This page discusses recent events at UMass Boston related to our theme ‘Organizations and Social Change’. Comments welcome!
Sustainability in the Supply Chain: Risks and Opportunities
By Vesela Veleva, Sc.D., Lecturer and Associate Director, SERC, UMASS Boston (posted 4/15)
In a panel discussion organized by the Center for Sustainable Enterprise and Regional Competitiveness (SERC) and attended by over 140 students, faculty and local businesses, representatives from Staples and Ernst & Young discussed how sustainability concerns such as energy costs, packaging, and reputational risks affect supply chain management, and how leading companies are able to turn such risks into business opportunities through establishing an effective value chain management system.
Mark Buckley, VP Environmental Affairs at Staples, began the discussion by introducing Staples and its journey toward sustainability. Founded in 1986 in Brighton, MA, Staples is today the world’s largest reseller of office products and services with operations in 26 countries, $25 billion revenues, and 88,000 associates worldwide. Similar to many other companies, 20 years ago Staples was focused on compliance. But an NGO campaign claiming that Staples is responsible for large areas of deforestation changed this and for the first time the company realized the need for greater transparency. Today Staples has an integrated sustainability strategy including five pillars:
- Sell green products and services
- Own customer recycling solutions
- Eliminate operational waste
- Maximize energy efficiency and renewable energy use
- Drive positive change in the world community.
For each of these pillars the company has aspirational targets (e.g., achieve zero waste in operations, zero carbon emissions in operations and help customers pursue the same goal). Mr. Buckley shared some of Staple’s main achievements in energy and carbon management such as:
- 26.3% reduction in energy intensity per sq. ft. since 2006
- 90 LEED certified buildings
- 513 EnergyStar certified buildings
- EPA #6 Green power purchaser in the U.S.
- The first company in the U.S. to sign 3rd party Solar PPA
- 58 all electric trucks which alone have saved Staples 1.2 million gallons of fuel and $1.3 million dollars.
Yet, a 2009 life-cycle assessment study revealed that 93% of Staples GHG footprint is embedded in the products they sell. The company realized that in order to really address sustainability challenges today, it needs to improve its supply chain management. A new position was created – Director Supply Chain Sustainability – to specifically focus on the challenges and opportunities of building a more efficient and resilient supply chain.
Cynthia Wilkinson, Staples Director Supply Chain Sustainability, who came from the logistics part of the business, shared with the audience some of the key challenges that Staples faces today:
- Communication: how to communicate to suppliers and stakeholders its goals and achievements (there is a need for a common language and metrics)
- Packaging: how to reduce packaging and respectively Staples environmental and economic impacts without impacting product quality.
- Products: how can Staples offer more sustainable products by using alternative materials such as sugar cane, wheat straw, and bamboo; recycle or reuse a greater number of products; and eliminate all chemicals of concern.
- Reporting: how can Staples measure and report on all key impacts.
Two recent initiatives to improve supply chain management include: “Staples Race to the Top” and Staples Sustainable Innovation Lab. Staples Race to the Top is a partnership with the company’s top 24 vendors asking them to identify plans for innovation and collaboration, optimize packaging, use the Staples product scorecard and eliminate chemicals of concern from products and packaging. The ultimate goal of the initiative is to reduce packaging by 20%. The Staples Sustainable Innovation Lab was launched in April 2012 and builds on a 12-year relationship with the Rochester Institute of Technology, where the goal is to create a lab as a testing bed for sustainable products and packaging with focus on the office and business environment. One of the company’s recent innovations includes the elimination of secondary packaging by purchasing a machine that can build the right size of box on site. According to Mr. Buckley, “the business opportunities in the area of product innovation and sustainability are huge”.
