The Verdant 360 Blog

In his new book, Hot, Flat and Crowded, author and New York Times columnist, Thomas Friedman asserts that January 1, 2000 was day one, year one of what he calls “the Energy-Climate Era.” He postulates that that was the day five key problems; energy supply and demand, petropolitics, climate change, energy poverty and biodiversity loss reached critical mass. While it is easy to question the date Mr. Friedman has chosen, it is harder to dispute the evidence regarding the direct negative impact that each of his five identified key problems have had on our environment, our society and economy. What I am most impressed about in Hot, Flat and Crowded however, is that it speaks to the real driver of these problems which is- the unprecedented growth of the world’s population over the last 100 years.

As the population has exploded over this period we have also seen unprecedented economic growth, through industrialization, globalization , computerization and the rise of consumer driven societies. To paraphrase Tom, the world has become Hot, Flat, Crowded and Affluent (at the very least striving for affluence). All of which combine to put enormous pressure on the planet’s resources.

At the beginning of the 20th Century according to U.S. Census Bureau there were approximately 1. 6 Billion people on the earth, today 109 years later there are according to the U.S. CB  6.7 Billion people. The forecast for the year is 2050 9.5 Billion. The pressure this puts on the planet’s resources is tremendous.

Climate change may be the most talked about problem related to population growth but is not the only. Deforestation, resource depletion, water shortages, destruction of arable land, and energy shortages all present challenges today, and will get more challenging as the world’s population increases.

For business leaders it makes it all the more important that we develop and implement sustainable business practices. We are now in global competition for energy, materials, water and labor. We face reduced supply and higher prices for the first three. At the same time our labor costs are higher relative to developing economies. To be successful it is imperative that we operate more efficiently, reduce waste, look to alternative sources of energy and develop workflows and processes that are more automated and reduce our carbon footprint.

Many major corporations are beginning to get the supply chain ramifications of climate change.  In a July 2008 operations report entitled “Climate change and supply chain management”, McKinsey states, “Top companies regard climate change as an opportunity to get closer to suppliers—effectively reducing both costs and carbon in their supply chains.” The authors, Chris Brickman and Drew Ungerman go on to say, “Forward-looking companies are using such discussions as opportunities for supplier development, for example by transferring best practices in manufacturing, purchasing, and R&D—as well as energy efficiency—to key suppliers. This opens the possibility of still lower costs and improved operational performance, in addition to helping suppliers remove more carbon from their supply chains.”

Yes, the world the world is Hot, Flat and Crowded but  Tom Friedman is optimistic. His subtitle Why We Need A Green Revolution And How It Can Renew America, speaks to the opportunity that is presented to those who choose to participate. If  business leaders commit their businesses to positive organizational change we can renew ourselves, our businesses, our communities and our planet.

-FR

Supply Chain Carbon, Supply Chain, Sustainability

One of the biggest challenges I face when discussing supply chain sustainability is dealing with what I call “the big misconception.” That is, the perception among many business leaders that sustainability is a high cost low return investment. I believe, however, that the opposite is increasingly the case. By focusing on the positive return on investment and clearly identifying return opportunities, it can be demonstrated that direct ROI benefits can realized through:

• Operational Efficiencies
• Material cost reductions
• Recycling materials
• Carbon Footprint reduction
• Carbon Offsets
• Increased sales
• Increased partnering opportunities

Understandably in the current business environment any additional business expense will and should be scrutinized. But  given the enormous challenges associated with our planet’s growing population and the desire for much of that population to strive towards affluence, we must recognize that business as usual is a recipe for disaster.

The positive for business leaders is that there is tremendous opportunity for those who can innovate, implement and execute sustainable supply chain solutions. Sustainability is at it’s core about the efficient allocation of resources. Reducing carbon footprint across the supply chain potentially has direct bottom line benefits. Inherently, if you use less energy you spend fewer dollars. Not withstanding the current low energy prices, energy costs will rise and as they do the benefits associated energy efficiency will grow. Additionally due to increasing awareness many companies are making demonstrable sustainability plans a requirement for their business partners.

As business leaders it is incumbent on us to do what is right for our companies, our shareholders, our employees and our customers. Increasingly many business leaders are recognizing we need to extend this to our communities, locally and globally. By recognizing that the supply chain benefits realized through a well executed sustainability plan do indeed extend to shareholders, employees, customers and communities, we are demonstrating true business leadership.

In upcoming posts I will present profiles of a number of business leaders who have demonstrated just such leadership and show how they have demonstrated benefits that strike directly to the bottom line and beyond. -FR

Supply Chain Carbon Footprint, carbon offsets, recycling, Supply Chain, Sustainability