Summary and conclusions

Environmental management in product chains

0.1 Eight types of environmental management initiatives in product chains
0.2 Environmental improvements from the initiatives
0.3 Interaction between environmental initiatives in product chains
0.4 Organisational aspects of the initiatives
0.5 Product and branch aspects
0.6 Conditions and regulatory measures for the diffusion of environmental management in product chains
0.7 Theoretical perspectives for analysis of the shaping and embedding of environmental management in product chains

This report analyses 25 cases of environmental initiatives in product chains involving companies and discusses the conditions for further diffusion of these types of environmental management in product chains.

0.1 Eight types of environmental management initiatives in product chains

The 25 cases, which are the empirical basis of the analyses in the report, have been described by four Danish consultancy companies and involve all at least one Danish company. In some of the cases, suppliers and/or customers are based in other countries. Based on the case descriptions eight types of environmental management initiatives have been identified. These types of environmental initiatives have been analysed with respect to the background of the initiative, the shaping of the initiative, the organisational and environmental impacts and the conditions for further diffusion of this kind of environmental management in product chains.

The different types of initiatives and the main company in each case are shown in the table.

Environmental initiative/management effort	Companies (activity, product or service)
1) Life cycle assessment	Technos A/S (paint manufacturer) Gabriel A/S (textile manufacturer) Jydsk Nylon (electroplating company) Danfoss Drives A/S (electronic product manufacturer) H+H Fiboment A/S (building materials)
2) Customer information, marketing	Bambo (production of nappies and sanitation products) HCI Nordic A/S (handling and distribution of chemicals) Danfoss Drives A/S (electronic product manufacturer) Skylight A/S (plastic product manufacturer) Jysk Nylon (electroplating company) Post Danmark (transportation) Brødrene Hartman A/S (packaging manufacturer) Levison + Johnson + Johnson A/S (printing company)
3) Green procurement policy or strategy	DSB (state owned railway company) Dan Rens A/S (distribution and sale of chemicals)
4) Recovery of materials and products	Danogips A/S (building material) Danfoss Drives A/S (electronic) Skylight A/S (plastic product manufacturer)
5) Supplier assessments and dialogues	Brødrene Hartman A/S (packaging mnufacturer) Novotex (textile manufacturer) Kompan A/S (playing ground equipment) Skanska Danmark A/S (contractor) HCI Nordic A/S (handling and distribution of chemicals)
6) Greening product development	Berendsen Tekstil Service (textile service company) Akzo Nobel Deco (paint manufacturer) Phønix Trykkeriet A/S (printing company) Trevira Neckelmann A/S (synthetic yarn manufacturer) Bambo (producer of nappies and sanitation products)
7) Eco-labels	Technos A/S (paint manufacturer) Berendsen Tekstil Service (textile service company) Novotex (textile manufacturer) Phønix and Kontrapunkt (printing company and graphic design company) Leika Danmark A/S (furniture distributor) Trevira Neckelmann A/S (synthetic yarn manufacturer) Levison, Johnson and Johnson A/S (printing company) ISS Danmark (cleaning service company)
8) Strategic co-operation	Phønix Trykkeriet A/S and Kontrapunkt (printing company and graphic design company) Leika Danmark A/S (furniture distributor) ISS Danmark (cleaning service company) Centre for concrete construction Berendsen Textile Service (textile service company)

0.2 Environmental improvements from the initiatives

Not all the cases make it possible to conclude whether environmental improvements actually were obtained. The cases show a focus on a number of different environmental impacts, which the initiatives aim at reducing. These impacts include:

Reduction of resource consumption, including energy consumption
Recovery of waste products and materials for new products
Phasing out hazardous chemical substances and products in agriculture
Phasing out hazardous chemical substances and products in products
Phasing out hazardous materials in products
Reduction of amount of monomers in paint
Development and use of more biodegradable chemical substances and products

The cases have different types of focus on reduction of environmental impacts. It is not so that they all have focus on the reduction on all environmental impacts in a certain product chain. Rather, the product chain is an arena for the shaping and embedding of the management of some environmental impacts in the product. The cases show these different kinds of focus on environmental impacts:

Impacts at a or more suppliers
Impacts during manufacturing
Impacts during distribution
Impacts during the use of a product
Impacts during product disposal and waste management
Impacts throughout the whole product chain

The focus in a case may be on the reduction in one part of the chain, like the product use, but a substitution of a chemical will also give a reduced impact during the manufacturing of the product. The cases show how the reduction of impacts in a certain part of a product chain may imply changes in another part, like when the reduction of environmental impacts from a paint in the use phase imply that changes take place during the manufacturing of the paint.

0.3 Interaction between environmental initiatives in product chains

The characteristics of the eight different initiatives show that environmental management in product chains is more than exchange of environmental information between supplier and customer. Several of the initiatives involve joint development projects and some of them strategic co-operation.

Several companies have been involved in more than one of the eight initiatives. Some of the combinations are:

Supplier assessment and dialogue combined with information to customers
LCA and information to customers
Product development and information to customers
Product development, eco-labelling and strategic co-operation

These combinations of initiatives shows that some companies have environmental-oriented relations as well upstream the product chain (to suppliers) as down stream the product chain (to customers).

0.4 Organisational aspects of the initiatives

The cases do not show a certain order of implementation of the different types of initiatives. For example, it is not so that all companies had implemented ISO 14001, before they initiated a change.

Most of the cases show integration of an environmental initiative into some of the existing business relations. This shows that integration of environmental concern and interaction is possible within existing business relations. Companies do not necessarily need to find new suppliers to get a change implemented. However, it seems like the mutual importance of supplier and customer has impact on the way the change process is organised. Changes seem to be organised as a mutual development process if the customer and the supplier are of equal strategic importance to each other, although the customer usually initiates the change. If the customer is not of strategic importance to the supplier, it may be more difficult to get a change implemented. Maybe the costumer have to choose a strategy that demand less of the supplier, like when one of the companies could not carry out a life cycle assessment, because the supplier was not willing to use the necessary resources to develop the data. The customer considered then to shift to go for a eco-labelling license instead because that would be less demanding of the supplier to answer questions about the ability of their product to fulfil some specific eco-labelling criteria.

Some cases show development of new organisational structures between the involved companies. One type of new structure is not directly part of the business relations (a centre for resource-saving concrete constructions). Although not directly mentioned in the case material also the so-called product panels, which involve different actors within a product or activity area (for example within textile, construction and freight transportation), have played a direct or indirect role in some of the cases. The panels can be characterised as a kind of policy networks and involves typically manufacturers, users, and knowledge-based institutions like consultants, research institutions and NGO’s.

Other new structures are directly part of the business relations. An example is a printing company, which gets a sales office at a graphic designer company as part of their strategic co-operation. Change in existing structures in seen, where the relationship between a detergent supplier and its customer (a cleaning service company) changes from a relation involving only sales and purchase persons to involving detergent chemists and cleaning technicians. This change was necessary in order to enable a change to less hazardous chemicals, which at the same ensured the quality of the cleaning service.

These experiences from the cleaning service case show the importance in greening of product development of a focus on the practice, which the product is supposed to support or become part of – and not only on the product or product component itself. In the cleaning service case, the important dialogue as part of developing guidelines for the practice with the new and greener detergent between the detergent chemists and the cleaning technicians focused on the roles of and interaction among the cleaning detergent, the equipment, the expected level of cleanliness and the expected level of costs.