Rich Goode, Senior Manager Climate Change & Sustainability Services, Ernst and Young, discussed the role of the accounting industry in advancing transparency, reporting, and better supply chain management. Ernst and Young has more than 700 climate change and sustainability professionals globally. Mr. Goode, a graduate of UMass-Boston’s MBA program, emphasized the importance of metrics and measurement if sustainability processes are to be effectively managed and targets met. Companies need to report not just their achievements but also their challenges to build trust among shareholders. “You need to engage with your harshest critics to become a better business,” stated Mr. Goode, as you learn most from your critics. Assurance on sustainability metrics adds another layer of credibility. The movement toward integrated reporting (reporting both financial and sustainability risks and achievement in one document) is also gaining momentum. Fifty percent of Fortune 1000 companies are hiring consultants presently to look at their carbon emissions.
One of the biggest challenges today is embedding sustainability in the value chain. Apple for example does not make anything. They own innovation, patents, but others make their products. They face significant supply chain risks. Many companies today ask “how do I measure and manage sustainability risks in the supply chain?” People usually have insurance for their house but not many companies are taking steps to ensure against supply chain risks. Globally there is a trend to do more with less. In the future companies will have to compete for water, energy, precious metals, and other materials for their business. If you can do more with less you are better positioned to be a successful business.
Mr. Goode shared some preliminary findings from the forthcoming Ernst &Young CEO survey on corporate sustainability:
- “Tone from the top” matters – CEOs and CFOs at leading companies are more engaged
- Businesses do not see governments and multilateral institutions as playing a key role in their sustainability agenda
- There is a heightened risk related to natural resource shortages (water is seen as the resource at highest risk, followed by oil and metals/other minerals)
- Corporate risk response is not well paired to the scale of sustainability challenges
- Integrated reporting is slow to take hold
- Companies see an increase in inquiries from investors/shareholders.
At the end of the discussion, the speakers provided practical guidance for students interested in pursuing sustainability careers. Sustainability should not be seen as a separate area but instead a skill that any professional will need in the future – from finance and accounting, to IT, management and HR. Having such expertise will provide students will better opportunities to compete in the job market. Staples, for example, shared that just as job candidates research a company’s sustainability practices before applying for a job, they also have begun to evaluate the sustainability knowledge and expertise of job candidates as an additional hiring criteria. It is just a question of time before sustainability management becomes the standard way of doing business just like the quality and IT movements. Mr. Goode, MBA alumni of UMASS Boston, shared his own experience in creating a sustainability position for himself at his previous employer Lucent Technologies (he was Director of Sustainability there before joining Ernst & Young). And there are numerous other examples how having a passion for sustainability can help propel a career in this area. Students can better prepare themselves by taking sustainability-related classes and/or getting sustainability certificate, engaging with companies, and completing sustainability internships to improve their knowledge and skills.
The SERC Center at UMB has five programs in Clean Energy and Sustainability (CES) and in November 2012 launched a green internships program for interested students (for more information see www.umb.edu/serc). It is also holding a Green Careers Event on April 17, 2013.
Environmental Sustainability at State Street: Performance and Opportunities for the 21st Century
By Vesela Veleva (Posted: March 1 2013)
In a public lecture to over 100 students and faculty at UMASS Boston on December 6 2012, organized by the Center for Sustainable Enterprise and Regional Competitiveness, Peter DeBruin, Vice President Office of Environmental Sustainability at State Street, discussed the business benefits of environmental sustainability, the company’s achievements and future opportunities.
State Street is well positioned to talk about “sustainability”– the company was founded more than two centuries ago, in 1792. As a purely business-to-business enterprise, State Street is best known in the Boston area, but often unfamiliar to the average person. Yet, it is one of the largest financial institutions globally with 29,000 employees in 29 countries, $9.6 billion in revenue in FY2011, assets under management of $2 trillion and investment servicing covering $23 trillion of assets. In 2012 State Street was #262 in Fortune 500. More importantly, the company was among the few large financial institutions not implicated in the financial scandals of 2008-2009.
