Incorporating sustainability into supply management in the automotive industry – the case of the Volkswagen AG

Companies are perceived as important actors in the drive for sustainability. Linked to this, and in response to increasing demands from various stakeholder groups, companies start to look at their supply chain to enhance their overall sustainability profile. Two major triggers can be identified: (1) focal companies are held responsible for environmental and social problems caused by their suppliers, which become more and more important as (2) an increasing share of value is created at the supplier level. In response to such demands, companies have to find ways to incorporate environmental and social aspects into their supply (chain) management. Therefore, environmental and social standards are integrated into supply management by amending the purchasing processes. This paper presents one approach to integrate social and environmental standards into supply policy and supply management at the Volkswagen AG, a focal company of the automobile industry. Therefore, required changes of the sourcing and supply structures were identified during an action research project, and possible options adaptable for company internal integration are shown.     

From a literature review to a conceptual framework for sustainable supply chain management

Academic and corporate interest in sustainable supply chain management has risen considerably in recent years. This can be seen by the number of papers published and in particular by journal special issues. To establish the field further, the purpose of this paper is twofold. First, it offers a literature review on sustainable supply chain management taking 191 papers published from 1994 to 2007 into account. Second, it offers a conceptual framework to summarize the research in this field comprising three parts. As starting point related triggers are identified. This allows putting forward two distinct strategies: (1) supplier management for risks and performance, and (2) supply chain management for sustainable products. It is evident that research is still dominated by green/environmental issues. Social aspects and also the integration of the three dimensions of sustainability are still rare.Both practitioners in companies and academics might find the review useful, as it outlines major lines of research in the field. Further, it discusses specific features of sustainable supply chains as well as limitations of existing research; this should stimulate further research.     

ISO 14001 in environmental supply chain practices

This paper focuses on the role of ISO 14001 in environmental supply management practices in Swedish companies. It discusses the existing and potential role of ISO 14001 for three key operational tasks of environmental supply chain management: to communicate the requirements to the supplier, to motivate and enable the supplier, and to verify that the supplier follows the requirements. The study used three different research methods: interviews with environmental managers, focus group discussions and a survey of two multinational companies and their operating units in several countries.It concludes that cooperation between the purchasing and environmental functions within a company is frequently not sufficiently achieved in implementation of ISO 14001; this makes the communication of customer requirements to suppliers less efficient. Building close relationships with suppliers is important to overcome initial difficulties, but this often conflicts with having a large supplier base. For the supplier to have an ISO 14001 certificate is seldom an absolute requirement, however, preference is often given to such suppliers. The value of the ISO 14001 certificate, as a proof of environmental performance, is a combination of the supplier's environmental ambitions, the advancement of supply chain practices of the customer and the ambitions of the certification bodies. Supplier audits are not commonly used as they are resource-consuming. Monitoring and verification approaches need further development.     

Eco-design in innovation driven companies: perception, predictions and the main drivers of integration. The Spanish example

This study attempts to contribute to the scarce knowledge on how eco-design, and to broad extent sustainability, is connected to innovation driven companies. In particular, this cross sectional research verifies i) perception and knowledge of eco-design of the professionals from innovation driven companies in Spain, ii) specific eco-design strategies towards sustainability that innovation driven companies are integrating in their strategic plans and their application in the supply chain and iii) the companies’ future predictions on innovation and eco-design linkage. The methodology of this paper is based on a survey, developed defining measurable proxies for both eco-design and innovation approaches and conducted on 10,000 multidisciplinary professionals from Spanish innovation driven companies. The study shows that sustainability is a cardinal driver for innovation and that responses have specificities regarding company size, activity or respondent position. Innovation and eco-design strategies for the future aim to use materials with a lower environmental impact and to develop new concepts.     

