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Environmental management in product chains 5 The shaping and embedding of environmental management in product chains
In this chapter, the different type of environmental initiatives in product chains, which were presented in chapter 4 as a typology, is analysed as change processes. The analysis of the single initiative is based on an analysis of the different cases, which are referred to that type of environmental initiative. The analysis of the single cases includes a description of the activities and the organisational and environmental impact of the activities. Furthermore, the conditions for the embedding and diffusion of these activities are discussed. 5.1 LCA-activities including collection of data from the suppliersLCA-activities is here understood as activities concerning: 1) Collecting environmental data about the product or the products in the supply chain or in the whole product lifecycle, 2) Environmental assessment on basis of the collected data, 3) Actions against a background of the environmental assessment. This description is based on analysis of five companies, who have included LCA-activities in their environmental work. 5.1.1 Activities and impactThe experiences from the analysis show that the most common reasons why the companies carry out LCA-activities are customer demand or expected customer demand about environmental data. For companies who already have environmental management systems, the environmental management system seems to influence the decision about using LCA as the method to collect and assess the environmental data to meet the customer demand. The table below gives an overview of the activities of the five companies and the effects of the activities on the organisation and the reduction on the environmental impact
5.1.2 Conditions for the initiative in product chainsLCA activities can contribute to both development of organisational capacity to develop the environmental management into a product perspective and to reduce environmental impact. The experiences from the activities on the companies from this investigation are, as shown in the previous table, that LCA activities can:
The experiences show some circumstances that need to be in focus when analysing LCA activities in companies. LCA activities demand many resources in relation to economy, competence and time. The cases show that both large and small companies can promote the environmental focus on the product in the product chain by carrying out LCA activities. Important conditions to provide success seem to be adjustment of the use of the companies’ resources. For the small company important conditions for realising the activities were financial support, local/national suppliers and customers, which made it possible in an easy way to meet and shape an overview, together with consultant support to the environmental assessment of the collected data. For the large companies important conditions were financial support and accordance between the choice of course of action and the internal long-term program. There were differences between the large companies’ choice of course of action. It seems to be important to reflect, if the competences to carry out a LCA on the companies’ products have to be built up in the company or in the companies’ network by the consultants. This influenced the companies’ choice of consultant support. The central point is not where the competence is building up, but it seems to be very important that the companies develop procedures in the companies to secure continuous maintenance of the data etc. and to follow-up the LCA activities with decisions and actions. Completion of a LCA has to be an iterative process, where means and targets are adjusted all the time to the possibilities, which arise in the process. There is a big uncertainty connected to the collecting of data, as the collecting of data involves many suppliers. Even for large companies it is difficult to collect environmental data. Therefore it can be necessary to adjust both the way the collecting of data is done and the ambition of the activity. An example is the large chemical company, which had to adjust the ambition from making an environmental declaration to get the product eco-labelled. The cases show that even though the means and target are adjusted in the process, the LCA activities increase the environmental focus on the product in the product chain and reduce the environmental impact. When LCA activities are going to lead to environmental focus in the product development, it is important that the core company is close to the end product. For instance, the company can be supplier to an end manufacturer or be the end manufacturer itself. To be able to integrate an environmental focus in the product development process, real possibilities to influence the choices in the product development process are necessary. The large electronic company is an example of a company, where the possibility to develop a guideline for the development activities is present, because the company has its own development section. When the LCA is carried out as a trade effort it is still important that the participants from the companies feel an ownership to the project. The experiences from the large building company shows, when the environmental employees are able to see the advantages in the developed tools the tools will be used. Otherwise, the results from a trade effort may be lost. In the building company the tool was not used until an interested environmental employee began systematically to use the tool to compare the environmental profile for the same product manufactured at different sites within the company. In this way, he could identify potentials for improvements. In relation to a regulatory perspective, the experiences point at:
5.2 Environmental information to customers5.2.1 Activities and impactEnvironmental information to customers is here understood as different types of information activities to customers about the environmental properties of the product and /or environmental aspects in connection to the company’s activities. This description is based on analysis of eight companies, who have all included information activities in their environmental work. The experiences from the analysis show that the most common reasons why the companies carry out information activities concerning environmental issues are:
The table below gives an overview of the eight companies with respect to their activities and the effects of the activities on the organisation and the reduction of the environmental impact