So, why should a company like State Street care about environmental sustainability and what does it really mean for a financial institution with a relatively small environmental footprint? What are the business benefits and future opportunities for financial companies embracing environmental sustainability? These are some of the questions Peter DeBruin faces every day as he works with people across the business to better understand, define and implement State Street sustainability strategy.
To better understand and help define sustainability, Mr. DeBruin considers State Street’s key stakeholders – employees, community, shareholders and clients – and what sustainability means to each of them. State Street’s sustainability journey began 11 years ago in Europe, where employees raised the issue as part of the growing environmental movement. The company Chairman and CEO recognized the importance of having a formal governance structure to manage sustainability and in 2008 State Street established its corporate environmental policy and principles (for more information see http://www.statestreet.com/wps/portal/internet/corporate/home/aboutstatestreet/corporatecitizenship/environmentalsustainability).
State Street’s corporate environmental sustainability policy states that the company is committed to:
- Be a leader in environmental sustainability
- Define environmental sustainability
- Create long–term value for shareholders.
As Mr. DeBruin shared, “We are not waiting for climate change legislation in the U.S. State Street is already subject to legal disclosure in the U.K., and climate change strategies bring bottom line benefits, including cost savings, attracting new customers and improving talent management.”
Mr. DeBruin shared with the audience some of State Street’s most significant sustainability accomplishments and their business value:
- As result of improved energy efficiency the company not only reduced its carbon footprint but also saved $1.7 million in 2011 alone. Over the last 5 years the cumulative savings from reduced energy use reached $10-$12 million, an amount going directly to company shareholders.
- Ten of State Street offices around the world have implemented ISO14001 – an environmental management system for continuously evaluating and reducing environmental impacts. Such a strategy helps differentiate the company from competitors and secure new business. For example, in the UK some clients demand ISO14001 certification as a requirement for doing business.
- State Street reduced its global water consumption from 666 cubic feet per person in 2009, to 583 in 2011, significantly exceeding its 2013 goal of a 3% reduction. According to Mr. DeBruin, “water is the oil of the 21st century and companies need to begin preparing for doing business in a world with limited supplies of drinking water.”
- It is much harder to measure the non-financial value of sustainability initiatives but it could be much greater than the cost savings. Large institutional clients are increasingly asking about the company’s sustainability strategy and accomplishments as a prerequisite for doing business. To date, State Street has 78 distinct pieces of recognition, including such prestigious awards and achievements as being a member of the Dow Jones Sustainability Index, Newsweek Green Ranking, FTSE4Good Index, EnergyStar, EPA Green Power Partner, and 100 Best Corporate Citizens.
- State Street’s external verification of its corporate responsibility report not only brings greater value and credibility among stakeholders, but also sets the company apart from its competitors.
- Increasing number of State Street offices are LEED certified and in 2012 about 40% of its employees worked in green buildings, bringing not just cost savings but also reduced absenteeism and increased productivity and retention and well as brand recognition.
- The launch of its Green Bond investment strategy, ESG (environmental, social and governance) screening for $126 billion in assets and ESG reporting service, has helped the company create more opportunities to expand its market share and attract new clients and investments..
Peter DeBruin shared some key lessons learned from State Street’s sustainability journey:
- Transparency brings bottom line benefits such as attracting and retaining clients, employees, and building a strong brand and reputation.
- It is important to set more aggressive environmental goals in order to challenge the organization and promote innovation and greater impact.
- Every little thing we do makes a difference in terms of costs and impacts.
- Intangibles are hard to measure but they bring the greatest business value.
At the end of his presentation, Peter DeBruin provided practical advice for students interested in pursuing a career in sustainability such as volunteering for an organization, expanding their contacts, using social media, exploring the different aspects of “sustainability”, following some non-profits and considering a non-linear career path like his own. His enthusiasm and engaging presentation clearly fired up the room and created a lot of excitement and interest in UMass-Boston programs such as the MBA Environmental Management track and Certificates in Clean Energy and Sustainability (for more information see http://www.umb.edu/serc/sustain).