Green supplier development: analytical evaluation using rough set theory

Suppliers' development is a critical function within supply chain management. Green supplier development is also necessary for effective green supply chain management. Interestingly, there is a gap in the research on how an organization can effectively manage supplier development programs, and specifically green supplier development. The use of formal models to aid green supplier development management is virtually non-existent. This paper aims to fill this gap by introducing a formal model using rough set theory to investigate the relationships between organizational attributes, supplier development program involvement attributes, and performance outcomes. The performance outcomes focus on environmental and business dimensions. The rough set methodology utilizes an ‘incomplete’ information approach which is more realistic in some data poor environments. A multistage rough set methodology is detailed through an illustrative application. The methodology generates decision rules relating the various attributes to the performance outcomes. Included in the discussion are insights into how these rules for individual and aggregated performance (environmental, business, and joint performance) may be evaluated. Practical and research implications of this work are detailed in the paper.     

Environmental supply chain dynamics

This paper investigates the circumstances under which “environmental supply chain dynamics” (ESCD) emerge. ESCD are a phenomenon where environmental innovations diffuse from a customer firm to a supplier firm. Its relevance is based on the argument that systemic approaches are needed to understand the environmental implications of industrial systems, of which supply chains are a key component. Furthermore, buyer–supplier relationships play a critical role in the decision-making processes of most suppliers, which in turn has the potential to stimulate environmental change within the supply chain. Based on case studies in the British and Japanese food retail sector and the British aerospace industry, it will be shown that ESCD emerge if there is a channel leader with sufficient channel power over their suppliers, technical competencies, and are themselves under specific environmental pressure.     

An exploration of measures of social sustainability and their application to supply chain decisions

Sustainability recognizes the interdependence of ecological, social, and economic systems – the three pillars of sustainability. The definition of corporate social responsibility (CSR) often advocates ethical behavior with respect to these systems. As more corporations commit to sustainability and CSR policies, there is increasing pressure to consider social impacts throughout the supply chain. This paper reviews metrics, indicators, and frameworks of social impacts and initiatives relative to their ability to evaluate the social sustainability of supply chains. Then, the relationship between business decision-making and social sustainability is explored with attention initially focused on directly impacting national level measures. A general strategy for considering measures of social sustainability is proposed, and a variety of indicators of CSR are described. Several of these indicators are then employed in an example to demonstrate how they may be applied to supply chain decision-making.     

Constructing sustainable palm oil: how actors define sustainability

Biofuels as a renewable source of energy have gained considerable importance in recent years. The use of biofuels is expected to rise since national governments of developed nations like the US and European countries see it as one of the ways to fulfill climate targets and increase the security in their energy supply. Production of biofuels is also expected to rise as developing nations see in biofuels the opportunity for connecting to international markets through supplying a new demand in the energy market.Several studies report on the environmental, social and economic gains and detriments that can arise from increased biofuel production and consumption. However, research that provides insight into the way in which such issues are defined by actors within the product chain is scarce. In this article we analyse how the strategies and value definitions of actors involved in the production and consumption of biofuels lead to specific definitions of sustainability. The empirical material concerns the chain of palm oil production in Colombia and electricity generation in the Netherlands. It is analysed using the method of action-in-context, which allows us to uncover the level and source of diversity of sustainability definitions in the product chain.While the current growth in production of palm oil is definitely buyer driven, the analysis of various activities in the chain shows that several aspects of sustainability are defined in more complex actor fields throughout the product chain.     

Improving sustainability through effective reuse of product returns: minimizing waste in a batch blending process environment

A case study of a successful reuse program in a batch blending production environment is presented. This program involves not only addressing the company's own potential waste, but also working with distributors and customers to take back and reuse product, thus eliminating the customers' burden of disposal. Implications of the program for downstream supply chain partners are identified and a structured approach for implementation is presented. Modification for use in similar production environments is possible, enhancing sustainability, while providing environmental as well as economic benefits.     

