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There are many types of risk that retailers and brands face when dealing with multi-layered supply chains, especially when that risk is multiplied by a large number of different products.  Risks can range from: receiving sub-quality products; receiving late/partial orders; having a major accident/social responsibility concern at the manufacturing site; or coming under fire for the poor environmental practices of a supplier, among others. Our focus here is environmental risk within the supply chain and efforts under way to improve supplier performance.
 
One Sustainability effort many companies are involved in, which can also reduce environmental risk, is directly engaging suppliers to assess environmental performance via index questionnaires and/or following up with audits and training. Requesting environmental information from suppliers initiates the engagement process, raises awareness about important issues, and signals that their customers are concerned about the environmental impact of supplier operations. The use of indices allows facilities to identify the areas for greatest improvement, and scoring systems provide a benchmark of performance to track progress. 

GLOBAL SOCIAL COMPLIANCE PROGRAM

An important program, developed by leading retailers, to improve environmental and social responsibility within the shared global supply chains, is the Global Social Compliance Program (GSCP). The GSCP was designed to assess and drive the improvement of suppliers to many different industries, and the program scope covers 11 different environmental areas.  Specifically it asks suppliers to report on:  environmental management systems, energy use/transport & greenhouse gas emissions, water use, wastewater, emissions to air, waste management, pollution prevention/hazardous substances, major incident prevention/ management, contaminated land/soil & groundwater pollution prevention, land use & biodiversity and nuisances.
 
Performance in these areas is rated in three broad and progressive categories:
 
LEVEL 1
Awareness and Compliance – involving meeting all legal requirements, maintaining certain records and good practices.
 
LEVEL 2
Proactive Management & Performance Improvement – Exceeding Level 1 by establishing an Environmental Management System, engaging with suppliers and demonstrating improvement.
 
LEVEL 3
Leading Practice – Exceeding Level 2 by establishing a strategy to motivate leading practices, engage proactively with stakeholders and voluntary standards.
 
By going through this process, suppliers and their customers can get a picture of their environmental performance. The first priority is to make sure suppliers are at least meeting Level 1. Meeting Level 1 reduces the risk of a facility incurring a regulatory non-compliance, while advancing through to Level 3 further reduces the chance of disruption due to environmental issues.
 
To increase the vigor of the initial self assessment retailers and brands may have the results verified internally or by a third party. Verification serves not only to reduce the risk of overlooking issues that are not apparent from just a supplier self assessment, but it encourages honest responses and can clarify instances where improper responses resulted from suppliers’ misunderstanding the criteria.  

THE ADVANTAGES OF GSCP

SGS has conducted audits based on the GSCP program for various facilities and can confirm that major opportunities for improvement do exist within most.  When suppliers take the next step and initiate plans for improvement in areas where gaps were identified in the self assessment, reductions in both environmental risk and operational cost can be significant. To achieve the highest Level in the program suppliers need to plan for, and work on, reducing their impacts. This calls for specific actions and may require a detailed onsite assessment of what and how improvements should be made.  One approach facilities can take to work on these issues is using index results to self-guide changes in operations.  Alternatively, companies may choose to seek external support, such as an energy/water/waste audit to identify specific problems, e.g. water/steam leaks, sub-optimal equipment settings, improper storage of waste, etc..  Regardless of the approach, it is in the suppliers’, brands’ and retailers’, economic interest to implement improvements to reduce environmental risk, and the potential associated costs. Sharing of savings can also be incentivized by programs where the brand or retailer provide funding for the auditing or training that will guide the suppliers.
 
For further information please visit our Sustainability website.

For more information, please contact:

Michael S. Richardson, P.E.
LCA & Sustainable Design
Senior Project Manager
SGS North America Inc.
t: +1 973 461 1517