Companies across the supply chain have embraced sustainability as an overarching term for better business practices. Through the years, corporate definitions have expanded beyond decreasing packaging waste and water usage to the introduction of functional products and employee wellness programs. Indeed, offering a standard definition of “sustainability,” not to mention its key issues, can be difficult.
“Sustainability today can be a confusing topic,” says Amanda Josey, strategic marketing manager of human nutrition for BASF Corp., Florham Park, N.J. “If you ask three people to define it, you’ll get three very different answers.”
For The Coca-Cola Co., Atlanta, sustainability ranks as one of its major performance goals. The global beverage company organized its sustainability goals under the “Live Positively” banner, which includes beverage benefits, active healthy living, community, sustainable packaging, water stewardship, workplace platforms, and energy and climate.
U.S. brewer MillerCoors, Chicago, models its sustainable goals after parent company London-based SABMiller plc’s five-step Sustainability Assessment Matrix. Most recently updated in its 2011 Sustainable Development report, “Success the Right Way,” MillerCoors reports its performance on ethics and transparency, alcohol responsibility, environmental sustainability, sustainable supply chain, and people and communities.
Packaging manufacturer Ball Corp.’s sustainability commitments include improving production efficiencies and safety performance as well as collaborating with the packaging supply chain to further optimize the contribution of packaging to sustainability. In its metrics, the Broomfield, Colo.-based company counts packaging, energy, safety, talent management, and water and waste as the main pillars of its sustainability program.
A major driver of ingredient supplier BASF’s sustainability program, known as “The S.E.T. Initiative,” was its anticipation that the world’s population will be 9 billion people by 2050. Put in perspective, Josey says that’s like adding populations the size of an extra China and an extra India.
“The pillars of our program focus on creating enough products, like beverages, to meet the needs of 9 billion people, while still using the same resources that we have today,” BASF’s Josey says. “On top of that, it also focuses on how to keep products affordable and socially responsible.”
The supply chain is the key consideration of BASF’s S.E.T. Initiative, which stands for the platforms of Sustainability, Eco-efficiency and Traceability. The S.E.T. Initiative is designed to help the nutrition value chain and, in particular, BASF’s customers navigate the sustainability process by choosing the platforms that are right for them, Josey says.
“Our customers can find themselves to be burdened and overwhelmed by the whole process of sustainability,” she says. “Consumers expect it and retailers expect it. So we try to answer the needs of our customers by applying the S.E.T. framework. We can adapt our modular approach to their needs and provide project management in the process.”
BASF’s S.E.T. Initiative was designed to evaluate its customers’ products beyond the ingredients supplied by BASF.
“We take a holistic approach,” Josey says. “We don’t only focus on our products, but we analyze the entire value chain from raw materials all the way through to the final consumer product taking a look at environmental, social and economic parameters.
“We also look at the value chain in a very different way,” she continues. “Because of the population megatrend, we not only focus on the sustainability of our products, we begin with the consumer product and work our way backward.”
As part of the initiative’s traceability platform, BASF is using GTNet from TraceTracker as an electronic platform that connects suppliers throughout the whole value chain, Josey says.
“Right now, most companies are expected to track what’s coming into and out of their organizations; it is very difficult to get that information in a timely manner,” Josey says. “The ability to communicate electronically can be particularly useful in the event of an issue, but it is also a prerequisite to measure sustainability improvements of a given end-consumer product over time.”
“If there was a recall, instead of taking several months and throwing away every single product that was produced, companies can get feedback from both upstream and downstream in their value chain, by the time it took to read an article about traceability,” Josey says. “In addition to this risk management aspect, whole chain traceability is also a prerequisite to monitor the sustainability profile of a given product over time and to be able to work on its continuous improvement.”
Sustainability conscious companies also are investigating new ways of reducing energy and natural resource usage. Sonoma Wine Co., Graton, Calif., is a crush-to-bottle contract winery that produces wines for clients across Northern California at six facilities throughout California’s wine country. The wine producer began its sustainability journey in 2003 when it purchased and rebuilt an existing facility, explains Natasha Granoff, director of business development for Sonoma Wine Co. At the time, Sonoma Wine Co. started to look into the company’s energy efficiency and water use, and in 2005 began inventorying its greenhouse gas emissions, she says.
“It kind of snowballed,” Granoff says. “People began to take more interest. There was more awareness as you start tracking and you start managing what you measure. It began a company culture.”
At its Graton facility, which bottles about 3 million cases a year in addition to hosting 2 million gallons in storage and another 50,000 barrels of wine, the company adopted a solar cogeneration solution from Cogenra Solar, Mountain View, Calif. The photovoltaic and solar thermal technology combination helps to offset Sonoma Wine Co.’s electricity usage and consumption of natural gas to heat water for wine processing, sanitation and barrel services operations. On a previously unoccupied 13,000-square-foot parcel of land, Sonoma Wine Co. installed 15 individual modules, which equate to 272 total kilowatts of electric and thermal output, Cogenra says.
“It’s definitely contributed to our reduction in natural gas to heat water and it generates more than they estimated,” Granoff says. “In fact, sometimes even after we store significant quantities of hot water we can’t use it all depending on our process flow. What we are beginning to see, now that we’re in the summer months, is it’s hitting this estimated 40 to 45 percent reduction in our natural gas use.”
Cogenra owns and operates the solar cogeneration array and Sonoma Wine Co. purchases at guaranteed rates the generated thermal energy and electricity. Granoff explains this agreement made the project a lower risk in terms of capital, which helped Sonoma Wine Co. commit to the project. The wine producer is looking into adding a roof-mount system at its Napa, Calif., facility, Granoff says.
