Greening the Supply Chain

What is Greening the Supply Chain?

While many multinational companies have internal standards for environmental excellence, their supporting vendors may not. Supply chain management refers to the process by which buyer companies require a certain level of environmental performance from their manufacturing partners and vendors. When a company imposes environmental conditions on the products and processes of its suppliers, it is called Greening the Supply Chain (GSC).

US-AEP encourages the use of GSC techniques because they provide the tools that promote consistent environmental performance for corporations operating in countries with varying levels of national environmental regulations and enforcement.

What is US-AEP Doing to Promote Greening of the Supply Chain?

US-AEP identifies and supports multinational companies who champion the values of GSC through outreach and education. A GSC "champion" is a company or organization that, in addition to establishing environmental criteria for its own supply chain, works with peer companies to encourage an industry-wide greening of suppliers.

Some of US-AEP’s current champions include non-profit groups like Business for Social Responsibility and multi-national corporations like Nestle Philippines, Nike, and United Technologies Corporation.

US-AEP collaborates with U.S. and Asian multinationals who seek to create supplier outreach programs. For example, US-AEP commissioned a survey of 30 global companies to ascertain their views on ISO 14001, an international standard for environmental management systems, and greening of suppliers. The survey revealed that many firms have environmental criteria for their suppliers, particularly in the textiles and apparel, automobile, and microelectronics industries. US-AEP is working to develop supply chain management programs in these three industries through associations, multinational companies, and research facilities.

US-AEP delivers technical assistance and training programs to Asian industry associations that provide expertise to supplier companies. US-AEP encourages the greening of suppliers through workshops, seminars, professional exchanges, and technical training.

US-AEP supports supplier outreach programs carried out by Business for Social Responsibility (BSR) for the textile, automobile, and electronics industries. BSR is a non-profit membership organization comprising 1,200 companies that are leaders in the implementation of responsible corporate policies, including: AT&T, Bristol Myers Squibb Co., The Coca-Cola Co., Du Pont, Ford Motor Company, General Motors, Levi Strauss & Co., Nike, Patagonia, Polaroid Corp., Reebok, and Viacom.

US-AEP works with BSR and their member companies on issues specific to corporate environmental performance and greening supply chains in Asia. In partnership with BSR, US-AEP has identified environmental leaders serving as champions for greening the supply chain in many industry sectors.

What Benefits do Companies Receive by Greening Their Suppliers?

Economic Benefits from Increased Efficiency. By reducing wastes, companies decrease handling expenses, fines, and even costly inputs. Supplier's savings may be passed along to buyer companies.
Competitive Advantage through Innovation. Efficient production is enhanced through the use of cleaner technologies, process innovation, and waste reduction. Reduction in wastes equals dollars earned.
Improved Product Quality. Supply chain partnerships help maintain relationships between buyers and suppliers leading to increased control over product quality.
Consistent Corporate Environmental Goals. In an era of multi-faceted, non-vertical manufacturing, companies include supplier outreach to address corporate environmental goals.
Improved Public Image. Consumers, investors, and employees respond positively to companies with a reputation for good environmental performance.

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