Friday, December 21, 2007

'Green' Asbestos

I'm learning that green doesn't go with everything, like those strange-shade-of-green pants abandoned in my closet. The last time I wore them, all it took was a raised eyebrow from my wife for me to head back upstairs, head-down defeated.

These days, it's me doing the eyebrow raising, as I'm bombarded with ads and press releases linking 'green' (as in "environmentally friendly") with all sorts of products and services. Is Bubble Wrap®, for example, a 'green' product? The folks at Shoplet.com think so. The product is included in the "Shop Green" section of its website (tagline: "Save Money, Save the Planet"), along with telephones, cameras, pens, and other items that contain recycled or recyclable materials (apparently, recyclability is the only criteria Shoplet.com used in making its 'green' selections).

On the one hand, Bubble Wrap® allows companies to protect their products with less packaging material compared to alternatives such as loose fill or paper. Sealed Air, the manufacturer of Bubble Wrap®, also encourages customers to reuse the material as much as possible to "delay [it's] final disposal and reduce the amount of materials needed to manufacture new products." On the other hand, Bubble Wrap® is a petroleum-based material, a co-extrusion of nylon and polyethylene that can't be processed at many municipal recycling locations. Sealed Air has seven sites where customers can ship used material for recycling, but customers have to pay for shipping and the wrap must be free of tape, labels or any foreign materials. (In this case, it's important to note that the product is being promoted as 'green' by the retailer, not the manufacturer).

This example illustrates an inconvenient truth of many 'green' products and initiatives: there are tradeoffs that companies and consumers must acknowledge and address. Negatives may still exist, even if the net results are positive. It’s like prescription drugs: you can take a little purple pill to treat your heartburn, but you may have to deal with headaches, diarrhea, and dry mouth in the process.

Tradeoffs exist because most products, manufacturing processes, and supply chains were not designed with sustainability in mind. Although sustainability is weaving its way into the industrial world, change will occur slowly, so companies and consumers will have to manage these tradeoffs for many years to come. But what are the tradeoffs? Unfortunately, you won't find the answer in most articles about 'green' and sustainability.

For example, I've read countless articles highlighting the energy-saving benefits of compact fluorescent lights (CFLs). According to ENERGY STAR, if every American home replaced just one incandescent bulb with an ENERGY STAR qualified CFL, we would "save enough energy to light more than 3 million homes for a year, more than $600 million in annual energy costs, and prevent greenhouse gases equivalent to the emissions of more than 800,000 cars." It's the feel good story of the moment, which is why I've replaced most of the incandescent bulbs in my house with CFLs.

But I can't recall a single article shedding light (no pun intended) on how these bulbs contain mercury, on how consumers shouldn't throw them away in the garbage, or what to do if you break one at home, as happened to me (see EPA site for what to do). Unlike some folks writing on this topic, I'm optimistic about Wal-Mart's commitment to sustainability, including its actions to promote broader use of CFLs. But if you go to Walmart.com to buy a CFL, you'll see plenty of information about the cost and energy benefits of the bulbs, but no mention of mercury or responsible handling and disposal information.

Granted, the amount of mercury in each CFL is miniscule compared to old thermometers. And earlier this year, lighting company members of the National Electrical Manufacturers Association (NEMA) voluntarily committed to cap the amount of mercury in each 25 watt or less CFL at 5 milligrams (see March 13, 2007 press release). Also, a coal-powered plant releases more mercury powering an incandescent lamp, over a five year period, than a comparably luminous CFL.

So, yes, the benefits of CFLs far outweigh the negatives. But if these negatives are not recognized and dealt with effectively, are we really making progress? Taking five steps forward and one step back keeps you moving in the right direction, but eliminating the backward step will get you to the final destination faster and with less negative impact on the environment.