Sonoma Wine Co. also is considering new sustainability initiatives, such as water meters and business intelligence dashboards that monitor wastewater generation, water, hot water, electricity and natural gas usage. Granoff says it also might implement an environmentally preferred supplier program for its vendors, which would be based on Wal-Mart’s Sustainability Index (see sidebar on page 29).
Similar to Sonoma Wine Co.’s prioritization of water usage, Nestlé Waters North America (NWNA), Stamford, Conn., maintains water as one of the key pillars in its corporate citizenship platform. The bottled water producer highlights water quality in addition to sustainability and community goals.
“Specific to our sustainability commitments, NWNA seeks to lead our industry in recycling, ensure the materials we use are designed for recyclability, continuously reduce our carbon intensity and aim for 100 percent renewable energy,” says Michael Washburn, director of sustainability for NWNA. “Another important focus area under the water pillar is our commitment to be a leader in sustainable water stewardship practices. This includes reducing water use throughout our manufacturing processes, as well as being a responsible steward of our spring sources and their surrounding areas.”
The communities in which NWNA sources its water have inspired a program of community outreach, especially for new production sites, Washburn says. NWNA worked with the organization Business for Social Responsibility to develop a framework to more proactively manage its siting process, which includes a set of principles and commitments to guide conduct in local communities.
NWNA also works with communities throughout North America to increase recycling rates of PET bottles. The recycling goals align with NWNA’s commitment to environmentally friendly packaging.
“In 1989, with the introduction of plastic PET bottles, our business began to grow and expand rapidly,” Washburn explains. “With this expansion came new considerations for us around the environmental impacts, such as packaging and recycling of our products. Since the early 1990s, before ‘sustainability’ became a mainstream term, much of our work has centered on reducing the environmental impacts of our packaging and manufacturing and logistics operations.”
The company designed the Eco-Shape half-liter bottle, the latest generation of which weighs 9.3 grams on average and contains 60 percent less plastic than its half-liter bottles available in the 1990s, it says. NWNA also is working on bottles made with a larger percentage of recycled PET, and has set a goal “to develop a next-generation bottle made from 100 percent recycled or renewable material by 2020,” Washburn explains. Nestlé Waters Canada’s Montclair Natural Spring Water is packaged in 100 percent recycled PET bottles, he says.
NWNA also set a goal to increase U.S. recycling rates to 60 percent for PET beverage bottles by 2018. The recycled resin can be repurposed to manufacture fleece fabric, carpet and new plastic bottles, Washburn says.
“Recycling rates for PET beverage bottles remain too low, at around 30 percent in the U.S.,” Washburn says. “The obstacles contributing to these low rates include low consumer awareness about the importance of recycling and a lack of access to recycling, both at home through curbside and in public spaces for people who are on-the-go.”
As part of its goal, NWNA is advocating for an extended producer responsibility (EPR) model that would require beverage producers to develop and fund effective recycling programs. The company is working with non-government organizations, recycling advocates, activists and other producers to establish state-based EPR programs, Washburn says.
In April 2010, a hybrid EPR system launched in Manitoba, Canada, that features curbside recycling, public spaces recycling, industrial/commercial/institutional recycling and a public education plan.
“The early results of this program are encouraging — the recovery rate for beverage containers in public spaces during a model community pilot program in Portage la Prairie was
95 percent,” Washburn says.
NWNA has seen consumers’ understanding of sustainability increase, which is a trend it expects to continue, he says.
“We’re seeing that consumers have a heightened awareness and interest in evolving sustainability issues, which is creating a bottom-up demand of accountability and transparency for both companies and retailers,” Washburn says. BI
|Inspiration from the world’s largest retailer|
Many in the industry highlight Bentonville, Ark.-based Wal-Mart Stores Inc.’s Sustainability Index as a major influence on their programs and platforms. The retailer attributes the values in the index to its shoppers’ desire for products that are more efficient, last longer and perform better. In addition, Wal-Mart also says its shoppers want to know the product’s entire lifecycle, that the materials in the product are safe, that it is made well and produced in a responsible way.
Wal-Mart’s Sustainability Index includes three phases: Supplier Sustainability Assessment, Lifecycle Analysis Database and A Simple Tool for Customers. The phases began with a sustainability survey delivered to top-tier suppliers in October 2009.
On its website, the retailer includes a list of 15 questions for suppliers organized under the following platforms: energy and climate, material efficiency, natural resources, and people and community. The questionnaire features inquiries to suppliers, such as the following:
n What do your total annual greenhouse gas emissions reported in the most recent year measure?
n Have you set publicly available water use reduction targets? If yes, what are those targets?
n Have you established publicly available sustainability purchasing guidelines for your direct suppliers that address issues such as environmental compliance, employment practices and product/ingredient safety?
n Do you invest in community development activities in the markets you source from and/or operate within?
The index continues with The Sustainability Consortium, for which Wal-Mart provided the initial funding, where the retailer can collaborate with suppliers, other retailers, non-government organizations and government officials to conduct research and develop data and tools that will enable research-driven product sustainability measurement and reporting, it says. Membership in The Sustainability Consortium includes ingredient suppliers, consumer packaged goods manufacturers and packaging suppliers. The consortium will take that information and develop a global database of information about products’ lifecycles from raw materials to disposal.
The final step of Wal-Mart’s Sustainability Index is to improve the sustainability performance of the producers its customers prefer. This process begins with merchant tools that will help its merchants understand and improve the sustainability of products sold at Walmart stores, and ultimately will culminate in customer outreach, it says. The retailer also aims to provide customers with information about products in a simple, easy-to-understand manner that will keep in line with its tenets to “live better.” BI