Several cases show that environmental initiatives are embedded in an organisation through changes in different elements of the organisation, like

Development of environmental management system
New knowledge in the organisation from analyses
Database about product components
Database about chemicals
Design handbook and guidelines
Guidelines for procurement
Tools for sales department
Participation of environmental staff in sales and design activities in dialogue with customers

0.5 Product and branch aspects

Some conclusions concerning the role of the type of products and branches, which are in focus in the cases, are:

In terms of the level of processing, the cases include raw materials, processes, products and services for professional users, and consumer products. The cases include also products of different types of materials: renewable materials, construction materials, metals, and chemicals. The complexity of the products is also different, from rather simple chemicals to complex construction projects.
Demands are mostly passed upstream product chains from a customer towards the suppliers. Demands passed downstream (to customers) are only seen in two cases. One of them concerns the distribution of chemicals, where a multinational company demands of its customers that they audit their customers. This can be seen as a kind of extended producer responsibility from the manufacturer based on the inherent hazardous properties of the products and an attempt to avoid critique of the products the company manufactures.
Some of the cases concern branches, where the Danish product-oriented policy has had a lot of focus: printing goods and textiles.
The cases show one example of a branch at a mature level with respect to environmental initiatives: the printing branch. In one part of this branch eco-labels and environmental management systems seem to have become a business condition. The market is governmental institutions and stakeholder organisations. The experience from these cases show that the companies in a branch at a mature level of environmental management still has to be dynamic and innovative, because they have to try to position themselves in relation to the other pro-active companies. This might lead to strategic co-operation like between a printing company and a graphic design company, or it might imply that the environmentally improved methods become the daily manufacturing methods, because it is too time-consuming and expensive for the company to shift between different methods.

A comparative analyses of cases within three resource areas: furniture and clothing, construction and housing, and information and communication show more similarities than differences in the type of environmental initiatives. This implies that the type of product or service and the way the product chain is organised does not seem to decide the type of environmental management initiative, which is possible. The following characteristics across the product areas were found:

Expectations from potential suppliers to public demand for more environmentally friendly products or solutions are in several cases not met (for example furniture for day-care institutions and cleaning), for example high priority environmental demands lack in tendering processes
Branch specific business organisations and knowledge institutions are involved as initiators and mediators, whereby the conditions for widespread diffusion of experiences should be ideal
However, only in one case, the use of recycled plasterboard for production of new plasterboard, the environmental demands seem to become a mainstream demand in business-to-business sales and purchase within a product or service area.

These characteristics show the need to analyse which conditions and regulatory measure, which can support further diffusion of the environmental initiatives.

0.6 Conditions and regulatory measures for the diffusion of environmental management in product chains

This paragraph summarises the conditions for each of the eight environmental initiatives and suggests regulatory measures, which could support the further diffusion and implementation of the environmental initiatives.

0.6.1 The conditions for implementation of the different types of environmental initiatives

The table shows the conditions, which are necessary for the support of each type of environmental initiative, and some proposals for regulatory measures, which can support the further diffusion of the different environmental initiatives in product chains.

Environmental initiative	Conditions related to initiative	Regulatory measures for diffusion and implementation
1) LCA	Procedure needs to be adapted to the knowledge resources of the companies Non-strategic suppliers reluctant to provide data Lack of branch data	Support to dissemination of more simple and more dialogue-based methods for lifecycle screening Support to the development of branch data
2) Environmental information to customers	Impact unclear when information is provided to customer without dialogue Easier for larger companies to collect and mediate environmental information	Regulatory demand for green accounts from all companies in order to provide easy access to environmental information about materials and products from suppliers
3) Green procurement	Easier for larger companies to make assessments of materials and products	Support to development and implementation of environmental declaration schemes for the provision of environmental information in business-to-business relations
4) Recovery of materials and products	Regulation like differentiated costs on waste handling supports recovery Dialogue about quality of the recovered materials necessary Differences in waste management regulation among municipalities a barrier to national recovery from waste products	Use of economic instruments in order to motivate to recovery of materials and products Encouraging joint initiatives which can support development of joint quality criteria for recovered materials and for integration hereof in future product development Development of more uniform municipal waste management regulation in order to enable recovery schemes for materials and products if they have been approved nationally
5) Supplier assessment and dialogue	Dialogue-based assessments of suppliers lead to more environmental improvement by the supplier and motivate joint projects Assessments are less formalised in business relations, where trust has been built	Support for the development and implementation of dialogue-based tools for environmental initiatives in product chains Support for the implementation of product-oriented environmental management systems Support for the systematic development of branch or product-oriented knowledge about business and innovation dynamics
6) Greening product development	Strategic business relations motivate joint environmental product development Eco-label criteria act as product development guidance	Support to competence development within integration of environmental aspects into strategic business relations Dissemination of experience with the application of eco-label criteria in strategy and product development
7) Eco-labels	Eco-label criteria act as product development guidance Environmental management system enables easy data provision to customers Public green procurement as driver but expectations to actual demand is often not met	Support to implementation of the public green procurement practice in governmental institutions in order to create more public demand for ‘greener’ products and services Support to the development and implementation of tools and schemes, which can support the dialogue between customer and supplier, like eco-labelling criteria, green procurement guidelines etc.
8) Strategic co-operation	Co-operation might inspire to implementation of ISO 14001 Change in inter-organisational relations towards more focus on quality and function of products and services might be necessary Joint development of environmental initiatives seems motivating	Support to integration of strategic business aspects into environmental management systems Support to competence development through training and further education within environmental management Initiation of more product and branch based multi-stakeholder policy networks (product panels etc.)