5.2.2 Conditions for the initiative in product chainsThe companies, who work with environmental information to customers, are all placed in the middle of a product chain so they both have suppliers and customers. The customer relation is a business-to-business relation. The most important drivers for companies to work with environmental information to their customers are demand from their customers for environmental information. The common reason for the demand is national or international legislation concerning different aspects of the end product or to the condition for the production processes. It is for example demands for the packaging, the product it self, to the disposal of the product after use or demands in connection to documentation or green account. The cases show two different types of environmental information to customers:
Information that addresses a specific need from a customer will often imply a demand to the supplying company itself to supply information. This could be the occasion of procedures in the company and downstream in the product chain that can throw light on the environmental aspects of the company and/or its products. This could also promote relations between different functions within the company and between the company and its suppliers. The largest effect of the advising activities is with the customer. This type of activity will supply new knowledge and develop the organisational skills to deal with environmental aspects. Furthermore, the customers’ choice of products could reduce the environmental impact from the product. The cases show that companies working with environmental information as an advising activity towards their customers, all belongs to trades where environmental issues have been in focus for a substantial number of years. These companies have a long history of environmental activities including implemented environmental management system. In relation to a regulatory perspective, the experiences point at:
5.3 Green procurement policy or strategy5.3.1 Description of the activities and impactsGreen procurement policy or strategy has been defined as companies, private as well as public, who have a general policy of favouring products with better environmental performance than their competitors. A circular from 1995 states that state institutions must consider the environmental and energy impacts in their procurement policy and consumption, whereas green procurement strategies in private companies are initiated on company basis. Two very different companies have been identified in this category: The Danish State-owned Railway Company (DSB) with several thousand employees and the small company Dan-Rens A/S with 9 employees. The table below gives an overview of the two companies with respect to their activities and the effects of the activities on the organisation and the reduction of the environmental impact.
5.3.2 Conditions for the initiative in product chainsBoth companies initiated the green procurement policy “on top” of other environmental initiatives in the company. The circular on a state policy on green procurement is referred to have spurred the green procurement policy in the Danish State-owned Railway Company (DSB), though explicit initiatives had already been taken from 1992. The green procurement strategy in Dan-Rens A/S was spurred by resources from the Ministry of the Environment’s ‘environmental competence’ programme. Both companies have built up an internal organisation with environmental competencies for assessing the environmental aspects of their procurement and with responsibility for the environmental activities. As part of the environmental activities, both companies have made use of life cycle assessments and environmental management system in Dan-Rens A/S is furthermore ISO 14001 certified and registered according to EMAS. The green procurement activities are thus - in the case of DSB with “help” from the circular - to a large extent initiated and dependent on activities in the case company. If the purchased green products are not price comparative with alternative products, the extra costs have to be financed by the company itself. However, in the case of DSB, it is said that the green products often have the same price as the less environmentally friendly alternative, whereas Dan-Rens A/S refers to the more environmentally friendly alternatives as more expensive. In DSB the green procurement strategy is referred to have changed the product portfolio in an environmental friendly direction, and the case description refers to the substitution of some of their toxic products, amongst other PVC containing products. A larger consciousness and knowledge on the contents of products has been obtained in Dan-Rens A/S, but a greener product portfolio is not mentioned. To some extent, it is tempting to explain the apparent larger effect of green purchasing in DSB than in Dan-Rens A/S as related to its size or the monopoly situation giving less price competition, the role as a very large customer for many of its suppliers and a company with large investments. The monopoly situation is, however, only a relevant aspect, if there is a strong internal environmental agenda, otherwise profits should be as relevant as for a market with competing companies. More important is the role of DSB as a large customer, which is referred to as conducive for suppliers’ interest in meeting environmental requests. The size and time horizon of a large part of DSB’s investments could further make environmental considerations an important consideration, especially in combination with the statement from DSB, that green procurement seldom is more expensive. Adding to the role of company size for the capability to assess the environmental impacts, are the difficulties of the smaller suppliers of Dan-Rens A/S to meet Dan-Rens A/S’s requirements. Despite the minor success for Dan-Rens A/S, the green procurement strategy and other environmental initiatives are still seen as a potential advantage in the coming years by Dan-Rens A/S. The company still hopes to be able to market its green profile, although the green procurement among Dan-Rens A/S’s customers is not as big as hoped. 5.4 Recovery of materials and products5.4.1 Activities and impactRecovery of materials and products is here understood as activities concerning recovery of materials from the production, establishing return systems for end-of-life products for recovery and preparation of disassembly guidelines to end-of-life products. This description is based on analysis of three companies, who have included recovery activities in their environmental work. The experiences from the analysis show that the most common reasons for the companies to carry out activities concerning recovery are:
The table below gives an overview over the three companies with respect to their activities and the effects of the activities on the organisation and the reduction of the environmental impact
5.4.2 Conditions for the initiative in product chainsAn effort for recovery of materials and products can contribute to both development of organisational capacity to develop the environmental management into a product perspective and to reduce environmental impact. The experiences from the activities in the companies from these cases are, as shown in the previous table, that the efforts can:
The experiences show some circumstances that need to be in focus when analysing recovery of materials and products in companies. It is very different in different companies/sectors how simple it is to recover materials in the product chain. In relation to a regulatory perspective, the experiences point at:
Development in the business conditions of the companies, e.g. for implementation of environmental management, can facilitate the possibilities for handling recovery. This can also support the integration of the experiences from the recovery activities in other company procedures, e.g. procedures for product development. In the individual company, reuse in the production processes requires quality procedures to ensure the quality. The experience from one case company without an environmental management system is that it expects to establish an environmental management system and later replace the existing control procedures (in – and out controls) with supplier management. The experience from the large electronic company is that an environmental management system ensures that the experiences and results from the activities are integrated in the company procedures for product development. 5.5 Supplier assessment and dialogue5.5.1 Activities and impactThe activities within supplier assessment and dialogue show different activities:
The five cases focus on supplier assessment and dialogue from five different branches: packaging, textiles, wooden products, construction and distribution of chemicals. The table below gives an overview of the five companies with respect to their activities and the effects of the activities on the organisation and the reduction of the environmental impact.
5.5.2 Conditions for the initiative in product chainsTwo of the cases focus primarily on supplier assessments based on questionnaires. In both cases the suppliers seem to be interested in a more dialogue-based approach so that they know how the customer actually assess them based on the provided information and how they as supplier might improve their practice. One case is based on a PC-based supply chain management tool, which integrates concerns for quality, environment and work environment (occupational health and safety). This system is dialogue-based, which helps the core company as a customer to find ideas for future focal points in the supply management system from the dialogue with the different suppliers. The scores are made public within the group of suppliers, which make some of them contact the customer to find out how they can improve their environmental performance, when they see that other suppliers score higher than they do. One case is based on integration of environmental aspects into business contracts and project plans. The company has developed its own strategy for which chemicals not to accept. The strategy is partly based on a branch database developed, which the company has developed further. This company offers the suppliers dialogue around how they can improve their environmental performance and integrate environmental aspects into their project plans, if they are not able to develop sufficient good plans. In most cases the mutual benefit and mutual importance of supplier and customer to each other is important for the supply chain management strategy. In several of the cases less control of strategic suppliers is seen, because the relationship is more based on trust developed through previous business relations and in some cases joint development projects. In some cases, the companies are not able to influence the relationship to some of the suppliers very much, either because the company is not important to the supplier or because the customer-supplier relationship is decided by a mother company, for example through long term business contracts about supply of certain raw material. Seen from a regulatory point of view, support to the development of dialogue-based supply chain management could enable a more dynamic supplier-customer relationship, where the suppliers become more interested in improving their own performance or in joint development projects. Support to the development and implementation of tools for this kind of co-operation could be valuable, like it has been done in relation to tools for environmental conscious projecting, which the contractor company seems to be using as part of their supply chain management. 5.6 Greening of product development5.6.1 Activities and impactsThe focus in greening of product development as initiative is on “in house” resource reduction and substitution of specific materials or chemicals. Other parts of the supply chain may supply altered inputs as part of a greening of the product. Five cases include greening of product development. The table below gives an overview of the activities of the five companies and the effects of the activities on the organisation and the reduction on the environmental impact
5.6.2 Conditions for the initiative in product chainsThe product focus has a lot of focus on substitution initiatives, for example substitution of chemicals, which are known as hormone disrupters. The focus is on specific substances, like heavy metals, and on more complex chemical substances and products, like colorants and oils. In the nappy and sanitation product company, Bambo, resource reduction has been the focus of the product development activities, combined with substitution of materials. The initiatives for a greening of product development were taken by company management, by individual (environmental) departments or by groups of employees. In one case, two companies jointly took the initiative. In addition, companies refer to supplier cooperation and dialogue as important for the companies’ greening of product development. Though companies took the initiatives, company external actors or factors raised the demand for greening or were expected to demand greener products. The request for substitution of chemicals with environmental or health effects were raised by:
Only in one case (Phønix Trykkeriet A/S), the activities were supported by public funding. In the other cases, prices and potentially higher market shares were expected to finance the activities. In the case of Phønix Trykkeriet A/S, the companys’ product development strategy is referred to have been marketing oriented and the company under competitive pressure, whereas customer pressure and regulation were drivers for the four other companies. Public support could therefore be seen as a contributor to a green development, which is more vulnerable and risky, than a green development as response to customer demand or obligatory regulation. With regard to the environmental effect, greener products were developed in four of the cases. In the fifth case, a basis for greener products was developed, but design and economic considerations may overrule the green agenda in the actual production. The greening activities have, as earlier mentioned, largely been substitution of unwanted substances: The chain perspective has been important for raising these issues, but a chain perspective on the greening is much less prevalent from the cases. Berendsen A/S is however an exception. The very strong dependency between the different joints in the Berendsen product service chain may be an explanation for the ‘chain greening’ compared to product greening. Very strong commitments have been made between the companies in the chain, which has contributed to maintain the greening agenda; also the dominant role of one customer seems to have been decisive for this green agenda. In the other cases, the customer demands and the regulatory obligations were conducive to the greening of the products. Both existing and new supplier cooperation contribute to keep green development on the agenda. The customers in these cases are however more varied, and therefore the green products do not necessarily have a broad customer base, except for the initial “green customer”. 5.7 Eco-labelling5.7.1 Activities and impactThe cases cover companies using public eco-labels or private green product brands as part of their environmental strategy. The cases cover seven companies at different stages of the eco-labelling process:
The table below gives an overview of the eight companies with respect to their activities and the effects of the activities on the organisation and the reduction of the environmental impact.
5.7.2 Conditions for the initiative in product chainsThe cases show three different roles eco-labelling can have:
The company, which is asked as supplier by a customer to collect data, because a customer further down the product chain wants to obtain an eco-label, experience that the routines for data collection developed as part of their ISO 14001 certification makes it easy to collect the necessary data. This case shows also interaction with another activity in the company. The company is asked to supply another yarn oil, because the ordinary does not live up to the eco-label criteria. They are able to supply another oil company because they for another customer had developed more biodegradable oil. Two cases deal with companies in a branch, where eco-labelling has become a standard offer to governmental customers, why they decide to position themselves further in relation to this part of the branch (printing for governmental institutions and for stakeholder organisations). In one case, the printing company develops a strategic partnership with a graphic designer company in order to attract governmental institutions, stakeholder organisations and front-runner companies by offering a full design and printing program of their written materials. The other case shows a printing company, which develops its dialogue with the governmental customers in order to enhance their knowledge about environmental aspects of printing so they prefer to have printing done in eco-label quality. Public green procurement seems to be an important driving force for eco-labelling. The experience with eco-labelling in relation to public green procurement shows, however, that governmental institutions often – or at least sometimes – choose to buy the cheapest products and not the most environmental friendly products. Within printed materials, however, it seems as eco-labelling is functioning as a strategy within public green procurement. Another barrier is the eco-label fee, which companies selling eco-labelling products have to pay to the national eco-labelling secretariat. If the manufacturing company choose to put this fee on the top of the price (0.15 – 0.4 %, depending on the type of eco-label) it seems as it might prevent companies from buying the products. They might in stead prefer a product of the same quality, but without the label. This implies that the environmental impact from eco-labelling might be bigger than can be assumed from the sales figures for eco-labelled products. However, the lack of eco-label on products of eco-labelled quality implies also that these products are not functioning as a visible “advertisement” for the eco-labels among professional customers and households. Two cases show that the quality of eco-labelled products (detergents and printed goods) in some cases might be different from the quality of “ordinary” products, which make some customers prefer the ordinary products. This could imply that it is important to organize dialogue with users about their perception of good quality as part of the development and sales activities. 5.8 Strategic co-operation5.8.1 Activities and impactStrategic co-operation as part of environmental management in product chains is understood as long-term business or network relations, which are based on environmentally improved products and services. Four of the five cases focus on the co-operation between two or more companies in a product chain and one case is a partly public funded centre with companies, consultancy companies and universities within the same product area (concrete constructions). In all the cases it seems as the environmental aspect is integrated into already existing business relations, including the partly public funded centre. All the cases concern development of environmentally improved products and services. The table below gives an overview of the five companies with respect to their activities and the effects of the activities on the organisation and the reduction of the environmental impact.
