Sustainability and commerce trends

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  • 1. I N D U S T R I A L E C O L O G Y I N N O RT H A M E R I C A Sustainability and Commerce Trends Industry Consortia as the Drivers for Green Product Design J. S. Golden, V. Subramanian, and J. B. Zimmerman Despite the current political climate in Wash- opment (ORD) has partnered with the Na-ington, it is clear that the 2nd decade of the 21st tional Academies of Science to incorporate sus-century has brought with it increased interest and tainability into all of the agency’s activitiesproactive engagement by the U.S. business com- and programs. Through the lens of sustainabil-munity and federal government to transition from ity, the EPA has created the Materials Man-firm and facility sustainability to a more holistic agement and Safe Chemical program to sup-focus on product sus- port green producttainability throughout Multinational retailers and manufac- design and manufac-the value chain. Al- turers are arguably the most influen- turing processes.though many of the ef- tial forces driving the rapid growth and The General Ser-forts are not systematic vices Administrationor coordinated, a de- expansion of sustainable product de- (GSA), which pro-scription of them in- sign throughout the life cycle around vides more than 12dicates that individual the globe. million products andorganizations are rec- services to other U.S.ognizing their responsibility to address sustain- federal agencies, is driving to “green” its sup-ability challenges. ply chain. The GSA’s initial effort to comply with the executive order is focused on seeking GHG emission inventory reporting from its sup- Public Sector ply chain, with the potential to expand into broader sustainability metrics, such as resource At the national level, the White House and depletion, water, and wastes to aid in their pur-multiple federal agencies have promulgated pro- chasing decisions. In addition, the National Agri-grams in an effort to drive industrial ecology culture Library at the U.S. Department of Agri-through product sustainability. Executive Order culture is expanding the development of the LCA13514, issued by President Obama on October 5, Digital Commons, which will house primary data2009, requires federal agencies to reduce Scope 1, from agricultural and industrial operations for2, and 3 greenhouse gas emissions, obtain 50% di- related agricultural chemical production, agron-version rates of solid waste, pursue opportunities omy, logistics, and industrial operations.with vendors to reduce greenhouse gas (GHG) The Securities Exchange Commission (SEC)emissions, ensure procurement preferences for and the Federal Trade Commission (FTC) areenergy-efficient products, and reduce consump- also indirectly driving sustainable product designtion of paper with low recycled content. and supply chain behavior throughout the life The U.S. Environmental Protection Agency’s cycle. The SEC on January 27, 2010, issued in-(U.S. EPA’s) Office of Research and Devel- terpretive guidance1 that instructs firms on how c 2011 by Yale University to evaluate and disclose how direct and indirectDOI: 10.1111/j.1530-9290.2011.00381.x impacts resulting from climate change affect theirVolume 15, Number 6 financial performance. The FTC is finalizing itswww.wileyonlinelibrary.com/journal/jie Journal of Industrial Ecology 821
  • 2. I N D U S T R I A L E C O L O G Y I N N O RT H A M E R I C Arevisions to the Guides for the Use of Environmen- The SAC3 was formally launched in 2011 andtal Marketing Claims (aka the “Green Guides”) has joined efforts with the OIA. The SAC de-to regulate how firms market or make environ- veloped the Sustainable Apparel Index to allowmental claims under Section 5 of the FTC Act. apparel retailers and brands to compare the per-Firms will have to be able to substantiate their formance of the upstream supply chain throughenvironmental benefit claims, which will require unified methods, metrics, and reporting on envi-increased transparency in the data and methods ronmental and social performance to customers.utilized to derive the results. Version 1.0 of the index employs a cradle-to- gate life cycle approach, based on three building blocks: (1) The OIA-EOG Eco-Index, (2) Nike’s Industry Consortia Environmental Design Tool,4 and (3) social and Multinational retailers and manufacturers are labor indicators for the manufacturing phase be-arguably the most influential forces driving the ing developed by the SAC. The index is primarilyrapid growth and expansion of sustainable prod- qualitative, deploying best management practiceuct design throughout the life cycle around the types of questions on energy, GHG and other airglobe. These changes stem from a collective