Transcript
Wuppertal, 10 February 2013 Sustainable Supply Chains slide 1
Sustainable Supply Chains
possibilities and limits of private sector governance
About this Presentation
• This presentation was given at the Wuppertal Institute on February 10, 2013.
• It looks back at the 20 years I am active in sustainable supply chain management / “Stoffstrommanagement”
• From slide 8 onwards, I have only used old slides, in their original format. From before 1995, there were no digital presentations available.
• The last slide is a question. No answers have been suggested yet.
Wuppertal, 10 February 2013 Sustainable Supply Chains slide 2
Wuppertal, 10 February 2013 Sustainable Supply Chains slide 3
Topics
1. My work on supply chains 1990-present 2. The early 1990s: sustainable supply chains
discovered 3. The 1990s: innovative companies take the
lead 4. The 1995-2010: the trend of voluntary
certification 5. 2000s: But is there a business case? 6. 2010-present: The process of sector
conversion. 7. 2010-present: limits of private governance 8. What will be the end game?
1. My work on supply chains
1990 - present
Wuppertal, 10 February 2013 Sustainable Supply Chains slide 4
Some of my (supply chain) projects
Wuppertal, 10 February 2013 Sustainable Supply Chains slide 5
2. The early 1990
sustainable supply chains discovered
Wuppertal, 10 February 2013 Sustainable Supply Chains slide 6
Dutch Environmental Policy 1990
Wuppertal, 10 February 2013 Sustainable Supply Chains slide 7
KPMG-de Man 1994
Wuppertal, 10 February 2013 Sustainable Supply Chains slide 8
Folie 9
D
r. R. d
e M
an
, Ad
vie
sb
ure
au
vo
or M
ilieu
bele
id, L
eid
en N
L
Stoffstrommanagement - Vortrag in der Akademie für politische Bildung, Tutzing, 23. Mai 1995
Staat, Kette, Stoffstrom
A B C STOFF- STROM
a b gKETTE: Akteure
STAAT
Folie 10
D
r. R. d
e M
an
, Ad
vie
sb
ure
au
vo
or M
ilieu
bele
id, L
eid
en N
L
Stoffstrommanagement - Vortrag in der Akademie für politische Bildung, Tutzing, 23. Mai 1995
Die textile Kette: Akteure Chemie-
lieferant
Kon-
fektionär
Bekl.-
Handel
Einzel-
handel Au
fträ
ge,
An
ford
eru
nge
n Textil-
veredlung Info
rma
tion
en
(Beispiel, kleiner
Teil der Kette) Chemikalien für
technische Effekte
Veredelte Materialien:
techn. u. modische
Eigenschaften
Bekleidung: modische
Eigenschaften zentral
Mode: Individualität /
Symbole .... Ökologie??
Themen auf
den Schnittstellen
Folie 11
D
r. R. d
e Man
, Ad
viesb
ureau
vo
or M
ilieub
eleid, L
eiden
NL
Berlin, 17. November 1999
Sechs Varianten
Kooperation
für
Nachhaltigkeit
ineffektive
Kooperation
für N.
Kooperation
gegen
Nachhaltigkeit
Konkurrenz
für
Nachhaltigkeit
ineffektive
Konkurrenz
für N.