The overview of the conditions for the application of the different types of environmental initiatives show that some of the initiatives may be easier to introduce for bigger companies with many resources and potentially bigger influence on their suppliers and customers than for smaller companies.

0.6.2 The role of environmental management systems

Several companies had implemented a formalised environmental management system, typically ISO 14001, before they initiated changes in product chain, while other companies have implemented ISO 14001 later on and some have not implemented an environmental management system. In a few cases, companies were planning to implement ISO 14001 after having been involved in one of the initiatives in a product chain. It looks like other companies’ strategies inspire companies in some of the cases while they are co-operating with them.

Although formalised environmental management systems play a role in some of the cases, the cases clearly show that companies do not initiate environmental management in product chains as self-regulation, but often based on external demands. These demands might come from private or public customers, like through public green procurement, or inspired by regulatory measures aiming at substitution of chemicals and materials (like lists of unwanted chemicals and taxes on certain materials). Sometimes a regulatory measure, which a customer experiences, is raised as a demand to a supplier, whereby the product chain becomes an arena for mediation of regulatory demands among different geographical contexts.

These observations show the importance of governmental regulation as guidance for corporate environmental management systems and thereby for environmental initiatives in product chains. One of the reasons for the need for external guidance for companies with environmental management systems (and for companies without environmental management systems) is the large degree of interpretative flexibility in the ISO 14001 standard. This implies that the standard not automatically guarantees a certain scope of the environmental management - for example a focus on environmental impact in the product chains, which the company is part of. The flexible elements in the ISO 14001 standard include (Jørgensen et al 2007):

The scope or boundaries of the activities covered
The identification of environmental aspects and impacts of company activities
The legal requirements which are recognised by the company
The policy priorities of the company
The focus in relation to suppliers, products and design, because it is up to the company to define those environmental aspects of activities, products and services, which the company believes it can control or influence.

0.6.3 The role of transnational environmental management

A few cases describe relations between Danish companies and either suppliers or customers from other countries. Some of these cases also show differences in the level of environmental protection or least different levels of environmental performance among companies in different countries, which are part of the same product chain. The examples include:

Danish multinational companies that experience the Nordic market conditions as quite different from other countries, which give problems transferring the environmentally improved concepts to the other parts of the two companies’ markets
Danish company, which experiences demand from a professional customer from another country about a quality of the products, which fulfil eco-label criteria
Danish company with suppliers in a number of other countries has developed its own supply chain management system based on questionnaires and training of own purchase persons in order to obtain a level of environmental protection, which acknowledge the local level of environmental capacity, but tries to develop the level of environmental protection among the suppliers further.

These cases show the importance for many companies of a policy, action plan and practice around transnational environmental management. The strategy need to include considerations about the level of environmental protection compared to the level of protection in Denmark and the present level of protection among suppliers and customers in these other countries. It is important that the companies do not assume that the environmental infrastructure, which they know from Denmark is available in other countries. This implies that it is necessary to get information about the environmental infrastructure, legislation and public debates and discourses around environmental issues in the other countries. The concept of script can used to consider what assumptions the company makes about the roles of the product, the user, the infrastructure, and the governmental authorities in those other countries, where present or potential suppliers and/or customers are located.

