Beyond Transparency: The Next Essential Step in Product Optimization

If you’ve been around the building products industry in the last five years, you’ve probably encountered conversations about transparency — around material health, chemical hazards, environmental impacts, you name it.

To be fair, if you were around the building products industry 10 years ago, no one was really talking about transparency (at least not like today). The buzzword of the day back then was recycled content. Before that, it was indoor air quality. And over time those attributes have become commonplace for most manufacturers; transparency is the next attribute to achieve.

But the act of becoming transparent is a long and difficult road, and most manufacturers are just now learning what it takes to meet the market’s definition of transparency.

By definition, material health transparency is the act of being transparent about the human health impacts of materials and ingredients used to make a product. Material health transparency is typically SKU-specific. For example, the blue chair is different from the brown chair because the blue and brown dyes are chemically different.

Many companies, however, have fully embraced transparency. They have learned that in order to know what is in their products, they must first trace backwards up into their supply chains to collect chemical information on all materials and ingredients they use. This is no small feat as intellectual property, confidential business information, and complicated org charts make chasing down this information difficult.

After chemical and ingredient data is collected, “transparency” asks manufacturers to screen each chemical against various chemical hazard lists and issue some type of disclosure using Manufacturers’ Inventories, Health Product Declarations (HPDs) or Declare labels as the transparency vehicle. While those manufacturers issuing transparency documents should certainly be recognized for their hard work and openness, transparency isn’t the actual end goal.

So, what is?

Many will say “optimization” — but, while that is the end goal for many manufacturers, most would struggle to concisely define what “optimization” actually is. Is an optimized product one that is free of known carcinogens? A non-toxic product? A safe product? Without further definition, optimization is a location with no GPS coordinates; it simply does not exist.

There is one very important, intermittent step that enables manufacturers to further define what life after transparency looks like — one that reduces the risk of regrettable substitutions and helps to define what optimization actually is: A chemical assessment.

Too many companies rely on their suppliers or the government to tell them what is okay to use and what isn’t — which chemicals are legal vs. illegal, regulated vs. approved. Chemical assessments help manufacturers make those decisions on their own, internalizing the risk evaluation associated with an alternative product or chemical of concern.

No manufacturer wants to spend the time, energy and resources to change a chemical ingredient only to find out the replacement product is more harmful than its predecessor. No manufacturer wins when they try to optimize their product for material health only to realize the chemical they are using is much more impactful on natural resources and the environment. The dirty little secret few want to acknowledge is that in the pursuit of healthier materials, there will be trade-offs — healthier chemicals with higher carbon footprints or even lower carbon footprints with unresearched, unstudied chemicals. Only by doing a deep dive into the ingredients can one truly have the knowledge required to make an informed decision surrounding optimization.

While there are many different assessment methodologies out there, there are two that we recommend manufacturers consider when exploring life after transparency in the pursuit of optimization.

The first is the GreenScreen for Safer Chemicals, which allows users to determine the material health impacts of chemicals against 18 human and environmental endpoints — including carcinogenicity, reproductive toxicity, and endocrine disruption. This detailed toxicological assessment allows its users to better understand why a chemical is or isn’t considered a potential hazard, allowing them to make informed optimization decisions. Best practices include using GreenScreen Assessments to evaluate alternatives to ensure the replacement product is truly “better.”

The second assessment methodology we like to recommend is the Supply Chain Life Cycle Assessment (LCA). Most companies performing LCAs typically utilize purchasable secondary datasets (ecoinvent or GaBi, for example) in place of primary data from their actual suppliers. This happens primarily because actual LCA data is limited within supply chains. Supply Chain LCAs pull data out of the supply chain and provides insight on the actual impacts of specific suppliers’ chemicals and ingredients. The benefit of this assessment approach is that it enables manufacturers to better understand if a material’s impacts are better or worse than another material, illuminating differences in same materials from different suppliers.

The key to manufacturers being able to benefit from these assessment methodologies is the availability and access to this type of data. To borrow a quote from Uncle Ben, “with great assessment comes great optimization.” We are firm believers that the only way manufacturers can produce safe products with no negative human health impacts across the entire product value chain is to have access to the type of information that enables manufacturers to make those informed decisions.

WAP Sustainability is pioneering the growth of publicly available GreenScreen Assessments and working within supply chains to create better access to primary LCA data of the world’s largest ingredient suppliers. We have partnered with Toxnot PBC on a crowdfunded tool whereby manufacturers who use the same chemicals can partner to cost-share GreenScreen Assessments that can be used for HPDs or product certifications such as TCO Certified, or to comply with company supplier requirements.

Combined, these assessment tools create significant value by putting informative data into manufacturers’ hands that are representative of their actual supply chains. The more data that are made publicly available, the more companies will be able to drive lower-impacting materials and products into the marketplace. While the growth of the trend toward transparency is creating radical change in supply chains, we can’t forget that there is a whole other world beyond it.