Konkurrenz
gegen
Nachhaltigkeit
3. The 1990s
innovative companies take the lead
Wuppertal, 10 February 2013 Sustainable Supply Chains slide 12
Folie 13
D
r. R. d
e M
an
, Ad
vie
sb
ure
au
vo
or M
ilieu
bele
id, L
eid
en N
L
Otto Versand, Umweltkoordination, Hamburg , den 14. November 1995
Typische Konstellation im
SSM
MATERIAL-PRODUZENT
HERSTELLER DES END-
PRODUKTES
(VERSAND) HANDEL
Material-wissen
Produkt-wissen
Markt-macht
Sheet 14
D
r. R. d
e Man
, Ad
viesb
ureau
vo
or M
ilieub
eleid, L
eiden
NL
Chain of Custody for Paper Products, Paper & the Environment, Berlin, May 31, 1999
A Closed Chain of Custody
Check logging
site
FOREST DATA LOGGING SITE
Norwegian
Measurement
System
DELIVERY NUMBER
Fibre Flow
Model
ROLL NUMBER
Norske Skog
Information
Systems
Forestry Logging Wood Paper Printed
Item
Sheet 15
D
r. R. d
e Man
, Ad
viesb
ureau
vo
or M
ilieub
eleid, L
eiden
NL
Chain of Custody for Paper Products, Paper & the Environment, Berlin, May 31, 1999
The Paper Production Chain becomes a
Forestry Products Communication Circle
Forest Owner
Wood
Buyer Buyer Paper
Producer Paper Seller Printer
Paper User
Paper Production Chain
Paper Seller
Printer
Paper
User
Forest
Owner
Wood
Buyer
Paper
Producer
4. 1995-2010:
The the trend of voluntary certification
Wuppertal, 10 February 2013 Sustainable Supply Chains slide 16
The Hague, Febr. 1, 2013 Public & Private Governance slide 17
Initiatives for sustainable commodities / social compliance
Sheet 18
D
r. R. d
e Man
, Ad
viesb
ureau
vo
or M
ilieub
eleid, L
eiden
NL
Round Table on Sustainable Palm Oil, London, September 20, 2002
Two Dimensions
1. The round table is a platform between business and NGOs for discussing standards and criteria for sustainable palm oil
2. The round table is a co-ordinator for business who want to produce products from sustainable palm oil and who need clear criteria, transparency and economically feasible ways of sourcing sustainable palm oil.
P.O.
production P.O. trade
production of consumer
products retail
environmental & social NGOs
1
2
con-
sumer
re-
tailer
producer
of end
product
processor pro-
cessor trader trader grower
financial
players
policy
legislation NGOs
palm oil chain
Institutes & consultants
London, November 10, 2003 OC meeting 20
Suitability for Palm Oil RT
SAI-platform + simple structure
+ business involvement
? NGO representation
FSC -- complex structure
- not a business initiative
+ NGO representation
MSC + simple structure
+ business involvement
+ NGO representation
Coffee - specific project structure
not suitable for our initiative
KL, January 19-20, 2004 OC meeting 21
Agenda
5 11:30 Governance structure:
a) summary of discussions, state of present discussion (RdM)
b) interests to include
6 11:45 Board
1. interests to include
2. number of Board members per interest group
3. NGO participation/representation in the Board
4. representation of additional stakeholders
7 14:30 Membership: rights and obligations
1. procedure for Board elections
2. voting rights
3. General Assembly
4. procedure for expulsion and monitoring
16:30 Membership
5. reporting
6. financial contribution (business and non-business members)
5. 2000s
But is there a business case?
Wuppertal, 10 February 2013 Sustainable Supply Chains slide 22
Sheet 23
D
r. R. d
e Man
/IM
D L
eiden
/L
ausan
ne
Unilever Sustainable Agriculture Workshop – Norwich, June 18
Central Questions
What activities in the supply chain are crucial to
cost control?
creation of value for consumer?
creation of value for stakeholders?
Where do we have to implement buying criteria?
Where do we have to restructure the supply chain for gaining better control?
Sheet 24
D
r. R. d
e Man
/IM
D L
eiden
/L
ausan
ne
Unilever Sustainable Agriculture Workshop – Norwich, June 18
1. describe the
existing production
chain technically
2. describe the
existing
production/value
chain organisationally
3. perform cost
analysis for all
relevant production
steps
4. perform value
analysis for end-
consumer
5. perform value
analysis for other
stakeholders
8. analyse value
potential of
sustainable sourcing
(for consumers)
9. analyse value
potential of
sustainable sourcing
(for other
stakeholders)
7. analyse cost
reduction potentials
11. decision making
10. summarise costs and
value
6.re-design supply
chain for sustainable
sourcing if needed
and analyse costs of
sustainable sourcing
Steps 3, 6, 7: Costs
3. Perform cost analysis for all production steps
6. Re-design supply chain for sustainable sourcing and analyse costs what criteria should be applied?
what changes are needed for sustainable sourcing?
what cost changes in the entire chain?