effort emissions, water quality, water use, toxics, solidto seek greater transparency in the value chain, waste, and land use. The next version, currentlywhich is intended to, among other goals, identify being designed (Version 2.0), will transition toeconomic inefficiencies by reducing socioenvi- a more quantitative, life-cycle-oriented tool thatronmental burdens and risks. will account for environmental and social im- This is best exemplified by the relatively pacts over all phases of the life cycle to helprecent emergence of the Sustainable Apparel drive product performance and effective decisionCoalition (SAC), the Sustainability Consor- making.tium (TSC), and the Outdoor Industry Asso- The Sustainability Consortium5 was launchedciation (OIA). All three are multistakeholder in 2009 at the Bentonville, Arkansas, headquar-organizations that are developing varied ap- ters of Walmart. Created as a university-led ini-proaches aimed toward a similar outcome of in- tiative in partnership with industry, it set out tocreased transparency throughout the value chain. create a common sustainability measurement andThe industry members comprising these con- reporting system (SMRS) for products through-sortia include well over 200 of the world’s out the value chain, on the basis of life cyclelargest retailers, manufacturers, and subtier sup- approaches. The SMRS is based on the ISOpliers. The fact that buyers from multiple ma- 14025 standard for environmental product decla-jor retailers and manufacturers now require rations6 and has recently adopted the GHG Pro-life cycle inventory and product benchmarking tocol7 product level accounting principles for lifedata as purchasing criteria is significant mo- cycle assessment (LCA). Apart from the tradi-tivation. Additionally, industry consortia are tional LCA, the SMRS is composed of (1) prod-ideally suited to establish standardized metrics uct category baseline models that use worst-casefor cross-organization comparison and to define market-typical products for comparative analysis;best management practices to improve environ- (2) product category rules; and (3) computationalmental and social conditions within antitrust tools to conduct life cycle modeling, including anframeworks. input-output LCA model.8 One of the pioneers in this space is the OIA’s The progressive approach to the SMRS in-Eco Working Group (OIA-EWG), which was volves creating a common understanding of theformed in 2007. This organization has partnered environmental and social “hotspots” for eachwith its transatlantic counterpart, the European product category. This information is universallyOutdoor Group (EOG), to create the OIA-EOG shared to accelerate best management practicesEco-Index.2 The index is initially a product de- through the value chain. Eventually, firms will besign tool focused on reducing environmental im- able to use this information as a part of a formalpacts of product materials, intermediates, and fi- product declaration, which can then be commu-nal products specific to the outdoor industry. nicated business to business (B2B) and business822 Journal of Industrial Ecology
  • 3. I N D U S T R I A L E C O L O G Y I N N O RT H A M E R I C Ato consumer (B2C). The OIA and the Apparel to report to many different organizationsCoalition have a taken a quicker-to-market ap- that require information in different for-proach by initially focusing on a single product mats and on different platforms.category; the Sustainability Consortium has en- 3. Increased support of the U.S. Life Cy-gaged in a broader product category approach, in- cle Inventory (USLCI), currently main-cluding the food, beverage, agriculture, personal tained by the National Renewable En-care, household care, and electronics sectors. ergy Lab (NREL), which contains ap- Beyond the industry consortia, numerous proximately 400 processes, as compared toservice-oriented companies are supporting the the more strongly supported, European-sustainable product initiatives due to the po- focused Ecoinvent database, with moretential emerging business opportunities. This in- than 4,000 processes.cludes the proliferation of eco-labels, which. at 4. Expansion of sustainable systems researchlatest count, number approximately 400 (Golden at the national level and by industry re-2010), and traditional accounting firms that are garding issues of unintended consequencesentering the business segment by developing sus- (Golden et al. 2010), supply chain risks,tainable product validation and auditing services. and economic national security. As moreTrans-sector service firms, such as intermodal individual firms and sectors look to alterna-transporters, materials management firms, and tive feedstocks and designs at a time of in-enterprise