If recyclability alone does not define a 'green' product, what does? Being made from natural materials? Helping to lower greenhouse gases? Asbestos is made by Mother Nature herself and its insulating properties help reduce energy use, leading to lower carbon dioxide emissions. Viewing asbestos from this perspective only, it's irresponsible for us to spend billions of dollars on lawsuits and asbestos-removal projects to eliminate a material that can significantly lower our carbon footprint. But as radio legend Paul Harvey reminds us each day in his broadcast, knowing "the rest of the story" helps us to reach more accurate and complete interpretations of history, people, problems, and opportunities.

Defining 'green' is not a trivial task, especially when tradeoffs exist. Several organizations have developed certification programs in this area, including MBDC and The International Oeko-Tex Association. The Federal Trade Commission (FTC) is also tackling this question, announcing in late November that it's beginning a regulatory review of its environmental marketing guidelines (last updated in 1998). The FTC was planning to review the guidelines in 2009, but "because of the current increase in green advertising claims, the Commission is reviewing the guides at this time to ensure they reflect today’s marketplace." I hope this means I'll be raising my eyebrows less next year.

As for my pants, the rest of the story is the same: they're still hanging in the dark corner of my closet. The holidays have come and gone, and although I received several nice shirts as presents, none of them match the pants. So I'm going to wait a few more months and see what happens on my birthday. If no luck, I'll give the pants to my kids, let them make dragon and frog puppets with the fabric--after I test the pants for lead, of course.

Thoughts on 'Green' Supply Chains by a Carbon-Neutral Analyst

I was listening to the radio this morning and an ad played for the station, promoting how they play today's hit music, with few commercial interruptions. The promo, voiced by a woman with a soothing voice, ended with what I'm guessing is the station's new tagline: "92.9 WBOS, A Carbon-Neutral Radio Station." What the heck does that mean, I wondered. It seems like everybody is jumping on the "green" bandwagon these days, including everyone in supply chain management.

Wal-Mart outlined its supply chain sustainability vision and objectives about two years ago, in a speech presented by Lee Scott titled "Twenty First Century Leadership." Other companies, particularly in Europe and in the high-tech industry, were already making inroads in this area, driven to action by regulations such as Restriction of Hazardous Substances (RoHS) and Registration, Evaluation, Authorization and Restriction of Chemical substances (REACH). But Wal-Mart's ambitious goals rippled through the supply chain industry, as well as the mainstream media, due to its massive size and influence. Today, you can't pick up the Wall Street Journal, Business Week, or any other business or trade publication without at least one article about the benefits of "going green."

A couple of weeks ago, I chaired a track on "Sustainability: Creating 'Green' Supply Chains" at this year's Council of Supply Chain Management Professionals (CSCMP) Annual Conference. Speakers from Herman Miller, HP, Whirlpool, Campbell Soup, Stonyfield Farm, Dow, Corporate Express, and other companies presented excellent case studies on this topic. The sessions were well attended, but a bit below my expectations considering all of the hype. Most of the attendees I spoke with were in "information gathering" mode, their companies still in the early stages of launching a green initiative.

Here are my main takeaways from the CSCMP presentations and the research I've conducted so far.

In order to achieve the greatest benefits, with the least cost and effort, companies have to consider sustainability at the design phase, both product design and network design. Unfortunately, most consumer products are designed with the assumption that they'll be thrown away someday. As a former product development engineer, I know that my design decisions and material selections would certainly be different if I had to take the product back at the end of its useful life, disassemble it, and re-introduce the materials back into manufacturing or nature. Drew Schramm, Senior Vice President, Global Supply & Quality for Herman Miller, provided an excellent case study of their Design for the Environment (DfE) process that illustrates this point perfectly (a write-up of the case appeared in the Journal of Industrial Ecology).

Similarly, carbon-footprint reduction has not been a consideration for most companies when designing their supply chain networks. It's highly unlikely that any company would optimize its network based solely or primarily on lowest carbon footprint, but by understanding the tradeoffs, companies may reach different decisions and prevent sustainability constraints from being "designed into" the network. Software vendors with network design solutions, including i2 Technologies, Infor, and Ilog, are actively exploring this area at the moment.

