Transcript Mel Wilson PricewaterhouseCoopers LLP

Environmental
certification of
products and
supply chains
Mel Wilson
PricewaterhouseCoopers LLP
Overview of this presentation
Changing view of business
Current environmental certification schemes
Potential future certification area
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‘Traditional’ view of a company
Owners
Suppliers
Management
Employees
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Customers
Modern view of a company
4
Communities
Owners
Special
interest
groups
Suppliers
Management
Customers
Governments
Employees
Potential
investors
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More realistic view of a company
Owners
Communities
Sp. Int. Groups
Customers
Suppliers
Management
Potential
investors
Governments
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Employees
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Supply chain in the spotlight
sp. interest
groups
governments
communities
owners
customers
employees
Suppliers
potential
investors
Management
What happens in your supply chain will eventually be
known by your other stakeholders. This can have
positive – or negative – business impacts.
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Spectrum of issues re supply chain
Climate
change
Air
pollution
Community
impacts
Hiring
practices
Human
rights
Biodiversity
Chemical
use
Natural
environment
Science
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Health
impacts
Product
safety
Workplace
conditions
Society
Ethics
Purpose of supply chain ‘certification’
Environmental certification of supply chain:
• Confirms that suppliers meet agreed upon standards
• Identifies potential areas of risk
-
Operational
Legal
Financial
Reputational
• Gives ‘comfort’ to your customers
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Three main types of certification
1. Process / Management System
2. Chain of Custody
3. Product
Facility
Chain
Facility
Facility
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Custody
Product
Process / Management System Certification
Determines whether the management processes and
practices at a facility / operation meet specified
environmental standards.
Examples:
• ISO 14001 EMS Standard
• CSA’s Sustainable Forest Management Standard
• Sustainable Forestry Initiative
• Forest Stewardship Council Standard
• Responsible Care
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Chain of Custody Certification
Confirms that environmental standards have been met
along the entire value chain, from initial production to
customer delivery. Most common in forest products
industry.
• Forest Stewardship Council (various certifiers)
• Program for the Endorsement of Forest Certification
(PEFC)
• PricewaterhouseCoopers certification
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Product certification
Confirms that the product performs in accordance with or
meets specified environmental criteria. Examples:
• EcoLogo (Canada)
• Green Seal (US)
• EnergyStar
• PEFC
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Emerging trend: ‘carbon footprint’ of supply chain
Regulation of carbon emissions, through new product
standards, taxes, and trading schemes is increasing as
governments strive to meet their Kyoto objectives and
commit to longer term carbon reduction strategies.
Managing ‘carbon footprint’ of supply chain will help
organizations manage operational, legal, financial, and
reputational risks relating to climate change.
But there are challenges…
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Generic cumulative carbon footprint
Use / dispose
Supply chain
Deliver to customer
Distribution centre
Central warehousing/
Manufacturing site
Shipment
Far East supplier
Raw materials
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Total carbon generated
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Balancing carbon benefits and impact on P&L
Impact on Profit and Loss
Impact on
CAPEX
• Build new
Further
assessment
required
Impact on
OPEX
• Switch to
carbon
products/
• Make assets services
eco-friendly
eco-factory
• Purchase
offsets
bio-diesel
Cost
neutral
Win win
• Change central
Cost
savings
• source
warehouse location
• Reduce / change
packaging
components
from China
Poor
Medium
Positive
Benefits regarding carbon footprint reduction
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• Develop low
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Managing carbon often pays for itself
CO2
reduction
Achievements in energy efficiencies
Achievements in process efficiencies
Improvements in logistics and transportation performance
Improvements in logistics and transportation performance
Improvements in manufacturing and supplier performance
Carbon = energy = money
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Cost
reduction
Potential certification: ‘Carbon Friendly’
1. Management processes and practices at facility /
operational level
• Energy efficient processes
• Reduction or offset programs in place
2. Chain of custody
•
•
No mixing of “high carbon” products
Energy efficient transportation / distribution
3. Product certification
•
•
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Energy efficiency
Take-back schemes
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Certification already starting at grassroots level
Carbon Reduction Institute (Australia)
Three types of operations/product certification:
No CO2, Low CO2, and Carbon Neutral
Carbon Certification of BioFuels
For tax benefits, manufacturers of biofuels must
certify carbon reductions compared to regular fuels
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Conclusion
Environmental certifications have tended to focus on
• Management systems
• Chains of custody
• Products
Significant activity in forest products industry but principles
same for all industries
Potential area of future growth: carbon certification for
supply chains and products.
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Thank you
Mel Wilson
[email protected]
(403) 509-7338
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