reporting companies are also actively creased global demand for consumer prod-tracking and, in many cases, participating with ucts, there will be a shift in supply chains,various consortia. increased demand for traditional and novel feedstocks, emerging economies of scale, and potential implications for infrastruc- Common Approaches and ture needs and security demands (Com- Common Needs mittee on Critical Mineral Impacts on the Each of the described institutional efforts is U.S. Economy 2008).undertaking an incremental approach toward 5. Expansion of programs to educate and trainquantifying and communicating B2B product sus- university students and retrain the currenttainability, while maintaining the idea that B2C workforce in sustainable product designcommunication may not be a priority or refined and supply chain management approaches,for the near term. such as industrial ecology, LCA, system If these existing and emerging initiatives are to dynamics modeling and optimization, andhelp the United States collectively move forward green chemistry and engineering, to meetin a responsible way, a number of common need industry workforce recruitment needs andmust be addressed. These include the following: emerging demands. 6. An inclusive systems approach that is 1. A platform for regular communication on structured in a way that reflects current methods for measuring and quantifying global value chain realities. The developed metrics and frameworks for transparent, and shared systems must promote solutions consistent reporting, among initiatives for that are universally accepted and imple- sustainable product design and value chain mented to realize the full potential of mea- management. This will promote shared suring, quantifying, and reporting current learning and reduce duplication. and future environmental and social im- 2. Creation of a single secure and confiden- pacts of product design and value chain tial national registry to harmonize, stan- decisions and activities. dardize, receive, and benchmark LCA data for the various industry initiatives. Requir- ing industry to submit proprietary data to Acknowledgements multiple public and private entities is in- feasible due to the obvious business im- This column is based on research sup- plications as well as the costs and time ported by the Sustainability Consortium, a Golden et al., How U.S. Institutions Are Driving Sustainable Product Design 823
  • 4. I N D U S T R I A L E C O L O G Y I N N O RT H A M E R I C Amultistakeholder organization, based in Fayet- About the Authorsteville, Arkansas and Tempe, Arizona, USA. Jay Golden is director of the Duke Center for Sustainability & Commerce at Duke Univer- sity in Durham, North Carolina, USA, where he Notes is an associate professor of the practice for sus-1. www.sec.gov/rules/interp/2010/33–9106.pdf tainable systems analysis in the Nicholas School2. www.ecoindexbeta.org/ of the Environment and Pratt School of Engi-3. www.apparelcoalition.org/ neering. Golden provides technical assistance to4. www.nikebiz.com/responsibility/nikeenvironmental the Sustainable Apparel Coalition and the Out- designtool door Industry Association, and he cofounded and5. www.sustainabilityconsortium.org/ codirected the Sustainability Consortium until6. www.iso.org/iso/catalogue_detail?csnumber=38131 2010, who sponsored research that supported7. www.ghgprotocol.org/8. www.open-io.org/ this article. Julie Zimmerman is acting director of the Center for Green Chemistry and Green Engineering at Yale University in New Haven, Connecticut, USA, where she is an associate pro- References fessor of green engineering in the School of En-Committee on Critical Mineral Impacts on the U.S. gineering and Applied Science and the School Economy. 2008. Minerals, critical minerals, and of Forestry & Environmental Studies. Vairavan the U.S. economy. Washington, DC: National Subramanian is a PhD candidate in the School Academies Press. of Sustainability at Arizona State University,Golden, J. S., ed. 2010. An overview of ecolabels and Tempe, Arizona, USA. sustainability certifications in the global market- place. Duke University Center for Sustainability Address correspondence to: and Commerce. http://center.sustainability.duke. Dr. Jay S. Golden, Director edu/sites/default/files/documents/ecolabelsreport. Duke Center for Sustainability & Commerce pdf. Accessed June 2011.Golden, J. S., K. J. Dooley, J. M. Anderies, B. H. Box 90335 Thompson, G. Gereffi, and L. Pratson. 2010. Duke University Sustainable product indexing: Navigating the Durham, NC 27708 challenge of eco-labeling. Ecology and Society Jay.Golden@Duke.edu 15(3): 8. http://center.sustainability.duke.edu824 Journal of Industrial Ecology
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