Leading Sustainable Organizations
Not long ago, it would have been considered unnatural for corporations to set their priorities and goals with an eye toward improving their environmental performance. But a steady flow of high-profile corporate initiatives and studies of customer behavior have revealed a change in the business climate. Companies that integrate sustainability practices throughout their supply chains are experiencing a clear benefit. Increasingly, key stakeholders — from investors to customers to prospective employees — are monitoring sustainability efforts for themselves and making their decisions accordingly.
The Leading Question
How are companies addressing the environmental impact of transportation in their supply chains?
- Only 22 Fortune 500 companies have begun blunting their supply chain’s impact on the environment.
- Mostly, they pursue discreet projects with measurable outcomes.
- A more holistic approach could yield greater rewards — but not without requiring risky upfront investment.
But more than just the threat of negative publicity is pushing corporations into the green zone. With domestic policy makers debating the merits of cap-and-trade legislation and world leaders struggling to agree on a climate change treaty, it’s only a matter of time before environmentally unaware companies will face steep fines for their failure to keep pace. At the same time, the slow-growing U.S. economy is forcing companies to focus on improving their efficiency to offset tepid demand and counterbalance the price volatility of commodities such as water and energy.
About the Research
This study, conducted in 2008, explored the strategies and practices of more than three dozen Fortune 500 companies to determine the extent to which they acted to improve supply chain and transportation sustainability. To obtain a sample of companies with environmental business strategies, we first researched three environmental supply chain initiatives: EPA’s Climate Leaders, EPA’s SmartWay Transportation Partnership and the Global Environmental Management Initiative. These consider greenhouse gas emissions across industries and provide a way to target companies that have a particular interest in supply chain sustainability. The companies participating in the three initiatives were cross-referenced with Fortune 500 and Roberts Environmental Center listed companies, yielding a total of 294 businesses demonstrating environmental strategies (58.8% of the Fortune 500), with 76 (15.2%) participating in at least two of the three initiatives.
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5. Calculated from Bureau of Transportation Statistics, “Commodity Flow Survey,” 1997, www.bts.gov; and U.S. Environmental Protection Agency, “Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2005,” 2007, http://epa.gov.
6. S. Murphy, “Will Sourcing Come Closer to Home?,” Supply Chain Management Review 12, no. 6 (2008): 33-37.
7. Energy Information Administration, “Real Petroleum Prices,” http://tonto.eia.doe.gov.
8. “Supply Chain News: Reducing Supply Chain Costs Is Top Executive Priority — to No One’s Surprise,” Sept. 1, 2008, www.scdigest.com.