A Supplier’s Guide to Sustainability Assessments This eBook outlines the types of sustainability assessment frameworks in use by purchasing organizations and provides helpful insight into the types of questions suppliers can expect to answer.

A Supplier’s Guide to Sustainability Assessments Introduction ….………………………………. 3

Types of Assessments ..………………….. 5

Proprietary ……………………...…………. 6

Industry-Driven ………………………….... 9

Third-Party ……………......................... 12

Conclusion …………….......................... 16

TABLE OF CONTENTS

In the four years since Walmart launched its Supplier Sustainability Assessment (SSA), commonly referred to as “The 15 Questions,” retailers, major brands, and other large purchasing entities such as the U.S. Federal Government have also started scrutinizing the environmental and social performance of their suppliers.

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Introduction

This trend has led to an explosion of new frameworks that purchasing organizations employ to evaluate their suppliers’ sustainability performance. Tools and methodology in use today range from simple and optional questionnaires to in-depth manufacturing and operations level assessments that are deeply embedded in the purchasing process.

A Supplier’s Guide to Sustainability Assessments

The scope of questions and their scoring implications depend on the purchasing organizations’ goals, the types of products assessed, and the relationship between supplier and customer.

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A Supplier’s Guide to Sustainability Assessments

In some instances, the goal of supplier sustainability assessments can be as simple as information gathering. But advanced organizations use these surveys to rationalize their supply chain and eliminate the lowest performing suppliers.

“In 2012, we launched an environmental assessment and questionnaire with each of our global suppliers, and we'll use results to make changes in the way our partners operate, aiming for more efficient practices that reduce environmental impacts. The findings will also help us be even more thorough as we evaluate future vendors.”

– Target Corp.

Sustainability assessments are used for a variety of purposes such as gathering baseline energy, water, or waste data, the assessment of environmental management and social responsibility practices, or identification of material business risks and opportunities. Generally these assessments fall into one of the three categories:

• Proprietary

• Industry-Driven

• Third-Party

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Types of Sustainability Assessments

A Supplier’s Guide to Sustainability Assessments

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Proprietary

A Supplier’s Guide to Sustainability Assessments

Proprietary frameworks are those that have been developed by or for a specific purchasing organization. These frameworks are frequently customized to the product and/or supplier specifications in order to assess the deepest levels of environmental and social impact.

Proprietary

“We work with more than 100,000 direct and indirect suppliers throughout the world and expect them to conduct their operations in an environmentally and socially sustainable manner. We use a variety of tools to assess suppliers, including background checks, self-assessment surveys, site visits and audits.”

~ Johnson Controls Inc.

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Example: Proprietary

A Supplier’s Guide to Sustainability Assessments

Johnson Controls Inc. Johnson Controls has released an on-line supplier sustainability rating system. The assessment contains 17 questions related to human rights, working conditions, employee safety, and energy management. The sustainability rating will be used as a method for measuring sustainability activity and compliance with the Johnson Controls supply base. It will also be used as an input to the company’s broader supplier scorecard.

“Sustainability assessments are tailored to match the channel of business and emphasize attributes important to us. All national brand vendors are reviewed based on 5 key sustainability categories: policy and management, energy and emissions, waste and recycling, water and supply chain.”

~ Kohl’s Corporation

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Example: Proprietary

A Supplier’s Guide to Sustainability Assessments

Kohl’s Corporation Kohl’s has a progressive presence as a sustainability leader. To assess its suppliers, the company uses a proprietary, web-based tool that includes questions related to impacts in packaging, energy, emissions, waste, water, and raw materials.

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Industry-Driven

A Supplier’s Guide to Sustainability Assessments

Industry-driven frameworks are primarily developed by trade associations for use by member organizations. This collective application of resources can be useful, since the suppliers for related organizations are often the same. By using an industry standard to assess impacts, a common language develops among purchasing organizations and suppliers that is advantageous for reducing survey fatigue. Due to the broad application of these tools, they tend to be less specific in nature, and are typically widely (and publicly) available.