Your 2020 Sustainability Goals: How's That Going, By the Way?

As of the writing of this article, the year 2020 is a mere 450 days away. Can you believe that? 450 days!

For the sustainability community, 2020 is a particularly important date: 2020 Sustainability Goals have become highly fashionable; unless you have been living under a rock, you are familiar with phrases such as “20 percent reduction [insert carbon, energy, waste, water, etc] by 2020.”

According to the website Pivot Goals, within the Fortune 250* there are 330 energy, climate or greenhouse gas (GHG) goals with 2020 as the target date. I can attest firsthand to helping dozens of non-Fortune 250 companies create 2020 goals. A quick Google search showed over 15 million search results for the term “2020 Sustainability Goal.”

In my role at WAP Sustainability, one of my main tasks is helping organizations measure GHG emissions and make progress towards stated targets. To say I am a GHG emissions geek would be an understatement. To put it in context, I received the Distinguished Alumni Award this year from the Greenhouse Gas Management Institute (GHGMI).

My experience in this area tells me: Most organizations are going to fall short of their 2020 goals.

Most organizations have not purposely done enough to reduce their footprints by one-fifth. Many have grown, shrunk, pivoted, merged and sold; the baselines established pre-2010 have changed, sometimes radically, and sometimes that change is still unknown. Mechanically and technically speaking, most organizations have significant uncertainty and data gaps in their calculations that make progress toward their 2020 targets hard to even measure.

Measurement aside, how organizations are going to talk about their 2020 goals come 2020 is going make for a case study in and of itself.

Likely, organizations will be forced to do one of the following:

1. Lie and say the goal was accomplished using some creative accounting.

2. Deflect by using something such as Science-Based Targets to redirect from 2020 goals by claiming more context, maturity, better climate perspective, etc.

3. Extend the goal by pushing the target to 2040, but now at a much higher level — such as 40 percent by 2040.

4. Credibly state that the goal was achieved.

So, with 450 days to go, what can you do to make sure you know what to do come 2020?

If you are in sustainability leadership …

Make sure that your carbon-accounting processes to measure your GHG emissions are done correctly. I see many organizations that have been doing the same incorrect emissions calculations for nearly a decade. Sometimes I see that calculations only reflect a portion of the business, and major scope 1 and scope 2 emissions sources are simply left out. These details have to be buttoned up before making public statements about goal performance.

Additionally, I would seriously consider having your 2019 inventory looked at by a professional. Make sure the protocol has been followed, make sure the appropriate emission sources are included, and that the inventory and its outputs are ready for communications. Ask yourself if this inventory would hold up to verification or assurance. Time is on your side now, but you only have 450 days.

If you are a sustainability marketer or communicator …

Start the credibility conversation today. It will be a dark day when the goal deadline has arrived and your organization is reluctant to communicate the results due to concerns over credibility. The implications of misleading investors, shareholders or customers with overstated sustainability performance come 2020 will be a real thing.

As a sustainability communicator, getting ahead of the credibility conversation by validating your emissions calculations and performance now is critically important. I see too many organizations that have never questioned the way their data is created, or was created way back when. I hear so much “we use XYZ software,” “we have been doing this for ten years,” “we don’t need any processes and procedures for this.” I also hear, “we had no idea we were so far off,” “why would my predecessor do it that way” and “we have been publishing this data wrong for so many years.”

My recommendation: Spend a little money and have your data reviewed. Your organization’s financials get audited for a reason; that same reason applies for these calculations. You have 450 days to make it right.

If you are a facility manager or specific topic sustainability leader …

Ensuring the accuracy of your organization’s total GHG emissions inventory is a large lift in and of itself, but the micro-aspect of emissions performance is equally important. If you happen to be one of the organizations that actually hit its 20 percent by 2020 target, the most important element of communicating that success is to be able to explain how those reductions actually happened.

Detailing how emissions reductions happened is part of the way to build credibility in communicating this massive accomplishment. As facility managers or topic leaders on sustainability, you are the front line for explaining which projects saved how much energy/waste/water/carbon at what ROI, over what period of time. While some will argue these details should be left in minutia, I would argue these details help write the story and build credibility. Additionally, CDP does a great job of helping organizations set context for their reductions.

Starting now, prepare a list of accomplishments, performance of projects, ROIs, pictures, charts and beyond to share with communicators and sustainability leadership. In 450 days, this level of data is going to be important.

If you are an NGO or advocacy group …

As The Beatles famously stated, sometimes we get by with a little help from our friends. As an NGO or advocacy froup, you play a huge role in helping organizations drive towards their stated goals by

holding organizations accountable: Ask about performance. Ask how the goals were accomplished. Ask why goals were not achieved. Help sustainability leaders hold their organizations accountable. With 450 days until 2020, it’s never too early to start advocating for organizations to hit their stated goals.