5.8.2 Conditions for the initiative in product chainsIn all but one case, the focus is on environmentally improved products and services. The case about the printing company and the development of strategic co-operation with a graphic design company focuses on implementation of procedures in the design company, which considers the possibilities for environmental concern as part of the design of the graphic products. These procedures are based on the production methods the printing company uses. The strategic co-operation with the design company implies, however, that quality demand from the customers might imply that these environmentally improved production methods might not be used every time, but environmental concerns seem to become more systematically addressed in the dialogue with potential customers in the design company. All cases are to some extent market driven. One case is driven by a demand from a strategic customer, while two cases are driven by the assumption that environmentally improved products will give better market opportunities in the future (furniture and cleaning service). One case can be characterised as a market strategy in an environmentally mature branch. In the case about the strategic co-operation between the printing company and the graphic design company, the initiative seems to have been taken by this rather environmentally pro-active printing company in order to strengthen its position, compared to other environmentally pro-active printing companies. Since also these companies have implemented ISO 14001 and have eco-labelled printed goods as an important part of the market strategy, it is necessary for the case company to develop its environmental strategy further and the company chooses to focus on strategic co-operation and a more specific market segment of more environmentally conscious companies and stakeholder organisations. In a case involving multinational companies, the Nordic market conditions are referred as quite different from other countries, which give problems transferring the environmentally improved cleaning concept to the other parts of the two companies’ markets (detergent manufacturer and cleaning service), while this does not seem to be a problem in the textile service case. The cases show some organisational changes in the relations between the companies as part of the strategic co-operation. The printing company gets a sales office in the design company probably because this makes it easier to have a dialogue with the customers about the possibilities for integrating environmental concern into the design process. The detergent manufacturer and the cleaning service company have developed a relationship between detergent chemists and cleaning technicians. This shows that a change to more environmental friendly products and services might imply that new competencies are necessary in the relation between supplier and customer. The centre, which focuses on concrete constructions, can be characterised as a strategic organisational structure at branch level, which aims at developing guidelines for resource savings and use of waste products as part of the cement in concrete constructions. The participants expect that these guidelines might be the future guidelines within the sector and are therefore interested in participating in the centre. In all cases at least one of the involved companies is ISO 14001 certified. In one of the cases, the focus on products seems to be inspired by the ISO 14001 certification, while the other cases do not mention the role of ISO 1400. Seen from a regulatory point of view support for the development of a product focus in ISO 14001 could be a strategy for disseminating a product-oriented environmental policy in companies. In two of the cases, where the focus especially is on the market for public green procurement, the companies do not succeed in actually finding a market for their products. In one of these cases price seems to be more important and in the other case the quality of the environmentally improved products seems not to convince the public customers. The detergent manufacturer in the latter case decides therefore to focus more on the fact that the new cleaning concept is cheaper, due its reduced consumption of detergents and water. More focus on support for the implementation of green public procurement in governmental institutions could be a regulatory strategy.
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