Continuing our series of posts by our University of Oxford students attending the Skoll World Forum, this piece is by Michael Thornton, a current Skoll Scholar and MBA student at Said Business School, University of Oxford.
When it comes to sustainability, one of the things that has always nagged me about companies that “go green” is that it typically just means recycling things around the office, some minor carpooling and installing or purchasing renewable energy. There is nothing wrong with these efforts, but it’s a bit like the Human Torch staving off Mr. Freeze with a Bic Lighter. Sure it’s the right direction and maybe even setting a good example others will follow, but it’s a serious, nearly negligent under-utilization of power.
The vast bulk of most companies’ environmental and social impact comes well before they decide how to power the lights in their offices. The majority of a product’s impact is often in the sourcing and manufacture of its material components. In others, like automobiles, the impact is in how the product is used (ie burning fuels for 10 years). Rarely, therefore, is the majority of a company’s impact in the scope of a typical greening agenda.
Sustainable sourcing is a major step forward and was the subject of the session Sustainable Sourcing: The Business Imperative. Moderator Roger Martin, Dean of the Rotman School of Management at the University of Toronto led an interesting discussion on the topic and seeded the most interesting and actionable insight in the process. Together with the panelists, William Rosenzweig, Co-Founder and Managing Partner of Physic Ventures, Mary Jo Cook, Chief Impact Officer of FairTrade USA and Jason Clay, Senior Vice President, Markets of World Wildlife Fund US, the Dean Martin explored audience selected topics. The process started with a macro conditions exploration including these gems paraphrased from Jason Clay –
The foreboding: In the next forty years we have to produce as much food and fiber as in the last 8000
The more hopeful (room to improve): the bottom 25% of producers create 50% of the impact and only 10% of the products
The most interesting portion of the discussion was that on the barriers to adoption of truly sustainable sourcing, playing off some highly relevant audience members. It became clear that there are indeed political barriers in convincing CEO’s and investors that sustainable sourcing can be good or at worst neutral to the bottom line and communication challenges in bringing that message down through organizations to the purchasers who ultimately select products. But, an undercurrent that had been popping up throughout the discussion became acutely apparent. There is a very real practical challenge in enacting a sustainable sourcing policy. Supply chains are so complex and often opaque that it is incredibly challenging to actually determine how much carbon or water may be required to produce a product or whether all components meet humanitarian or labor standards.
The need, as Dean Martin highlighted, is for a comprehensive toolset to allow all actors in the value chain to enact sustainability goals. He advocated an assemblage of foundations and non-profits working in related areas to come together around this issue as one that can transform so many others. I believe he is right that all too often those seeking change will look to closely at their particular issue’s direct on the ground impact, and miss the root causes or potential solutions that could exist. He further advocated that this assemblage work to create a tool map of sorts which can be disseminated and then broken off by anyone who can fill the puzzle.
This got me excited and thinking: This could be a real step towards real change. But, what would such a toolset include? My own first pass would be:
- Open supply chain mapping data & software
- Common ranking and metrics for impacts – positive and negative
- “Additive Impact Analysis” – my name for the ability to take the impact of a component product and add it to the whole, all the way through the value chain
- Choice software that allows a purchaser to quickly see the impacts and balance them against cost and more common factors quickly and clearly
- Better business methodologies for measuring supply chain risk as it relates to environmental and other “soft” factors
- A mechanism for supply chain insurance that does not require creation of a duplicate supply chain but instead makes existing ones more distributed, sustainable and secure
- Public indexes for key environmental data from suppliers around the world. This can help bring aid and attention to the worst and plaudits for the best
- A more comprehensive consumer facing labeling system – there are too many to the point where impact is being lost
- Metrification of environmental and social impacts
It’s imperative that those who have super-hero leverage over the levers of the global sourcing system activate them. The top 1000 companies control 33% of the global economy; if they act, the world changes. What tools do you think are missing to convince even a less forward leaning company that they can source sustainably?
This is a guest post by Michael Thornton, a current Skoll Scholar and MBA student at Said Business School, University of Oxford.