At the end of the day, we all want to have success in driving organizations towards more sustainable performance. Sometimes stated goals and aspirations outpace the technical and mechanical rigor of calculating, reporting and managing emission performance. With some small changes, most organizations can spend the next 450 days making sure their 2020 Sustainability Goals are not forgotten.

*According to Pivot Goals, 385 companies have been evaluated, including the Fortune 250 past and present.

3 Strategies for Green Product Selection in Healthcare Facilities

By Greg Zimmerman, Executive Editor Green

At a green building conference a few years ago, Dr. Claudia Miller, assistant dean of the University of Texas School of Medicine, made a rather bold statement: “Architects have a greater ability to improve public health than medical professionals,” she said.

The same could certainly be said for facility managers. That’s because facility managers are the ones who choose products on an ongoing basis for the life-cycle of the facility. Decisions facility managers make regarding products brought into a facility have a profound effect on the health and wellness of patients and staff, as well as on the overall quality of the environment, both indoor and for the world at large.

 But it’s not always easy to wade through the din to ensure product criteria and standards developed, and the products selected as a result, are truly doing no harm.

“The strategic role of healthcare is not just treating diseases, but also preventing them,” says Howard Williams, president and senior sustainability consultant at Howard Williams Consultants. “Healthcare’s role is delivering health care. Think through what this means vis a vis product standards and prioritize tools that enable facilities and purchasing to align and support the vision.”

Beyond cost and performance, facility managers must consider a range of environmental factors in the products. Here are three strategies to consider for getting the best results.

1. Consider a Red List — Call it a list of restricted substances or a list of chemicals of concerns, a red list is essentially a list of chemicals that are not allowed to enter a healthcare facility in any form, including building and cleaning products. For large organizations, like Kaiser Permanente, the red list usually falls under an environmental purchasing policy. For smaller organizations, EPA, the Living Buildings Institute, and others all have developed red lists readily available for facility managers to use as part of their own product selection criteria.

 But why is a red list important? For one, says William Paddock, cofounder and managing director of WAP Sustainability, “It’s pretty important for healthcare facility managers to make sure they’re not filling the hospital with substances that are causing the very diseases that people are coming to have cured.” Known carcinogens and toxic chemicals are the main substances that make up the red lists, but these lists are constantly evolving. “Always be aware that the chemicals lists are changing,” says Paddock. “What chemical will be the next 60 Minutes special?”

But simply selecting products that won’t do harm is only half the battle. Facility managers should also make a concerted effort to effect positive health and wellness benefits with product selection. “Healthcare facilities should be the safest places we should be able to go indoors,” says Paddock. Building and cleaning product standards must reflect a healthcare facility manager’s commitment to maintaining the health of the facility’s patients and staff. Products that help achieve good indoor air quality, lower energy use, and ensure a healthy community should all be given highest priority in healthcare facilities.

 2. EPDs/HPDs – Once a red list has been identified, how do you determine whether the products you’re considering include any of those substances? In most cases, you can’t just email your sales rep and say, “Hey, what chemicals are in your chair?” Instead, ask for a document called a Health Product Declaration. The HPD is a standardized way to report the materials that make up a building product so facility managers can see if any are considered hazardous, or appear on their own list of restricted chemicals. In recent years, more and more manufacturers have spent the time and money to have HPDs developed for their products because some of the leading rating systems, like LEED, WELL, and the Living Buildings Challenge, are rewarding users for selecting products that have HPDs developed for them.

  That’s also true for the HPD’s close cousin, the Environmental Product Declaration (EPD). The EPD lists the environmental attributes and impacts of a product, based on the manufacturer conducting a full environmental life-cycle assessment of the product. There is a ton of information in the EPD, not all of which facility managers will be interested in or will be useful. So Williams suggests making sure you understand what you want to get out of an EPD before requesting one.

One of the most common reasons to request EPDs for products is to discover the amount of embodied carbon in the product. Facility managers who are participating in their organization’s greenhouse gas catalogue will need to understand how much carbon is required to manufacture the products they select. This is especially important in huge healthcare facilities with larger-than-average carbon footprints. “There are lots of tools to help us manage (energy) consumption,” says Paddock. “But we don’t have a great idea of how much carbon it took for concrete, flooring, or other products. So embodied carbon is an important criterion, and then you can select products based on carbon intensity.”

That’s not to say EPDs aren’t important for considering other environmental criteria, like soil erosion, waste generation, and more. It’s just that, as facility managers well know, often too much data is just as bad as not enough. So again, it’s important to know exactly what you’re looking for and how you’ll use that information in product selection criteria.

“I favor the idea of telling suppliers why you want the information, how it will be used, and that EPDs will be required on and after a certain date,” says Williams.