Industry-Driven

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Example: Industry-Driven

A Supplier’s Guide to Sustainability Assessments

Electronic Industry Citizenship Coalition (EICC)

The EICC Environmental Reporting Initiative standardizes approaches to measuring and reporting on

key environmental impact indicators in the global electronics supply chain. It is based on global standards such as the Greenhouse Gas Protocol and established reporting formats including the Carbon Disclosure Project (CDP) and the Global Reporting Initiative. The tool uses a standardized questionnaire for gathering quantitative carbon emissions, energy, water, and waste data, as well as qualitative information on suppliers' environmental management practices. Once purchasing organizations and suppliers establish trading relationships within the system, they are authorized to share completed supplier questionnaires.

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A Supplier’s Guide to Sustainability Assessments

The HIGG Index Based on the Outdoor Industry Association’s Eco Index and Nike’s Apparel Environmental Design Tool, and developed by the Sustainable Apparel

Coalition, the Higg Index is a comprehensive performance assessment tool for the footwear and apparel industries. The tool helps companies standardize the measurement and evaluation of product design and environmental performance across the supply chain. The Higg Index has been adopted for use by Target and Walmart, among others.

Example: Industry-Driven

“The Higg Index is a learning tool...that allows beginners and leaders in environmental sustainability, regardless of company size, to identify opportunities.”

~The Sustainable Apparel Coalition

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Third-Party

A Supplier’s Guide to Sustainability Assessments

Third-party frameworks are normally developed by an NGO with a specific mission for disclosure or social change. These frameworks are made widely available, most at no charge, for companies to use to begin to measure and disclose environmental, economic, and social impacts. In most cases, completion of these types of scorecards leads to the opportunity for companies to publicly report their impacts (although it is voluntary to do so). As these frameworks are often under close scrutiny from investors, they tend to dive deeply into issues including governance, human rights, and climate change risks and opportunities.

Third-Party

“Those suppliers who partner with us in building a responsible supply chain will be the suppliers that will grow with us. And you, too, will become a better and more sustainable business.

~ Mike Duke, President and CEO, Wal-Mart Stores

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Example: Third-Party

A Supplier’s Guide to Sustainability Assessments

The Sustainability Consortium The Sustainability Consortium has developed a standardized framework for the communication of sustainability-related information throughout the value chain. The framework, called the Sustainability Measurement & Reporting System (SMRS) serves as a common, global platform for companies to measure and report on product sustainability. It enables rigorous product-level Life Cycle Assessments to be completed at a fraction of today’s time and cost, and provides a platform for sustainability-related data sharing across the supply chain. Walmart, Best Buy, and numerous other brands and retailers have deployed this

framework.

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A Supplier’s Guide to Sustainability Assessments

CDP Supply Chain

The CDP Supply Chain program invites suppliers to respond to the CDP questionnaire on behalf of participating retail and purchasing organizations. The CDP

questionnaire asks participating suppliers to disclose information regarding their energy consumption and emissions and identified climate risks and opportunities as a result (a water questionnaire is also available). In 2012, 54 retailers, including Walmart and Dell, participated in the CDP Supply Chain program and more than 6,000 suppliers worldwide were asked to respond.

Example: Third-Party

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A Supplier’s Guide to Sustainability Assessments

B Impact Assessment

The B Impact Assessment is a comprehensive tool that is made publicly available to any company seeking to measure their impact on their employees, the community in which they operate, and the environment. So far, more than 8,000 companies have used the B Impact Assessment tool; nearly 800 of these companies have gone on to certify as B Corporations.

The Global Reporting Initiative (GRI)

The GRI is a global nonprofit that seeks to make sustainability reporting a standard business practice for all organizations. The GRI framework

is comprehensive and used by companies around the world to measure environmental, economic, and social impacts. Companies may use the framework without reporting to GRI.

Examples: Third-Party

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In Conclusion Requests to provide environmental impact metrics have become the norm rather than the exception. Whether being asked by a retailer, an NGO, or a government agency, savvy suppliers are now preparing to respond to these requests by familiarizing themselves with the types of sustainability questionnaires currently in use in the marketplace. We’ve helped hundreds of suppliers understand and reduce their environmental impact. If you are looking for support

A Supplier’s Guide to Sustainability Assessments

to respond to a sustainability request, we invite you to contact us. We can provide the expertise and bandwidth that will help you successfully accomplish your sustainability goals.

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