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The green dividend in supply chains

Green procurement and building sustainable supply chains are hot topics and businesses have to reduce their environmental impact?


November 2010

 

By Marc Engel

 

As supply chain professionals, we know that we have a crucial role in meeting sustainability objectives. We choose the suppliers that develop products, the materials to make them, and we drive innovation. As sustainability targets become more complex, so too does managing a supply chain implementing them.

 

Unilever collaborates with 160,000 suppliers globally, and these suppliers are a valuable part of our business. Our challenge is to ensure we work with them to demonstrate the opportunities associated with achieving these goals.

 

Building successful relationships with our suppliers is the cornerstone of our business. They are vital in our aim to double the size of the company while reducing our overall environmental impact. We grow, you grow.

 

First, it is important that suppliers are aware of sustainability targets and expectations. At Unilever, we have developed a Sustainable Agriculture Code (SAC). This defines our expectations so we can commit to sustainability together. The SAC lays out minimum standards we expect our suppliers to adopt, and future performance targets. We aim to buy all of our raw materials from sustainable sources, and this is a good way to communicate our targets to suppliers.

 

Innovative technology also has an integral role to play in developing the tools to make achieving sustainability targets as simple and beneficial as possible to suppliers. For example, Unilever recently collaborated with the University of Aberdeen to develop “The Cool Farm Tool”. This enables both supply chain managers and farmers to input data they have access to in their daily jobs, and use this to calculate their total greenhouse gas emissions.

 

Farmers are then able to see the effect of making small changes to their agricultural methods, such as using a different fertiliser, on their overall carbon emissions. The Cool Farm Tool’s simple but management-sensitive calculation method enables our farmers and suppliers across the globe to find simple ways to reduce their greenhouse gas emissions.

 

Building strong relationships with suppliers and working with them in partnership to increase innovation, sustainability and productivity is a key part of our supply chain function, no matter where our suppliers are based. Working with suppliers across the globe is part of 21st century business, and it is important that supply management executives constantly consider how to integrate their goals with their supplier’s agendas in different regions, particularly when perceptions of sustainability may differ. For example, in China, Unilever work with hundreds of tomato farmers to ensure we reach our sustainability targets. This includes helping them to realise that working towards sustainability targets can help them develop their business.

 

Ultimately, business success rests on both top-line and bottom-line growth, but all too often sustainability is seen as a cost to be absorbed rather than an opportunity for growth. This does not have to be so. For example, we help farmers to manage pesticides better, which results in less crop damage, a higher yield and increased profits for them.

 

At Unilever, we believe businesses will prosper and survive by making changes in favour of sustainability. That is why we are confident in our commitment to double the size of our business while reducing its overall environmental impact. Engaging suppliers with this inseparable relationship between business growth and sustainability is the key to achieving this goal.

 

Marc Engel is CPO at Unilever

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