Wednesday, November 11, 2009

The Real Green in Greenwashing

As I am currently working on a project where some of our messaging is around greenwashing, I stumbled upon this article called "Green or Green Washed? 7 Lesson in Green Supply Chain in China". Supply chain, as you may know, is the path that your [name favorite product] follows to end up on the shelf in [name favorite store]. The companies you know by name outsource almost every piece of the product of [name favorite product] to other smaller companies so that they can sell you a product with the smallest institutional costs to their own company.

The supply chain is the excuse that every corporation gives when asked why their company practices isn't as non-toxic as possible. It's the supply chain people, we need to re-negotiate our contract, it takes a while for the machines to change over to create more environmentally friendly products. All valid reasons for coming up with a realistic schedule in eliminating toxic chemicals from products, though what this article lays out is how corrupt this chain really is and how much power [name favorite brand] has and must yield to make real changes in their company practices.

Read the article, its wonky but its good, but here are the 7 lessons:

Lesson 1: In the financial downturn, more than ever it’s all about the bottom line.
"Why the sudden interest? Most companies commitment to greening their supply chain is no more than a commitment to efficiency and cost-cutting, with green being an added bonus. It’s not that companies suddenly have the urge to go hug a tree; it’s because financially these changes made sense. 2008’s booming commodities market had a huge impact on companies interest in reorganizing their supply chains. Rising oil costs impacted the price of other commodities and made recycling materials and reevaluating sourcing locations smart financial moves."

Lesson 2: Risk-prevention is a motivator
"Greening is also motivated by risk prevention. Speaking from experience working with multinationals, the industrial goods manufacturing director says, “Only until you get caught doing something or are worried about getting caught doing something do you worry about green.”

Lesson 3: Greenwashing is prevalent
"Even companies that are known sustainability leaders can be perpetrators of greenwashing. Timberland is an excellent example. The major American footwear brand is known for its green initiatives, even creating a Green Index rating to measure the environmentalimpact of their products and disclosing the names of their suppliers.

Ma Jun says the truth isn’t so pretty. “That is a company that talks a lot about CSR. [But if they did the research], they could easily find that one of their suppliers has six years of records on our air pollution database consecutively, one year after another. And another has 3 years of records on our water site.”"

Lesson 4: Transparency is key
"But while the pollution maps can help a company sustainably manage their supply chain, it’s not always so clear-cut. An underlying problem is that suppliers often contract out to other factories, making the supply chain links a bit fuzzy. The industrial manufacturing director believes that compliance is much harder in China than in factories in smaller Southeast Asian countries. “There are so many factories here, there’s no way they can regulate every one,” he says."

Lesson 5: The system of accountability doesn’t work
"Speaking from years of experience dealing with suppliers and client companies, the director maintains that most companies pressure their suppliers for the cheapest price and then expect compliance on environmental standards. Suppliers are struggling to survive and don’t want to lose money either, so they satisfy their client companies with fake documents. When scandal breaks, companies blame their suppliers for lying to them. As it did in 2007 with a rash of tainted product scares and more recently with reports of tainted drywall, the blame goes to Made in China, and not Poorly Managed Supply Chain."

Lesson 6: Green is a smart long-term solution
"“The worst thing that can happen to a procurement department is disruption to supply,” she points out. She warns companies that there are aspects of climate change that will affect their ability to source raw materials. Flooding, storms, and extreme weather all will influence a company’s long term sustainability. She suggests companies that research their options earlier rather than later."

Lesson 7: But in the end it has to pay to go green
"Until the cheapest price is no longer the goal, greening efforts may not go much further than those that double as cost-cutters. For a company to go green, Ma Jun believes that environmental groups need to work to ensure that there is enough financial incentive for supply chains to be better managed. “If we keep allowing those who cut corners to gain the competitive edge in China than we will not be successful in our efforts to protect the environment.”

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