0.6.4 The role of governmental regulation

The cases have shown how a number of different types of regulatory measures have been important as occasions and driving forces for the development and implementation of environmental initiatives in product chains:

Command and control regulation, for example restrictions on certain chemicals and materials like PVC, make a company exclude PVC products from their procurement
Economic instruments, like taxes on the waste handling of construction waste etc. initiate the development of a recovery scheme for waste plasterboard
Market based instruments, like eco-labelling and public green procurement inspire companies to develop products within their product area
Competence development through the development and implementation of tools and training at branch or company level, like within the use of LCA
Information-based tools, like the list of unwanted chemicals, for example used as background in the phasing out of additives in paint
Policy networks within product areas and branches create joint initiatives - and thereby momentum or volume in eco-labelling campaigns or legitimacy behind guidelines for greener products, like the product panel on textiles.

Public green procurement is a driver for eco-labelling and product development in several cases. However, the anticipated market for the greener products does not materialise, in some cases, in an actual public demand (furniture and cleaning service). This shows the need for support for further implementation of public green procurement policies into actual public green procurement practice. The role of the public green procurement is bigger in relation to printed goods. However, the restricted budgets among the public institutions is also here a limiting factor, which implies that the public institutions want the eco-labelled product quality, but they do not want to pay the fee for the eco-labelled product, so they ask for not having the products eco-labelled.

Differences in municipal regulation have been a barrier to environmental initiatives. Two initiatives for development of national waste recovery schemes have only developed to a limited extent, because collection of waste materials and products as part of waste management needs approval from each of the municipalities. This practice has made a more widespread use of the schemes very time-consuming.

0.6.5 Regulatory support to environmental management in product chains though coherent policy regimes and policy patterns

The cases show the need for a careful development of the policy regimes, which are supposed to support the development of a new type of practice among companies, which means a focus not only on a law or a circular but also on the necessary policy instruments and competences among the civil servants that is needed. Furthermore, the experiences show the need for consistent policy patterns, which means that the different policy measures need to support each other. This implies that if the implementation of a certain measure, like public green procurement, is seen not to develop as expected and the demand for greener products do not develop, the background has to be found and changes in the policy measures developed. An important restriction to the development of public green procurement is the restricted budgets of the governmental institutions. It is important to analyse when and why these higher prices on eco-labelled products develop. Is it for example because better and therefore more expensive materials, components etc. are used or is it because the supplier expect that the users of greener products are willing to pay more for the product. In relation to printed products, the price difference between the labelled and the not-labelled product is sometimes only the eco-label fee, because the products are of the same quality. If the customer wants the products labelled, the printing companies want the public customer to pay the eco-label fee, but due to their restricted budgets governmental institution seem often to decide not to get the products labelled.

The lack of diffusion of the environmental initiatives into more widespread practice in several of the case studies show the need for the governmental regulation to be more differentiated and have a focus on the different types of companies. There needs to be policy instruments, which encourage front-runners, but there need also to be instruments, which focus on the more reactive companies and also on the back laggards. The role of multi-stakeholder forums in some of the cases as a way of developing a successful strategy shows the need for support for this kind of initiatives. Examples are the product panels, the co-operation around development of waste management schemes and quality criteria in the use of recycled plasterboard in new plasterboard and the co-operation around a centre for resource-saving concrete constructions. Such multi-stakeholder forums can in some cases solve the dilemma whether the focus should be on developing the demand for or the supply of more environmental friendly solutions or products first, like eco-labelled products or products made from recycled materials. The need for these forums shows that also markets for more environmental friendly solutions and products need to be developed through a combination of policy instruments. This combination should include command-and-control regulation of for example chemicals, economic instruments like taxes and innovation supporting programs. It is necessary to develop these stakeholder forums with a broad selection of stakeholders in order to develop a broad legitimacy of the way the environmental problems and the solutions are framed.