3. Green Product Certifications – For many healthcare facility managers just beginning to create product standards, the tried-and-true cadre of green product certifications are still incredibly useful tools to differentiate products that meet particular criteria for environmental standards. “Green product certifications are an ‘easy button,’” says Williams. “The third-party certification assures purchasers of an unbiased review against the standards, effectively outsourcing verification and the need to stay current.”

That’s to say, the most common single-attribute green certifications quickly show a stamp of approval for a particular green criterion, like VOC emissions or recycled content.

A green certification can also provide a more complete picture of product selection standards and criteria, though, says Williams. “A multi-attribute, third-party certification, such as Cradle-to-Cradle, satisfies red lists, carbon management, water stewardship, responsible recycled content, and social equity for an increasing array of products and materials.”

In some cases, often with single-attribute certifications, the green product certification will be included in an EPD, says Paddock. But if facility managers are unsure, or if the manufacturer hasn’t created an EPD for a particular product, the green certification can then still be a valuable differentiator. 

The Current State and Evolution of Corporate Sustainability Assessment Organizations

CDP, RobecoSAM, EcoVadis — they are all organizations that assess the sustainability performance of companies worldwide. They all have their own agenda and targets, and of course, their own methodology to assess a portfolio of companies. 

Globally, +/- 60 percent of companies that publicly communicate sustainability data are answering to sustainability assessing organizations(1)(2). It is not an easy task: A survey of sustainability managers internationally has identified that replying to sustainability questionnaires was the biggest pain point in sustainability data management in 2016(3).

We did some research and interviewed experts to understand what can be learned from the scoring/ranking provided by assessing organizations and what’s coming for companies that are or will be assessed.

Bertrand Desmier, Sustainability Business Line Director at Tennaxia, is unambiguous: “Companies are receiving more and more demands each year from rating agencies and the topics are becoming more challenging with in-depth questions.”

Globally, companies reporting on sustainability are predominantly responding to CDP, RobecoSAM and EcoVadis(1)(2). Others organizations such as Sustainalytics, MCSI, Viego-Eiri, Oekom Research, Gaia Index, FTSE4Good and Bloomberg are also assessing companies based on sustainability, but are used more or less frequently depending on the region.

There are two types of assessing organizations: Those serving investors and those serving large companies focused on risks and opportunities in their supply chain. CDP does both, while EcoVadis is focused on the supply chain and DJSI RobecoSAM serves investors.

Who responds to sustainability assessing organizations?

In 2016, CDP sent worldwide, investor-backed disclosure requests to every publicly traded company; 1,089 companies disclosed their data. The same year, EcoVadis evaluated 20,400 companies (80 percent are considered SMEs) around the world(4). In 2017, 942 of the 3,400 world largest invited companies participated in RobecoSAM’s Corporate Sustainability Assessment(5).

Who uses sustainability ratings and scores, and why?

Assessments that included ratings and rankings are typically used by investors and procurement teams to make better decisions in their investment strategy and to minimize risk for the business.

“EcoVadis is different from financial sustainability ratings in that we provide information used in commercial relationships. Through a SaaS procurement solution, we enable our clients to monitor their portfolio of suppliers.

Depending on their own priorities and strategy regarding their supply chain, we can help them identify risk categories of suppliers; assess, view ratings and scorecards of suppliers; and work together to improve their performance and transparency.”
— David McClintock, Marketing Director at EcoVadis

In a recent study, EcoVadis and HEC business school compared the reasons driving sustainable procurement between the US and Europe. Risk mitigation, brand reputation and compliance are the three major drivers. With recent regulations such as the California Supply Chain Transparency Act, the UK Modern Slavery Act, the Dodd-Frank Act on Conflict Minerals, and the “Devoir de vigilance” in France, this trend should only grow with time.

Source: HEC/EcoVadis 2017 - 7th Sustainable Procurement Barometer

According to Bloomberg Professional Services(6), “To meet rising investor demand, more asset managers are incorporating Environmental, Social and Governance (ESG) considerations into their investing strategies, and an increasing amount of research suggests that their approach aligns with positive financial returns.” Disclosing ESG data is also pushed by the UN’s Sustainable Stock Exchange Initiative’s global partners, which include 15 stock exchanges that provide written guidance on ESG reporting and 12 that require companies to make ESG disclosures (none is in the US).

Sustainability/ESG scores and rankings aren’t only used by investors and procurement teams. Companies themselves are using them to assess their performance and to compare to peers.

Ranking can also be a way to leverage some key topics internally. By nature, companies are competitive; they don’t like to be the last in class, thus enabling sustainability managers to leverage material sustainability topics internally.

Questionnaires from assessing organizations often involve several departments, especially with RobecoSAM, which screens on average over 20 different criteria in 60 industry-specific questionnaires, including information on climate change, tax strategy, human rights, risk mitigation, governance, etc. It enables sustainability departments to engage with internal stakeholders.

