Moving public sector supply chain accountability beyond 'green' aspirations

3 August, 2012 | By Richard Tipper

Against the backdrop of a relentless drive for reform, a growing number of local authorities are bringing together their aspirations for greater environmental accountability with the commitment to secure further cost savings. Local authorities in England are already required to measure carbon emissions from their own estate and operations and attention is now turning to the supply chain. A key feature in the emissions equation, this offers an opportunity to assess both an organisation’s wider environmental impact and a significant area of expenditure.

Private sector organisations, across a wide range of sectors, have used environmental accounting to manage such costs and better understand the climate change implications, for a number of years. With the industry maturing, specific programmes, such as the CDP Supply Chain Initiative and European Supply Chain Institute, have also created a greater focus and understanding of the specific challenges.

There are a number of specific issues to consider when exploring supply chain carbon reporting, including the relationships between public sector organisations and the businesses that supply them. A question regularly asked is how environmental concerns sit alongside other commercial issues and, in the case of the public sector organisations, how reporting requirements can be squared with the need to minimise the burden of red tape.

While the strategy to tackle such projects continues to evolve, best practice has also made significant headway.

As a starting point, consider carefully what you are looking to get out of this exercise. Is this about ticking a box, set by central government, or are you genuinely looking to improve the efficiency of your supply chain, focus on suppliers who share your values and can demonstrate environmental awareness in line with your policies? It is essential to clearly communicate such objectives, both internally and externally, what you intend to do with the information you get from suppliers and how you will measure success.

Before asking suppliers for information, ensure the department that has ownership of this programme has a properly functioning carbon reporting system. While many local authorities have made a start on carbon footprinting, there are numerous examples of poorly maintained systems that will not stand up to scrutiny. If you cannot account for your own greenhouse gas emissions in a transparent, accurate and complete manner, you should probably think twice before expecting others to stand up and be counted.

Good supplier relationships take time to build but can be rapidly eroded by poor communication. A key factor for success is, therefore, an approach that engenders trust and good relations with suppliers. Take time to think how you should approach your suppliers, what to ask for, what to expect and when to expect this information.

Most local authorities are likely to be served by hundreds or even thousands of suppliers, so it makes sense to prioritise those that have a material carbon impact. Suppliers of heavy equipment and energy intensive processes, such as logistics and waste management, are likely to be greater emitters than suppliers of, say, office stationary.

Having reached a stage where you are ready to start collecting information, ensure the reports are in a consistent and standardised format. Supply chain reporting will only provide useful and comparable information by taking a standardised approach. The most widely used standard for corporate GHG accounting is the WBCSD-WRI GHG Protocol and in most cases, it makes sense to request data to this standard.

But standardisation is only half the challenge, with subsequent analysis and reporting a further hurdle. The growth in innovative web-based solutions to secure consistency, accuracy and completeness for all participants has made considerable progress in reducing the burden of reporting.

There are clear signs that greenhouse gas reporting may be made mandatory in the foreseeable future, with the government announcement in June that companies listed on London Stock Exchange, will be required to report emissions from April 2013. Few would doubt that the public sector will be required to follow at some stage in the future. However, to safeguard success from early initiatives, it is important to ensure suppliers have the opportunity to integrate such initiatives into their own management systems. They must understand that carbon reporting is not just a box ticking exercise, as part of a procurement process. If suppliers are to use this as part of their efforts to reduce GHG emissions, it must be part of business processes, so that improvement or deterioration of performance can be measured over time.

Richard Tipper, chief executive, Ecometrica, a developer of accounting platforms for energy, travel, waste, water and carbon