eliminate waste.

The carbon footprint associated with the materials, manufacturing and distribution services HP directly procures is about 5.3 million metric tons of CO2 per year. We're focused on reducing it in a number of ways, starting with greater efficiency.

For instance, adjusting shipping and distribution modes can offer real opportunities to lower CO2 emissions. The strategies don't have to be complex. At HP, we typically ship our products by air or ocean to regional distribution centers, and then by truck or rail to their final destinations. More and more, we are converting shipments from air freight to ocean freight -- reducing greenhouse gas emissions. Going by ocean produces only about 1/60th of the CO2 equivalent of air transport. We've also worked closely with the US Environmental Protection Agency to establish the SmartWay requirements for efficient truck transport. Today, 100 percent of our US truck carriers are EPA SmartWay certified.

Supply operations impact the entire product life cycle from sourcing raw materials to recycling and reuse. Responsible mining practices are a key raw material lever - together, we need to do more here. In addition, a product's "end of life" is also a key window to reduce environmental impact by reclaiming important input materials and life cycle energy. For that reason, HP has worked to recover and process about 1.7 billion pounds of electronic products since 1987--- and we are on our way to accomplishing our goal to recover 2 billion pounds by the end of 2010.

Operational efficiency benefits every stakeholder in the chain, all the way to the customer. If you're not efficient you can't be sustainable or in the long term, profitable.

Transparency

In order to bring about positive change, the private sector must also be transparent and open. More and more, customers insist on buying from companies that they trust to be environmentally responsible.

Being held publicly accountable for progress toward goals -- as well as your setbacks -- is a key ingredient to success. That's why HP has been reporting through the Carbon Disclosure Project since its inception and verifying carbon emissions from our facilities based on the Greenhouse Gas Protocol. In 2008, HP became the first major IT company to publish aggregate supply chain emissions, including those of our first-tier suppliers.

Like many others in our industry, HP's supply chain includes numerous 3rd party suppliers and partners. It's hard to be held accountable when the elements of your supply chain are a closely guarded secret. That's why HP took the unusual step in 2008 of disclosing our top 100 suppliers -- we hope others in our industry follow that lead.

Collaboration

Like many things in business, the greatest leverage in our sustainability efforts is coming from collaboration. The multiplier effect of an entire ecosystem working towards a common goal is clearly more effective than any one company working alone. We are coming together, sharing innovations and developing standards.

Efforts like the Electronics Industry Citizenship Coalition (EICC), which HP helped found in 2004, foster responsible management and operational practices in the areas of labor, ethics, environment, worker's health and safety across the electronics supply chain. Ninety-eight percent of HP's first-tier suppliers have agreed to adopt the EICC's code of conduct, resulting in higher adoption rates of social and environmental policies worldwide. Further, the EICC has established the first industry-wide tool for tracking supply chain carbon emissions.

Others are doing very promising work in this area, too. For example, we are working with Walmart and The Sustainability Consortium on a sustainability index for consumer products. This voluntary system - transparent and based on open standards - has the potential to stimulate competition and spark innovation across a wide range of consumer industries.

Together, business leaders should work with standards organizations, governments and regulatory authorities to establish clear goals -- and new ways of collaborating to minimize impacts to our environment.

Companies across many industries are making a difference. We encourage others to join and extend the effort to slow the changes in our climate.