1. Mansour Hajbagheri Erasmus Mundus Conference: Higher Education and Climate Change Central European University, Budapest 26-27 Feb. 2009 Business and Climate Change Efforts: A Supply Chain Perspective

2. 2 Agenda  Introduction  Why Supply Chain?  What is a Sustainable Supply Chain Management (SSCM)?  Green Sourcing Principles and Values  Corporate Practices for Green Sourcing  Conclusion  Discussion

3. 3 Drivers of Going Green  Legislations, regulations and standards for going Green  Ethical obligations and social responsibility  Financial incentives

4. Impediments to Going Green  Lowers economic profits  Imposes unequal costs among competitors  Costs of going green will eventually be shifted to the stakeholders  Social issues are best solved by government. “Business of business is business”. 4

5. Gap Between Knowledge and Action

6. Why Supply Chain? 6  Profitability: It has the potential to create value (profit) for the business.  Criticality: Firms cannot be sustainable unless their supply chains become sustainable first. Is this a Green car?

7. Why Supply Chain? (Cont.) 7  Synergic nature: “Networked” vs. Individual effort

8. What is a Sustainable Supply Chain? 8 “Management of raw materials and services from suppliers to manufacturer/service provider to customer and back with improvement of the social and environmental impacts explicitly considered”. Adapted from Sarkis [1]

9.  Best efforts to mitigate all kinds of pollution:  Air, water, land, noise, etc.  Avoid creating waste whenever possible:  Packaging – inbound and outbound  Environmentally friendly chemicals 9 Green Sourcing Principles & Values  Reduced disposal costs:  Recycling waste  Reusable packaging  Lower operational costs  Energy conservation  High density lighting

10.  Make Green part of the RFI/RFP process and filter out non-green suppliers – What % of their waste stream is recycled? – What % of their raw materials are from recycling? – What $’s have they invested in Green initiatives?  Require or encourage suppliers to undertake independent environmental certification, e.g. ISO 14000  Build environmental criteria into supplier contract conditions  Supply base environmental performance management  Conduct life cycle analysis in cooperation with suppliers  Coordinate minimization of environmental impact in the extended supply chain 10 Corporate Practices for Green Sourcing

11.  Cooperate with suppliers to deal with end-of-pipe environmental issues:  Reduce packaging waste at the customer/supplier interface  Reuse/recycle materials in cooperation with the supplier  Launch reuse initiatives (including buy backs and leasing)  Reverse logistics:  Give supplier an incentive to reduce the customer’s environmental load  Waste by-products reused by the raw material suppliers  Material ‘Life Cycle Management’ 11 Corporate Practices for Green Sourcing (Cont.)

12.  Supply Chain is the most important issue that a green business should address in its environmental efforts.  Greening the supply chain can potentially reduce costs and provide profit opportunities.  Bringing sustainable practices into supply chain is a certain trend in the future. Thus, those who start from now gain a competitive advantage. 12 Conclusion

14. 14 References 1.Sarkis J., Manufacturing strategy and environmental consciousness, Technovation 1995,15(2),79–97. 2. Sarkis J., A strategic decision framework for green supply chain management, Journal of Cleaner Production, 2003, 11, 397-409. 3. Institute for Supply Management (ISM) website: www.ism.wswww.ism.ws 4. 2007 McKinsey survey of 2,192 executives on climate change: http://www.mckinseyquarterly.com/Operations/Supply_Chain_Logistics/How_ companies_think_about_climate_change_A_McKinsey_Global_Survey_2099 http://www.mckinseyquarterly.com/Operations/Supply_Chain_Logistics/How_ companies_think_about_climate_change_A_McKinsey_Global_Survey_2099