Do You Believe in Supply Chain Environmentalism?

I'm not sure if I do in the recession, but the concept of supply chain environmentalism in the retail sector, outlined in this Reuters' op/ed, is definitively worth some consideration. On its most basic level, the author, Lawrence Goldenhersh, defines supply chain environmentalism as "the effort of the retailer community to recast the competition in the commodity marketplace by treating carbon dioxide (CO2) content as a differentiator for same-priced commodity products". In other words, can certain products outperform their peers, even at premium price points, if they pass some level of environmental or sustainability scrutiny? Perhaps, but I'm not entirely sold yet, as it pertains to consumer's willingness to pay a premium, especially in a time where for the majority of the population, stretching every dollar counts.

But as procurement and operations practitioners, one reason to pay attention to supply chain environmentalism is that shareholder activists and government are increasingly petitioning and legislating their way to changing consumer behavior (not to mention what we can design and sell). The above-linked article reports that "U.S. and Canadian companies considered 68 global warming-related resolutions filed during the 2009 proxy season, up from 61 in 2008, according to Ceres, a national network of investors, environmental organizations, and public interest groups. Nearly half of those resolutions filed this year were withdrawn when companies agreed to make climate change-related commitments."

When it comes to government intervention, I'm sure many Spend Matters readers are well aware of the potential impact not only of Cap and Trade -- which we call "tax and tax" around the office -- not to mention other legislation including the Waxman-Markey climate bill which would require "robust retail product labeling" and would provide a "related program for giving retailers CO2e (carbon dioxide equivalent) credits for a portion of the greenhouse gas reductions they drive from the supply chain of qualifying products." Ultimately, even if you don't think consumers alone will change their buying behavior, you can be sure that government, especially government in the context of the left-leaning administrations in power in many countries at the moment, will take some sort of action for us. And that's reason enough to begin to lay the groundwork for serious investments in supply chain CSR initiatives.

Jason Busch

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