“Companies tell us that they see real business value in the process that needs to be established to answer the RobecoSAM CSA (Corporate Sustainability Assessment). Aside from potentially securing the company a place in the coveted DJSI, we are often told that it also creates a network within the company and incorporates sustainability thinking in companies’ DNA.”
— Robert Dornau, Director of Sustainability Services at RobecoSAM.

Public rankings, such as the ones from CDP and RobecoSAM, are promoted by companies themselves when they perform well. Media and NGOs are also relaying this information, increasing public awareness on the subject. CDP even uses the name-and-shame method by publicly disclosing the names of the companies that don’t answer to its invitation to participate.

Working toward a more standardized approach

Companies experience survey fatigue as they receive dozens of requests from assessing organizations(3) and often not under the same formats. On the other side, investors acknowledge the increasing amount of ESG data available, but a lack of standardization makes it difficult to compare companies(7).

Though there are two types of assessments (for the investment community and for companies focusing on supply chain risks and opportunities), we see assessing organizations trying to reduce the work for respondents.

“EcoVadis has a partnership with CDP, enabling us to access the data provided to CDP by our clients — it reduces the number of times our clients have to provide their data on climate change,” McClintock said. “Perhaps more importantly, we support industry initiatives, including TfS in chemicals, GeSI-ETASC in ICT, Railsponsible and AIM-Progress in food and consumer goods, which have standardized on the EcoVadis rating for CSR assessment of suppliers. This is vastly simplifying the process for suppliers to share results to multiple clients.”

Others, such as RobecoSAM and its CSA, align their questionnaires with different organizations. “RobecoSAM works with CDP, GRESB or the London Benchmarking Group. Climate Strategy questions are aligned with GRESB. We try to ask questions in a way that companies reporting according to GRI can recycle their efforts and easily identify how they can reference their GRI reporting in our questionnaire. We’re very aware of companies’ reporting burden and we actively try to ease it by aligning our questionnaire with other organizations’ questionnaires,” Dornau said.

Some will try to consolidate their teams, such as French sustainability rating agency Viego, which merged with Eiris in 2016 to provide European investors with stronger ESG information and research.

There is definitely a dynamic here — assessing organizations are trying to align and reduce the work for responding companies and provide more standardized and meaningful data to their clients. However, this space is still relatively young, new topics of interest are emerging, and stakeholders are requesting material information with KPIs. In this context, it is not possible yet to have a standardized approach.

“10 to 15 percent of the RobecoSAM questionnaire changes every year. Our questions need to be challenging enough to allow us to differentiate between the top 10 percent of companies. We like to keep companies on their toes with regards to emerging topics or increasing disclosure expectations. This is what companies like about RobecoSAM,” Dornau said. “When we add new questions, around 20 percent of companies are ready to answer and have good answers. 80 percent are not yet ready but they use our questions as incentives to address new topics internally. Consequently, we see them improve in future years.”

What can assessing organizations teach us about the current state of sustainability disclosure?

Experts agree that companies are getting better at disclosing information. RobecoSAM had an increase of participating companies from 867 to 942 between 2016 and 2017. In France, Desmier noticed a “click effect”: Once companies start to disclose, they don’t backtrack; they tend to engage with their suppliers on transparency, pressuring them to disclose more about material topics. There is also peer-to-peer competition pushing companies to be more performant and transparent if their competitors are doing so.

According to Dornau, this year RobecoSAM upgraded its CSA with questions about “policy influence and impact measurement and evaluation. New topics introduced in recent years were tax strategy, materiality, human capital development. There is also the evolution of existing criteria, e.g. supply chain, that expanded the required transparency beyond basic information. The human rights-related questions were also made more challenging this year, focusing on due diligence, assessment and disclosure.”

According to EcoVadis’ latest Barometer(8), there is also a big trend of assessing the supply chain on specific sustainability topics, with 75 percent of organizations using sustainability data when selecting new suppliers; 63 percent having specific sustainability weighting requirements when managing RFPs, RFXs and tenders; and 58 percent using sustainability data for their annual supplier evaluations. However, according to the same study, assessments remain primarily with tier-one suppliers.

Source: HEC/EcoVadis 2017 - 7th Sustainable Procurement Barometer

The future of sustainability reporting and assessing organizations

According to Desmier, there is no escape: “There is a constant, continuous and more precise questioning of companies, and it won’t stop anytime soon.” Sustainability assessing organizations are one way for various stakeholders to assess companies’ disclosure and performance. The public is now more aware of this topic and “we saw recently in the press a couple of companies being sued for lack of transparency, which is relatively new,” Desmier said.

It also means that companies must not only be transparent but ensure the quality of their data. Civil society, as well as investors, don’t easily trust the accuracy of the data provided by companies and are calling for verification.