Sustainability and supply chain management – An introduction to the special issue

This paper introduces the special issue of the Journal of Cleaner Production on “Sustainability and Supply Chain Management”. This special issue mirrors the increasing relevance of this topic for both practitioners in companies, and academics. The purpose of this special issue is to serve as a catalyst to this important topic. Environmental and social problems and challenges do not stop at the gates of single companies, but have to be considered along the supply chains as the entities across which related material and information flows are organized. The aims of the paper are to introduce current research topics and provide an overview of the single papers. The papers cover supply chain strength of regions and regional activities as well as actions taken by small- and medium-sized manufacturing and public organizations. The papers in this issue also take a look at performance indicators and closed-loop supply chain aspects. Amongst these topics, four papers incorporate social aspects, which have been relatively and significantly less researched than environmental issues.     

A conceptual framework for analyzing sustainability strategies in industrial supply networks from an innovation perspective

This article proposes a new conceptual framework concerning the implementation of sustainability in supply networks from an innovation perspective. Based upon a recent qualitative literature review in environmental, social/ethical and logistics/operations management journals, this article summarizes and analyses the approaches found. Concluded is that even though innovation, socialization, experimental learning and cultural perspectives have been acknowledged as being relevant to explaining supply network dynamics in general, they are rarely included in the current frameworks concerning sustainability. The question still remains why companies influenced by the same external factors and similar in size and power develop a different strategy towards sustainability aspects in their supply network. The article demonstrates with the first results of a survey held in the fashion/clothing sector the relevance of this question.The proposed conceptual framework states that the capability to develop a strategy is influenced by the innovation power of the “focal” company and its supply network. The three implementation strategies presented in the framework are: resign, offensive and defensive. Two propositions are defined to be tested. These propositions focus on the relation between the level of innovation power and the implementation strategy concerning sustainability. Factors used to characterize the innovation power of the “focal” company are: external orientation and transparency, cooperation between departments, learning and adapting, leadership, autonomy and possibility for experimenting, and result driven. Cooperation in the supply networks is characterized by factors like trust, reputation, joint programmes, and cooperative information systems throughout the supply network.In empirical research, strategies found will be related with the level of innovation power. This level will be measured using the factors mentioned. The results might add a new innovation dimension to an improved conceptual framework within the interdisciplinary field of sustainability and supply network research.     

A life-cycle framework to analyse business risk in process industry projects

The chemical and related process industries are particularly exposed to high environmentally related costs arising from normal operation and accidents, not only of their own processes but also other processes in their supply chains. A methodology (Process environmental risk assessment—PERA) is presented for the assessment of all such risks during the design of new processes. This can be seen as a project-centred risk assessment that seeks potential problems along the whole supply chain. Each activity, resource use or waste source along the supply chain represents a potential interaction between the supply chain and the environment. These potential interactions are identified systematically using a life-cycle based assessment. To assess the risk to the project or process supply chain arising from those interactions the relevant stakeholders must be identified. Their likely response can then be considered and ranked according to the risk it poses. The methodology facilitates the management and communication of risk, and is illustrated by application to some aspects of the manufacture of PVC. The method could equally be applied to the assessment of existing processes.     

The message and methods of ethical investment

This paper examines a high profile and often provocative segment of the financial industry: that of Ethical or Socially Responsible Investment. By offering an ethical or sustainable product which has the potential to influence so many stakeholders—the financial industry is in a unique position to guide change towards corporate sustainability. However, what message is ethical investment really giving to companies and the financial industry? Are ethical investors and their rating agencies capable of effectively influencing corporations towards more sustainable patterns of production and consumption; and are their approaches consistent with the principles of Cleaner Production? This paper first gives an overview some of the definitions ‘ethical investment’ and the scale of activities under this umbrella term. Then the actual screening methods and their application is examined. A typology of the different ethical mutual funds is given, and two cases of ethical funds are described (Robur’s Environmental Fund, and Sustainable Asset Management’s sustainability rating tool). Each are analysed in terms of their potential to either reveal or conceal cleaner production innovations by the firms they assess. In order to ascertain where Ethical Investment might lead companies, the effects of ethical investment on companies—and back on the asset management companies themselves is explored. A reflexive model of corporate and finance sector learning based on the ethical screens is proposed.     