7. Analyse cost reduction potentials can cost increases of step 6 be off-set?
gin
gin
gin
gin
gin
gin
gin
gin
trader
trader
trader
spinner
spinner
spinner trader
spinner
textile
producer
textile
producer
textile
producer
retailer
retailer
textile
producer
gin
gin
gin
gin
trader spinner textile
producer retailer
6. Sector conversion
How to implement sustainability in entire sectors?
Wuppertal, 10 February 2013 Sustainable Supply Chains slide 27
Cotton Market Scenario
0
5000
10000
15000
20000
25000
30000
35000
2005 2010 2015 2020
tho
us
an
d m
t
premium
proven OK
("better")
probably OK
probably not OK
organic =
<0,2%
rapidly
growing
graded
commodity
market for
“better” cotton
Awareness Company
Standards
Company
Verification Assessment Best Practice Company Roll Out
Industry /
MultiStakeholder
Initiative
Industry Sustainability
Standards
Verification by
Standard Organisation
Corn
Sugarcane
Orange Juice
WWF on water
WWF on water
WWF on water
Milk Quality Safety &
Environment
Best Practices for Milk
Producers
Linus Project
Ecosystem Fund
Barley
Hops
Company Developed
Industry Multi-stakeholder Developed
Intracompany
Better Sugarcane
Initiative
Skylark Project
MASSA Tool
Apples
MASSA Tool
MASSA Tool
Global Water Stewardship
Program
SAI Fruits
SAI Fruits
African Farmers
Ingredients SAI Arable &
Vegetable Crops
AIM Progress
RSPO
Key Stone Alliance
Beef
Ingredients
Poultry
Coffee
Potatoes
MAAP Program
MAAP Program
MAAP Program
No Beef from
Deforested Areas
Animal
Welfar
e FAI Flagship Farm
Projects
UTZ Certified
Rainforest Alliance
Sustainable Land
Management
Commitment
Awareness Company
Standards
Company
Verification Assessment Best Practice Company Roll Out
Industry /
MultiStakeholder
Initiative
Industry Sustainability
Standards
Verification by
Standard Organisation
Milk
Coffee
Cocoa
Coffee
Tea
Cocoa
Bananas
SAN and Rainforest
Alliance
Company Developed
Industry Multi-stakeholder Developed
Intracompany
The Cocoa Plan
C.A.F.E Practices
Fair Trade & Organic
Cocoa Practices
Ethical Tea
Partnership
Pineapple
Passion Fruit
Oranges
Other Fruits
Rainforest Alliance
Rainforest Alliance
Rainforest Alliance
Rainforest Alliance
Company Standards
4C Criteria
C. How shall the company implement the sustainability standard in its supply chains?
• SUPPLY CHAIN MAPPING TOOL
• market characteristics for selected input (supplier market?)
• existing supply chain model(s): direct, through suppliers, commodity, …
• existing and future quality, supply security and logistics requirements
• additional requirements for sustainability
• Checklist/Tool for Re-Designing Supply Chain (if available)
C1: What sourcing model to follow? Need for changing existing model?
• joining forces with others who source from same suppliers: opportunities and risks
• pre-competitive cooperation through industry organisations, roundtables, …
C2: (How to) cooperate with other companies in sustainable sourcing?
• identification of farmers’ and suppiers’ needs (knowledge, finance, …)
• company capacities
• opportunities to involve third party organisations
C3: How to support suppliers /farmers in implementing standard? DETAILS
• options within the sourcing model chosen
• company’s position in sourcing market
• role of stakeholders, third party organisations in monitoring C4: How to monitor implementation?