This hits a nerve. According to GRI, 32.5 percent of GRI are partially or totally assured by independent third parties, and the companies doing so are mostly based in Europe, due to the heavy regulation in this part of the world(9). There is clearly still a gap between what corporations are doing and what their clients, investors and/or civil society are expecting.

To encourage companies, assessing organizations often allocate better scores to companies that can prove data have been verified by an independent third party. Others, such as EcoVadis, are investing in technology to improve the quality of their assessment and the efficiency of the process.

Increasing the scope of sustainability reporting is also a trend: People now want companies to be transparent about their activities, their impact on local communities, and in their supply chain. McClintock said EcoVadis is working on “having better geographic coverage; we want to be able to assess every supplier, wherever they are in the world” — highlighting that disclosure is not only a topic for European and North American countries but for the world in general.

New services help companies reply to questionnaires and perform better. Tennaxia, for example, provides consulting services and technology, helping clients with their sustainability strategy, defining the right content to report, collecting high-quality data and communicating it to various stakeholders, including sustainability assessing organizations. EcoVadis provides services to its clients, as well as to suppliers, with a Suppliers Capacity Improvement Tool. RobecoSAM regularly organizes webinars and practitioner workshops to support and educate companies on the questionnaire’s aim and content.

Sustainability assessing organizations are not going anywhere anytime soon; on the contrary, the pressure seems to only increase to push companies toward transparency. While some organizations are working to standardize how companies should report, be questioned and how investors can use sustainability/ESG data, it is not yet a mature field. There is still a lot of work in terms of defining material content for companies and investors, and the quality of data that is reported.

(1) ReScore 2017 – Best Practices in Sustainability Data Management, International Benchmark↩

(2)Tennaxia — 5ème édition, étude Pratiques de Reporting RSE et Rapports Extra-financiers↩

(3) ReScore 2016 — The Pain Points of Sustainability Managers Across the World, International Benchmark↩

(4) EcoVadis Global CSR Risk & Performance Index 2017↩

(5) DJSI 2017 Results Review↩

(6) Bloomberg Professional Services, The growing role of ESG investing in portfolio management, June 8th, 2017↩

(7) Bloomberg Investors relation, Investors seeking consistent ESG disclosure, research finds, May 4th, 2017↩

(8) HEC/EcoVadis 2017 — 7th Sustainable Procurement Barometer↩

(9) CSE — Sustainability Reporting Trends in North America 2017

About the Author: Juliette Barre is Sustainability Principal at Tennaxia North America a leading global provider of Sustainability and EHS data management services. Juliette created Tennaxia North American office where she developed Tennaxia’s partnership program and manage all activities in North America

Something > Nothing: The Importance of a Circular Feedback Loop

“All I really need is the word to be brought up.”

“If they aren’t talking about it, then it can’t be important to them.”

At WAP Sustainability, we work with manufacturers and brands to help them meet customers’ expectations on sustainability, many of which receive requests through The Sustainability Consortium (TSC). 

In the course of our work and discussions with suppliers of Walmart, we have recently been reminded that sustainability is still a small part of the total equation of doing business with the retail giant; and we noticed it becoming less and less of a factor as of late.

One of the world's iconic manufacturers of children's products told me that the reason they were not fulfilling Walmart's request for sustainability information through TSC is that they had just returned from Walmart’s Bentonville, Arkansas headquarters — and once again, the “S-word” never came up.

"No posters on the wall; not even the S-word on a piece of damn paper."

Even colleagues at TSC report challenges with getting Walmart to make the topic visible: "I had a prospective member who was interested in joining our organization and they felt the company could be doing more and wanted to be more engaged in the sustainability community. One trip to Bentonville made them realize this was no longer a priority and they didn’t become a member."

Even companies with Board Members on The Sustainability Consortium are questioning the lack of a nudge.

“It has to be about creating value and there isn’t any. No favorable purchasing terms, additional shelf space, end caps, promotions … If we miss a shipment or have a supply chain hiccup, none of this matters; none of this helps us in those situations."

Reflecting on a recent sustainability conference, I was reminded once again of the buzzwords, promises, stated goals, commitments, claims and so forth around the topics of sustainable purchasing and responsible sourcing; half of the exhibitors and sessions seemed to have something to do with one of these topics.

Yet one of the companies responsible for driving sustainability into organizations as a top 10 strategic priority back in 2008 has seemed to take a step back. Maybe it is the new leadership at Walmart; maybe it is the sustainability personnel at Walmart; maybe our clients are right and they aren't that serious, after all.

In 10+ years of discussing sustainable purchasing or responsible sourcing (whatever term you subscribe to), the single biggest opportunity — and the single biggest failure — is a lack of a feedback loop. The buyer-seller nexus cannot be influenced if we do not use our words.

We talked with Walmart’s Senior Director of Sustainability, Fred Bedore, about the feedback loop from Walmart to suppliers on their sustainability performance. He highlighted that Walmart engages with suppliers in multiple ways, including Joint Sustainability Meetings with the top 25-30 suppliers and through their Global Responsibility Report; overall about 1,800 suppliers representing 70 percent of Walmart’s sales respond to TSC’s KPIs.