An important prerequisite of the diffusion of the environmental initiatives is sufficient staff in the Environmental Protection Agency with competences about the dynamic interactions between environmental policy and product chain dynamics and innovation dynamics. These competences include competences about the different roles of governmental regulation in innovation processes, like the support for development of product standards, quality criteria, prototypes, experiments etc. in the development of demand and supply of more environmental friendly solutions. Consultancy companies may be important in supporting companies in some parts of an environmentally focused innovation process and consultancy companies are good at making relations to companies, if it is a demand for public funding in an innovation programme. However, several of the initiatives in the case studies have had problems being embedded, when the public funding to the consultancy companies ends. Some of these initiatives, like the role of eco-labelling in the textile sector and the role of public green procurement within furniture and cleaning services could probably have been embedded, if there had been enough resources in the Environmental Protection Agency to monitor the market development for more environmental friendly products and services. This monitoring should include analyses of the driving forces that seem to support or hinder the market development. This kind of analyses and organisational support is not supposed to be a kind of governmentally supported “picking the winners” in terms of what products to develop, but a critical support and monitoring of the complex dynamics in the different phases of innovation processes in market development.

This role of the Environmental Protection Agency need to be part of a stronger innovation focus in the environmental policy with focus on the need for different instruments in research, innovation and diffusion at the market. Some elements in such a regulatory strategy should be:

Research guidance based on environmental perspectives based on assessment of research strategies and potential outcomes, development of visions and objectives for areas of research
Support for innovative activities focused on specific application fields, including support for development of prototypes, development of market structures and analysis of experiences from first-generation users
Regulation of technology applications through the regulation of driving forces and institutional frames which determine the use of products in the development of specific consumption areas

0.7 Theoretical perspectives for analysis of the shaping and embedding of environmental management in product chains

The analyses of the 25 case studies have shown the value of theoretical perspectives in analyses of the shaping, embedding and diffusion of environmental initiatives in product chains.

The following theoretical perspectives have shown to be of value and are recommended as focus in future capacity development as part of governmental strategies, which aim at supporting emergence and stabilisation of environmental concerns as part of product chain dynamics:

A social shaping approach to the analyses of the co-shaping of company strategies and practice on the one hand and societal environmental discourses on the other hand during the emergence and stabilisation of new issues within corporate practice

A capacity-building approach to the development of environmental competences in companies, including a focus on the development of knowledge resources, internal and external communication channels and interpretive structures, which helps translate environmental concerns into design guidelines etc.

A network relation approach to analyses of the type and role of existing and new relations between different actors, which are involved in the shaping and implementation of environmental initiatives in product chains. This should include a focus in the type of resources, which are useful or developed in this kind of relations, like knowledge, legitimacy, purchasing power or market access.

An innovation dynamics approach to the development of new products and services within product chains, including interaction with other types of actors, like government, civil society organisations, knowledge institutions etc.

A user-oriented innovation approach to the greening of products, where focus is on the anticipated or necessary changes in practice and in the roles of the different elements like materials, equipment, personal competence, societal expectations etc. The concept of script as the vision of the future practice can be applied in this type of innovation.

A business strategy approach to the corporate practice in relation to customer – supplier interaction, where focus is on the degree of pro-activity, the role of short and long term relations between customers and suppliers and on the competence development within and among the different companies within the product chain.

An international perspective on transnational environmental management with a focus on the dynamics behind corporate strategies between local adaptation and global integration and strategies for capacity building in transnational product chains.

An environmental assessment perspective on the effect of the initiatives on the environmental impact. The approach is based on a life cycle screening approach combined with an assessment of the time perspective, the degree of prevention, the degree of holism and the changes in environmental impacts.

A political science approach to the role of governmental regulation in the shaping and diffusion of environmental initiatives in product chains. This should include a focus on existing regulation as a barrier or support, the development of new regulatory regimes as part of the support for environmental initiatives in product chains and the role of coherence in the policy pattern, which shapes the practice within a certain product, service or technology area.