• costs and benefits of third party certification
• need for chain of custody verification / certification, availability of practical solutions
C5: Verification and role of 3rd party certification Securing Chain of Custody DETAILS
A Role for Certification ?
32
Lesson 5: Certification and On-Product Labelling …
• Certification can be useful – especially for ‘high-risk’
commodities outside direct company control.
– Its value should not be overestimated and
– its costs should not be underestimated.
– It is a second-best solution after effective government regulation.
• On-product labelling with sustainability certificates is not always useful:
– limited consumer interest; – limited communication value; – own brand often more useful.
Interlaken, Oct. 11, 2012 ICAC 71st Plenary Meeting slide 33
and/or ?
7. 2010-present:
limits of private governance
Wuppertal, 10 February 2013 Sustainable Supply Chains slide 34
1990-2005
2005-…
inclusion in
public policy
competitive
benchmark
setting
innovation
non-
competitive
consolidation
Sustainable commodity standards
do contain criteria on land rights
Multi-stakeholder commodity standards
– original focus: ecology
– increasing focus on human rights issues, inclusion of social NGOs, social criteria
Land-use Issues included in most standards:
– land use rights / responsibilities
– indigenous people
– food security (not common yet: e.g. RSB)
Applying FSC, RSPO, RTRS, Bonsucro etc. criteria will (in principle) strengthen land-related rights, but do they really?
Washington,April 26, 2012 commodities that respect land rights .... slide 36
–
–
–
Case I: RSPO and Palm Oil land
conflicts (Indonesia, Malaysia)
In 2010 FoE and Grassroots reported serious violations of RSPO criteria by IOI in Indonesia and Malaysia – RSPO Code of Conduct 2.3
(transparent engagement)
– RSPO 4.2.4a on non-certified holdings
Grievance Procedure was the result
Mediation to produce results in 2012
IOI’s all new certifications on hold (2012)
Washington,April 26,
2012
commodities that respect land
rights ....
slide 39
Case 2: FSC and Forest Plantation
land conflicts (Uganda) 2005: NFC company acquired 50 year
licence for plantations – timber production
– CDM carbon credits
Investments a.o. by HSBC and IFC
FSC certification – at early stage (required by investors)
– granted despite land-related issues
2011 Oxfam Report – “20,000 people evicted”, “breach of FSC
criteria”
– Investigation by FSC / Certifying body SGS: “no breach”
– IFC takes issue seriously
– complaint filed by Ugandan communities with CAO
The situation today – CAO has started mediation process
– FSC and IFC waiting for outcome of CAO procedure
Washington,April 26,
2012
commodities that respect land
rights ....
slide 40
The Hague, Febr. 1, 2013 Public & Private Governance slide 41
Initiatives for sustainable commodities
/ social compliance
‘private governance’: does it work?
• Yes: – Within a limited time span, pragmatic
cooperation between private stakeholders and civil society (NGOs) has resulted standards and certification systems with a a degree of acceptaton.
– If governments had been involved from the very start, this result would not have been possible.
• No: – Effective implementation of the
resulting certification systems is fundamentally dependent on the presence of functioning public governance which can be no means be replace by private certification.
The Hague, Febr. 1, 2013 Public & Private Governance slide 42
‘private governance’: is it enough?
• A solution for sustainable raw materials from agriculture?
– yes: good standards have been produced for a limite number of globally traded commodities.
– no: it cannot be a sustainable solution to start a new roundtable for every single commodity.
• An alternative for traditional forms of public governance?
– yes: the roundtables are a good mechanism for producing broadly supported sustainability standards within limited time.
– no: in the end, these standards need to become part of public regulation both in producing and consuming countries.
The Hague, Febr. 1, 2013 Public & Private Governance slide 43
8. What will be the end game?
Wuppertal, 10 February 2013 Sustainable Supply Chains slide 44
Wuppertal, 10 February 2013 Sustainable Supply Chains slide 45
top related