However, the opportunity to make sustainability more visible in buyer meetings with merchants was confirmed as an opportunity for the retailer. Bedore recommended that suppliers bring up sustainability (the Index, packaging, efficiency or another sub-topic) with the buyer to help spur the conversation, highlighting that a reverse feedback loop with the buyer is an interesting approach that sometimes creates really good engagement and results.

As sustainability professionals and as a broader sustainability community, what is most concerning to me is that sustainability practitioners at manufacturers and brands spend significant internal capital to "get sustainability done.” Our colleagues cross internal and external lines, push the organization, manage data, respond to surveys and make the case for sustainability, and for what? 

"The word doesn't even come up when my biggest customer meets with me." 

And picking only on Walmart and TSC would be unfair.

The demand for a feedback loop expands beyond just Walmart. Just last month, 50 major building product manufacturers including Herman Miller, Milliken, Kohler and Allegion sent a joint letter authored by the International Living Future Institute (ILFI) to architects and design professionals demanding a feedback loop on the sustainability performance of their companies and products.

In contrast, there are positive examples of good feedback loops. I want to compliment June Fisher from Kohl’s, who in my opinion had provided great feedback to Kohl’s suppliers: When responding to Kohl's Sustainability Survey, June would take the time to review the survey and schedule a call to review responses. She provided feedback and expressed interest in the responses our clients had worked so hard to generate. IKEA, too, does an exceptional job at providing feedback, digging deep into each data point, checking for errors or abnormalities.

For Walmart, feedback direct to 1,800 suppliers at 15 minutes each is a mere 450-hour task.

The moral of the story is, as sustainability practitioners, we have to activate the information we are collecting. We need not let our colleagues expel internal political capital trying to respond to our self-created surveys, only to set them up for failure by not having a feedback loop to show that anyone actually cares. I truly believe that “S-word” written in a room, on a Vendor Scorecard, or as a static topic on every buyer agenda is an easy first step to closing the feedback loop. We move forward by making sustainability visible.

As an action item, I'll even offer to create one of those motivational posters with the S-word on it, and maybe some pictures of solar panels, recycling bins, a Prius, or a windmill; Walmart, give me a call — I'll send you one for every buyer’s room.

Why your sustainability reporting must evolve with your company

Sustainability reporting trends

Sustainability is a trending topic and since 2010, a large number of American companies have started a sustainability reporting: according to the G&A Institute, the proportion of S&P 500 companies that issue a sustainability report rose from less than 20% in 2011 to more than 80% in 2015. How will this reporting trend evolve over time?

First, let’s get back to the basics: what should a relevant sustainability report contain? Frameworks such as GRI are here to guide you: they provide a large list of sustainability issues a company should deal with. In addition to these guidelines, a materiality analysis helps focus on topics that matter most to your company. But once you’ve set up your list of material issues and sustainability KPIs, for how long will this list be relevant: one year? two? five?

If we come back to the main reasons why companies have started their sustainability reporting, we can find the following ones:

• Answering to rating agencies such as DJSI, CDP

• Communicating with stakeholders (investor, clients, NGOs, employees, etc.)

• Monitoring the company sustainability strategy

• Complying with regulation

You may have noticed (and perhaps experienced yourself) that all these requirements change over time. Every year, rating agencies will add new questions either regarding new topics or for a more specific sectoral/regional approach. Stakeholders will request new information on sustainability issues and governments may add regulations on specific topics.

Sustainability reporting evolutions

If you haven’t changed your sustainability reporting in the past couple of years, here are some evolutions you may want to implement:

• Sector specific indicators

• Scope 3 GHG emissions

• Supply chain assessments

• Circular Economy

• Protection of personal data

• United Nation Sustainable Development Goals

More examples can be found in the sustainability trends for 2017 report from SustainAbility.

In addition to these new issues, you must consider your company’s own evolution: international expansion, the acquisition of another company or the launch of a new activity will probably raise new sustainability issues.

As a result, the more time passes, the less relevant your initial sustainability reporting will be, because it will miss a growing number of new sustainability topics faced by your organisation.

As sustainability issues for a company evolve over time, so should its reporting. Adjusting your sustainability reporting can become costly and time-consuming depending on the reporting tool you use. If your sustainability reporting tool is not flexible enough to support your reporting evolution, you may not be able to collect new categories of data. This in turn will affect your ability to manage new sustainability issues and to meet your stakeholders’ requests.

Sustainability reports: from checklist to management tool

But does answering all these frameworks really enable companies to manage their sustainability issues?

