Greening Supply Chain - Improving supply chain governance with sustainable supply chain model

• By: Ramesh Srinivasan, Manager MetricStream Inc
• Date: December 08, 2009

After adopting the Green Supply Chain Management (GCSM), next in line are EMSs or Environment Management Systems. Although the role coincides with the GCSM, EMSs are strategic management approaches that define how an organization will address its impacts on the natural environment. More than 88,800 facilities worldwide had certified their environmental management systems (EMS) to ISO 14001, the global EMS standard, and thousands more had adopted uncertified EMSs.

An EMS consists of a collection of internal policies, assessments, plans and implementation actions affecting the entire organization and its relationships with the natural environment. Although the specific institutional features of EMSs vary across organizations, all EMSs involve establishing an environmental policy or plan; undergoing internal assessments of the organization’s environmental impacts (including quantification of those impacts and how they have changed over time); creating quantifiable goals to reduce environmental impacts, providing resources and training workers; checking implementation progress through systematic auditing to ensure that goals are being reached; correcting deviations from goal attainment; and undergoing management review.

EMSs are intended to help organizations embed environmental practices deep within their operational frameworks so that protecting the natural environment becomes an integral element of their overall business strategy. EMSs implementation requires companies to get ISO 14001 certified. ISO 14001 adoption requires certification by an independent third party auditor who helps to ensure that the EMS conforms to the ISO 14001 standard. Once certified, the ISO 14001 label indicates that the organization has implemented a management system that documents the organization’s pollution aspects and impacts, and identifies a pollution prevention process that is continually improved over time7. For example, Federal Foam Technologies, Inc., a Minnesota-based company, adopted an EMS and certified it to ISO 14001. By relying on its EMS structure, the firm reduced its annual landfill use by 40 percent, and decreased its associated disposal costs and liability risks.

Although organizations have been using EMSs to be more environmentally sustainable, issue is that EMSs do not require organizations to improve their environmental performance, instead focus on creating and documenting environmental policies and procedures. EMSs therefore may represent only symbolic efforts to improve an organization’s image.

The relationship between EMSs and GSCM practices has potentially complementary and significant implications for an organization’s environmental sustainability because together they offer a more comprehensive means of defining and establishing sustainability among networks of business organizations. However, when EMSs are adopted in the absence of GSCM, environmental benefits are likely to diminish. This is because the organization’s supply chain network does not share its environmental goals and environmental sustainability of any organization is impossible without incorporating GSCM practices.

Environmental Costs

Sample Implementation of Green Supply Chain