Being "less bad" is not the same as being good. Ken Alston, CEO of MBDC, made this point in his presentation; it's also a key message in the influential book "Cradle to Cradle: Remaking the Way We Make Things" by William McDonough and Michael Braungart, the founders of MBDC. Most corporate sustainability reports highlight year-over-year reductions and long-term targets for carbon dioxide emissions, energy consumption, and other metrics. But focusing solely on reductions, while important and necessary, is not enough. To borrow Apple's phrase from years ago, companies also have to "think different" and address sustainability not within the confines of existing supply chain processes and constraints, but by designing completely new processes and ways of working that are inherently sustainable.

Many supply chain continuous improvement initiatives, typically driven by cost reduction or productivity improvement objectives, can also be viewed from a green perspective. For example, the reason most companies implement a Transportation Management System (TMS) is to reduce their transportation costs. It just so happens that load consolidation and route optimization translate into fewer trucks on the road, driving fewer miles, consuming less fuel, and emitting less carbon dioxide. This example lends credibility to the "what's good for the environment can also be good for the bottom line" argument. But a cynic might take a different perspective: this is applying a "green" label to a fundamental supply chain practice.

More work is required on global standards and metrics. There are already standards in this area, such as ISO 14000, but differences still exist between industries and countries, particularly with regards to calculating and reporting carbon footprint. The speakers at the conference generally agreed that calculating carbon footprint was a challenging task, especially if you have a multi-tiered global supply chain. How far back into their supply chains should companies go? Does HP, for example, have to track the carbon emissions involved in converting sand into silicon? And how do you get this data from vendors in places like Vietnam? Stonyfield Farm mapped out its carbon footprint a few years ago, but Ryan Boccelli, their Director of Logistics, conceded that they had to make a lot of assumptions.

Regulations and mandates drive action. The companies leading the way in sustainability are predominantly those with operations in Europe or suppliers to Wal-Mart. In other words, companies that face regulations and mandates. Would these companies have the same focus on sustainability if they weren't forced to? Hard to say, but since some of these companies haven't voluntarily implemented their European sustainability practices in the US, the answer is probably no. The lack of supporting infrastructure and services for reverse logistics is certainly a contributing factor, but the main reason is much simpler: they don't have to do it. I'm not a big fan of regulations, but if we expect industries to act with more urgency, the government will need to exert greater pressure or provide incentives. Wall Street and the investment community, especially "socially responsible investors," can also push companies to act. The speaker from Campbell Soup, for example, said that a large shareholder contacted the company inquiring about their corporate sustainability statement and objectives. The shareholder suggested that he may sell the stock if Campbell's sustainability efforts were not aligned with his "socially responsible" investment criteria.

Are consumers willing to pay more for green products? This is the million dollar question, and most people think the answer is no, except for certain niche products. It'll be interesting to see what happens to the toy industry this holiday season, after the ongoing recalls of toys manufactured in China containing lead and other toxic substances. Then again, consumers haven't cared much that Apple's iPhone contains brominated flame retardants (BFRs) and polyvinyl chloride (PVC), toxic substances that other phone manufacturers have eliminated from their products. Apple has sold over 1.4 million units since the end of June, and analysts forecast strong sales during the holidays. At the end of the day, consumers vote with their wallets; if we don't change our buying decisions, why should companies change their practices?

Also, if a radio station can promote itself as carbon-neutral, why can't I? Sure, I exhale my fair share of carbon dioxide into the atmosphere, but I offset it with a couple plants in my office and a bunch of trees in my backyard that dump countless leaves on my lawn. Come by this weekend and watch me rake my leaves, the old-fashioned way, without a gas-powered leaf blower. I'm sure that counts for a few extra carbon credits, which I'm willing to sell for the right price.