A panel of experts at Edie’s conference in 2017 explained that “broad reporting frameworks have created a tick-box system for external gratification”. However, put together in one report don’t necessarily provide relevant information for the various types of stakeholders. According to them, reports that are created mainly to respond to GRI, SASB, CDP and other frameworks, “failed to truly present the benefits of firms’ sustainability actions”.

There is something here that I believe will resonate with many people doing sustainability reporting. When sustainability is not embedded in the general strategy of the company (i.e. when top management doesn’t lead the way), sustainability reports often look like checklists or an accumulation of information providing poor added value to a company (or its stakeholders).

In theory, the checklist system is supposed to simplify the reporting exercise and make all stakeholders happy. In reality, this is not always true. So far, I haven’t heard anyone say they love reporting and data collection. Long hours spent on data collection, validation, consolidation, and report creation can be gruelling.

Plus, you can imagine the frustration if this work results in a report that almost no one reads and/or uses. The company also risks frustrating its stakeholders if they can’t find the information that matters to them.

There is not one way to solve this issue but here are three best practices we recommend for our clients:

• Perform a materiality analysis to identify what matters/impacts a company and its stakeholders (here is a white paper on the subject)
• Analyze the data you collect, and use it to actually improve your company’s performance rather than just to communicate externally
• Write audience-specific sustainability. It doesn’t necessarily mean sharing more information, but writing shorter reports focused on key audiences in a way that speaks to them.

It’s highly unlikely that a company will shift overnight from a checklist kind of report to performance, audience-oriented reports. Sustainability reporting is a journey and a dynamic process. However, there is a real added value for companies to start looking at sustainability reporting as an empowering process.  Companies like Tennaxia help companies combine technology and sustainability expertise to help you in your journey step by step.

Exhaustive checklists are good for grocery shopping, but not sufficient for sustainability strategy. Data should truly add value for stakeholders and the company.

*Republished with permission from Tennaxia

Written by Juliette Barre, Tennaxia

Christmas Tree Sustainability

It is December, hard to believe I know, but the end of the year is among us.  Now that we are on the latter side of Thanksgiving, the Holidays are among us.  One of the most anticipated decisions this Holiday season involves your Christmas Tree.

A few years ago, we were part of the the first-ever ISO-compliant third-party peer reviewed life cycle analysis (LCA) of Christmas trees. The LCA sought to answer a number of questions, with the areas of most interest being what overall environmental impact Christmas trees have on environment, and if there is a significant different between real and artificial trees. The study was sponsored by the American Christmas Tree Association (ACTA) a non-profit organization representing artificial Christmas tree retailers and real Christmas tree retailers, to clear up common misconceptions about the environmental impacts of Christmas trees.

The study found a surprising number of factors come into play in determining the environmental impact of Christmas trees.

The review compared the most common artificial Christmas tree sold in the United States to the most common real Christmas tree sold in the United States, and found that the choice of one tree over the other has a negligible impact on the environment. However, the study’s findings show that length of ownership, disposal method and “tree miles” can make a difference on which tree is environmentally preferable.

The study, reviewed by an independent third party panel, took into consideration five key environmental indicators to determine which tree type is environmentally preferable.

“There is a clear environmental break even point between the two trees,” said William Paddock, Managing Director of WAP Sustainability Consulting, a Nashville, Tennessee-based consulting firm that works with companies on corporate sustainability issues. “The debate gets a little more interesting when you look at different environmental indicators. Take for example the energy required to produce both trees. The energy required to make one artificial tree is roughly equal to the energy it takes to raise six real cut trees.”

Conscientious consumers need to consider factors such as length of ownership, disposal method and tree miles before choosing a type of tree.

ACTA encourages consumers to consider these five helpful tips when deciding which tree to buy this year:

1. Purchase locally grown Christmas trees if possible.
2. Consider “tree miles.” How far did the tree travel to get to your home? How far did you travel to get it?
3. If you have purchased more than nine cut trees over the last nine years, consider purchasing an artificial tree to minimize your environmental impacts.
4. If you own an artificial tree, make sure and keep it in use for at least six to nine years. If you plan to replace an artificial tree, donate it before you dispose of it.
5. If you purchase a real tree, consult with your local waste authority about how to properly dispose of your tree.

“Our members have been urging consumers to choose the Christmas tree that best fits their lifestyle, be it real or artificial,” said Jami Warner, Executive Director of ACTA.

In some cases, purchasing an artificial tree turns out to be a more environmentally friendly option.

The study also highlights an “Eight Christmas Environmental Payback Period” between the two tree products based on the study’s five environmental indicators. The study found that the environmental impacts of one artificial tree used for more than eight Christmases is environmentally friendlier than purchasing eight or more real cut trees over eight years.

“As a general rule of thumb, if you are going to purchase an artificial tree, keep it in use for at least nine years,” Paddock said.

“ACTA encourages responsible consumerism,” said Warner. “Consumers should consider the impact on the environment for every item they purchase, not just Christmas trees.”