Inter-linking issues and dimensions in sustainability reporting

During the last decade, Sustainability Reporting (SR) has been increasingly adopted by corporations worldwide. This is evidenced by the adoption of several guidelines, such as the ISO 14000 series, the Social Accountability 8000 standard, and the GRI Sustainability Guidelines. SR shows promise to help corporate leaders and their employees to contribute towards achieving sustainable societies. However, most of the guidelines and standards address sustainability issues through comparmentalisation, thereby, leading to the separation of the economic, environmental, and social dimensions. Due to these divisive approaches, holistic assessments of the effects of their efforts are seldom properly integrated into coporate decisions and procedures to make improvements for example through Cleaner Production, Worker Health and Safety, Consumer Safety, and reductions in the negative short and long-term Social and Environmental Impacts.This paper analyses SR reports from three companies with the help of Grounded Theory's constant comparative analysis. This analytical framework helped the authors to systematically assess the degree to which the companies addressed economic, ecological and social issues separately or in an integrated and inter-linked manner. From the inter-linkages found, a new category is proposed to be added to future SR. This new category can help corporate SR planners and researchers on sustainability reports to better understand how the company leaders understand their responsibilities with regard to SD. These inter-connectednesses are highly relevant in many short and long-term dimensions of supply chain management, global warming, ecological disruption and societal equity issues, especially with regard to the local, national and global energy issues of fuels and oils, the central themes of the conference at which this paper was originally presented. It also plays a key role in real, long-term changes towards Sustainability, where the time dimension plays a key role in human survival on Planet Earth.     

Gold mining in Australia: linking historical trends and environmental and resource sustainability

The mining of gold has been and continues to be an important aspect of Australian industry. Gold mining moved quickly from fossicking and alluvial sources in the 1850's to hard rock mining. This paper presents, arguably for the first time, a detailed historical compilation of Australian gold mining production data. This data is then analysed in the context of sustainability, focussing particularly on mineral resource sustainability and the broader aspects of environmental impacts now commonly reported by some mining companies in annual sustainability performance reports. The key trends which are demonstrated by the data include a long-term decline in ore grade, increased open cut mining, substantive increases in tailings and waste rock production, as well as showing the impact of new technologies and economics on available gold resources. The available environmental data on material and energy inputs to and pollutant emissions from gold production is also presented, showing a clear sensitivity to ore grade. In terms of sustainability, these relationships raise significant issues such as increasing greenhouse footprint per unit gold produced, potential impacts on energy and water consumption, as well as overall gold resource sustainability. The paper presents a unique case study of the resource and environmental sustainability of the Australian gold mining sector with major implications for sustainability policy and reporting.     

LCA of environmental and socio-economic impacts related to wood energy production in alpine conditions: Valle di Fiemme (Italy)

An extended Life Cycle Assessment (LCA) is performed for evaluating the impacts of a woody biomass supply chain for heating plants in the alpine region. Three main aspects of sustainability are assessed: greenhouse gas emissions, represented by global warming potential (GWP) impact category, costs and direct employment potential. We investigate a whole tree system (innovative logging system) where the harvest of logging residues is integrated into the harvest of conventional wood products. The case study is performed in Valle di Fiemme in Trentino region (North Italy) and includes theoretical and practical elements. The system boundary is the alpine forest fuel system, from logging operations at the forest stand to combustion of woody biofuels at the heating plant. The functional unit is 1 m³ solid over bark of woody biomass, delivered to the district heating plant in Cavalese (Trento). The relative sustainability of traditional and innovative systems is compared and energy use is estimated. Results show that the overall GWP and costs are about 13 kg CO_2equivalent and 42 euro per functional unit respectively for the innovative system. Along the product supply chain, chipping contributes the greatest share of GWP and energy use, while extraction by yarder has the highest financial costs. The GWP is reduced by 2.3 ton CO_2equivalent when bioenergy substitutes fuel oil and 1.7 ton CO_2equivalent when it substitutes natural gas. The sensitivity analysis illustrates that variations in fuel consumption and hourly rates of costs have a great influence on chipping operation and extraction by cable yarder concerning GWP and financial analysis, respectively. This is confirmed by sensitivity analysis. Better technologies, the use of biofuels along the product supply chain and more efficient systems might reduce these impacts. Replacing the traditional system with the innovative one reduces emissions and costs. A low energy input ratio is required for harvesting logging residues. The direct employment potential is a conflicting aspect and needs further investigations.     

