Sustainability and the Supply Chain

Paul Tasner

Presented to:

Monterey Bay International Trade Association “Streamlining Global Trade”

Palo Alto, California July 17, 2014

The Plastic Pollution Problem

130,000,000 lbs CO2e 9,000 TONS/DAY

1,700 PICKERS/DAY USA EXPORTS

3 Phases of Sustainability Phase 1: Getting the basics right.

This is the basic level and the phase in which the majority of organizations reside. Companies employ simple measures such as switching lights and computers off when left idle, recycling paper, and using greener forms of travel with the purpose of reducing the day-to-day carbon footprint. Some companies also employ self-service technologies such as centralized procurement and teleconferencing.

3 Phases of Sustainability Phase 2: Learning to think sustainably.

This is the level where companies begin to realize the need to embed sustainability into supply chain operations. Companies tend to achieve this level when they assess their impact across a local range of operations. In terms of the supply chain, this could involve supplier management, product design, manufacturing rationalization, and distribution optimization.

3 Phases of Sustainability Phase 3: The science of sustainability.

The third level of Supply Chain Sustainability uses auditing and benchmarks to provide a framework for governing sustainable supply chain operations. This gives clarity to the environmental impact of adjustments to supply chain agility, flexibility, and cost in the supply chain network. Moving toward this level means being driven by the current climate (in which companies recognize the significance of cost savings through green operations) as well as pushing emerging regulations and standards at both an industry and governmental level.

Implementation Overview Establish standard procedures and codes of conduct (set the ground rules) Increase quality of communications/reporting (make it easier) Encourage and support cross-functional collaboration (marketing, legal and procurement) Engage and manage supplier and stakeholder (community) relationships

Core Idea

Value Chain

Adding Value

Creating Value

Shift Focus

Labor Productivity

Improving RESOURCE Productivity

Examples: Water usage Energy-efficient buildings Recycling (reclaiming/repurposing)

Strategies for Implementation

Starbucks Fair Trade best practices

Home Depot FSC wood

Walmart Sustainability Index/Consortium

EXAMPLES

Engage Suppliers • Choose and set strategic targets and metrics in absolute or intensity terms (e.g., reduction in GHG’s) • Engage suppliers in the big goals and gain input on best rollout mechanics

• Collect supply chain sustainability information Supplier scorecards RFPs Procurement data systems

Engaging Suppliers • Provide training to Suppliers during phase-in and again when new requirements are initiated (RP policy, practices)

• With regards to information tracking: look for patterns,

improvement

• Partner to offer suggestions, incentives & recognition

“Make vs. Buy”

A business whose supply chain is dominated by 3rd party relationships has a significantly greater challenge effecting change than a business that controls their own means of supply.

Transportation Carbon Comparison

Air 8X Road 1X Rail 4X Sea 8X

SmartWay® Transport Partnership

The SmartWay® Transport Partnership is an innovative collaboration between the U.S. EPA and the freight industry to increase energy efficiency while significantly reducing greenhouse gases and air pollution.

Fuel Consumption & Emissions

Technologies and strategies for reduction:

• Idle Reduction • Improved Aerodynamics • Improved Freight Logistics (the left turn!) • Automatic Tire Inflation Systems • Wide-base Tires • Driver Training • Low-Viscosity Lubricants • Weight Reduction • Intermodal Shipping • Hybrid Powertrain Technology

“Greensourcing” The goal of this program is simple: to identify and ultimately improve the environmental and social impacts of the business with the supplier.

The first step of the program is to integrate the reporting of key sustainability metrics and issues into the ongoing client-vendor relationship. Through this, one gets a baseline understanding of the joint environmental footprint, and, very importantly, allows sustainability to become an added dimension of current practices.

“YOU CAN’T FIX WHAT YOU DON’T

MEASURE.”

Why We Want to Work With You • your footprint is our footprint • you are the expert – you know your business best • you’ve made a commitment to our business • both businesses will benefit from these steps • there are many advantages to making sustainability

one of your business’s priorities: energy + material cost savings, ability to attract new business, and steps to get ahead as businesses start to address

sustainability.

What We Expect From You • COMMITMENT. To examine and record your

business’s environmental impacts. • REPORTING. On the metrics that have been

established. • EXECUTION. Setting and completing goals to

improve our joint environmental footprint. • REPETITION. We ask that you repeat this

process with your key vendors. • TRANSPARENCY. We are looking for areas

to improve, and we reward honesty in identifying these.

What You Can Expect From Us • COMMITMENT. This added dimension to our business

relationship strengthens the link and increases its unique capacities.

• SUPPORT. Our teams are resources for identifying and introducing environmental best practices to your business, ultimately helping to make sustainability a core competency for you.

• INCENTIVES. We are happy to reinforce positive change either in direct financial terms (such as the carbon reduction incentive) or with longer-term contracts for our business.

• COMMUNICATION. We commit to tell the story of the successes of this program broadly.

• WATER • ENERGY • MATERIALS

OBJECTIVES: what is the ultimate goal? STRATEGY: how do we want to get there? BEST PRACTICES: examples of meaningful environmental innovations. METRICS: how do we track progress?

How It Works

THANK YOU

Paul Tasner, Co-founder & CEO PulpWorks, Inc. Renaissance Center 1115 Third Street, Suite 2 San Rafael, CA 94901