Sustainability in the New Zealand wine industry: drivers,stakeholders and practices

This research aims to investigate various sustainability issues in the New Zealand wine industry. Namely, the study examines (1) what drives the industry to engage in sustainability practices, (2) the role of stakeholders in the company's decision-making, and (3) environmental practices related to water utilization, chemicals and waste management. A qualitative research approach supplemented by quantitative measures was adopted to answer the research questions. Twenty-four wineries were studied. The research found that the most important drivers for sustainable practices are personal values, preferences and satisfaction with the profession (i.e., enjoyment of the work itself), followed by product quality and customers' demand. Size of firm also appears to be an important factor. New Zealand wine companies are also driven by the market, but companies do not receive a price premium for grapes grown sustainably or organically grown. The study proposes a typology matrix that differentiates wineries' involvement in sustainability based on the extent of sustainability practices and sustainability drivers.     

Strategy development in small and medium sized enterprises for sustainability and increased value creation

Sustainability strategies create many synergistic effects for SMEs working collaboratively, as well as systemic benefits for the commons. After setting forth the business case for sustainable SMEs, and considering SME sustainability advantages in contrast to MNEs, this paper discusses several different incentives for SMEs to optimize sustainability: (1) becoming valuable sustainable investment targets for larger firms; (2) creating highly competitive networks of sustainable SMEs in market spaces where large enterprises are less successful; (3) becoming highly efficient suppliers in global supply chains through sustainable practices.While several successful models of the sustainable SME are evolving, it may be that networks of SMEs will become essential for addressing the systemic problems that underlie industrial ecology, enterprise resilience, and global supply chain sustainability. SMEs represent the majority of all enterprises, and rapidly evolving communication technologies allow for various routes of network formation.     

From green product definitions and classifications to the Green Option Matrix

Hybrid cars, recycled products, photovoltaic cells, bioplastics: why so different products can be called ‘green’? Which practices companies willing to develop green products should implement? How companies can easily and effectively communicate to stakeholders the environmental features of their green products? This paper tries to answer these questions, by developing a Green Option Matrix (GOM), which characterizes green products and practices along different dimensions. This matrix is then used to analyze the different features of green products as well as related green practices developed by a sample of companies belonging to the Dow Jones Sustainability World Index (DJSWI). Relevant data are collected by means of content analysis of companies’ websites and sustainability reports. Green products and practices developed by each company in the sample are positioned in the matrix and results are presented and discussed for each industrial sector. Then, different sectors’ behaviors are compared. The proposed matrix can be used by companies as a market tool to analyze competitors’ green products and practices and as a communication tool to effectively communicate to stakeholders the specific green features of their products and practices.     

Fuzzy input–output model for optimizing eco-industrial supply chains under water footprint constraints

Global water stress is expected to increase due to population growth, economic development and climate change. Because of this trend, there is an increased interest in the water intensity of industrial activities conducted via the product supply chain or within specified geographical boundaries or regions, both at the enterprise- or regulatory-level. The total water footprint of economic activities should be evaluated in consideration of local water resource consumption, virtual water trade and resource availability. As individual entities seek to protect their respective interests, the challenge is to optimize inter-regional trade of goods with the consideration of the interests of participants in the network. This work presents a fuzzy input–output model for optimizing supply chains under water footprint constraints. Two case studies, involving tile manufacturing and biofuel production, are considered to demonstrate the use of the model.