Supply Chain Compliance: Addressing the Elephant in the Room

by Derek Newberry*

If events like Apple’s Foxconn debacle teach us anything, it is that even reputable companies with strong supplier codes of conduct can face serious compliance issues where regulatory mechanisms are lacking.  I reflected on this recently when leafing through the summary report from last year’s Wharton Initiative for Global Environmental Leadership (Wharton IGEL) Conference “Greening the Supply Chain”.  While I enjoyed reading about the participants’ experiences in sustainability management, I was struck by the short shrift they paid to the all-important question of compliance, despite acknowledging that when it comes to producing tangible results, this really is the “elephant in the room”.

Indeed, ensuring that suppliers adhere to social and environmental criteria and comply with applicable legislation is a thorny problem in settings where the boundaries of corporate responsibility are unclear and enforcement can be costly and onerous.  This is doubly true in production chains characterized by numerous small suppliers and sparse governmental regulations, as is the case in much of the global agricultural sector.  How can we create regulatory mechanisms that enable these sustainability programs to look as good in practice as they do on paper?

Clean Energy Challenges and Opportunities for Investing in Sustainability

by Sharon Muli*

Jason Baxter of Drexel University

If the Earth had six massive solar installations measuring 200 miles long by 200 miles wide filled with 10% efficient solar cells, it could generate enough energy to meet global demand.  While this is a powerful vision that demonstrates the high potential of solar power, it sounds like a rather absurd thought. Yet this image raises a fundamental question; how can we take better advantage of solar power?

This issue was discussed during the Clean Energy and Sustainability Investing Workshop at the Wharton Social Impact Conference on November 16, 2012, organized by the Wharton Social Impact Initiative.  This year, the theme of the conference was “The Finance of Impact:  Innovative Approaches to Social Change”. The discussion of photovoltaics (PV) emerged as a clear example of how financial investments and technological development can lead to more sustainable change.

UBS Q-series Inflection Points: Towards Sustainability

*by Candice D. McLeod

Last month, UBS hosted Inflection Points: Towards Sustainability at the Bloomberg headquarters, as part of their annual Q-series initiative. The Q in Q-series stands for asking questions, particularly tough questions, as noted by Penn alumna and UBS Head of Global Sector Research, Erika Karp, who helmed the event.

Erika Karp, UBS, Head of Global Sector Research

The event’s main tough question: How do companies not only identify the inflection points in the their industry –“defined as accelerating rates of system-wide change that alter the manner in which industry leaders think and act”- , but also leverage these changes into driving sales and profits?

Promoting Sustainability by Not Mentioning Sustainability

Post by Sharon Muli*

In some situations, the best way to spread sustainability is by not mentioning it.   More specifically, by not talking about sustainability using the language of sustainability.

I heard about the experiences of several business leaders in sustainability while attending the New Metrics of Sustainability in Business Conference  on September 27-28th, 2012.  This conference, hosted by Sustainable Brands and Wharton’s Initiative for Global Environmental Leadership (IGEL), sparked engaging discussions among those in a wide range of roles who talk, or don’t talk, about sustainability. Below are some of the main points that emerged from the conference and participant discussions.

Consider your audience and the situation
As an individual interested in sustainability, a student studying sustainability, or an employee in a sustainability role, you would think that talking about it be beneficial. That may not always the best approach, however.  It is important to consider the audience, the situation, and the intended outcome of a conversation.

Bank of America works on Food Security in Philadelphia

Food management is a major problem in America. While 40 percent of the country’s food is thrown out, 15 percent of Americans receive food stamps, while even more are food insecure.  Here in Philadelphia, the hunger problem is among the worst in the country.  Food insecurity is not just a problem for those under the poverty line, however. Members of America’s lower middle class have increasingly needed food assistance, as stagnant wages and unemployment puts pressure on income.

Organizations like Philabundance and Greensgrow, which work on various aspects of the hunger problem, have become more vital due to the recession. Public-private partnerships have sprung up to help.

The Food-Water-Energy Nexus: A Global Issue

The global population is projected to hit eight billion people within 20 years. With a growing population, dramatically more food, water and energy is needed. Yet even today, food and water supplies are becoming increasingly stressed in the face of climate change, development and unsustainable natural resources consumption. Recent drought-caused food price hikes have provided a glimpse into what the resource-constrained future would look like without significant action.

The concept of the food-water-energy nexus refers to how each one of those things affects the other. Water is the most important part of this nexus, because it cannot be created or substituted. Water also directly affects both of the other items. For example, most forms of energy production require substantial amounts of water for cooling and mining. Agriculture accounts for more than 70 percent of global water withdrawals. By comparison, around 16 percent of global water withdrawals are for the industrial sector. More than three billion people will be living in water-stressed areas by 2020.

Sustainability at the Inaugural Wharton Supply Chain Conference

**The views expressed herein should be taken as those only of the author and not of Wharton, IGEL or the University of Pennsylvania**

 Perhaps the most surprising part of the inaugural Wharton Supply Chain Conference was how “sustainability” was only mentioned twice: when Jim Miller, VP of Worldwide Operations of Google, mentioned that consumers must care and be informed before sustainability issues are taken care of; he used the example of his wife still buying an Iphone after the Foxconn debacle although she was against the labor practices. The second was when Randall Lovorn, VP of Commercialization and Innovation at PepsiCo, briefly mentioned his firm’s sustainability practices, and its new project of a net-zero waste plant in Arizona that gives back energy to the grid.

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Green Philadelphia: A New Porch/Park and More

Our friends at the Natural Resources Defense Council sent us a few links today for new steps in sustainability for Philadelphia, and we wanted to share.  Kaid Benfield, a blogger and Director of Sustainable Communities for NRDC, posted yesterday that

If you care about green cities, you have to like a lot of what’s happening in Philadelphia lately, from land use planning to watershed management to the greening of vacant and blighted lots and, now, the opening of a lively new public space that makes the city a better place to live, work and visit.

Well, as Philadelphia natives, we have to agree that Philadelphia is quickly becoming a better place to live. As Benfield wrote in his post yesterday, for those of us who commute via 30th Street Station, a new park called “The Porch” has made the walk from the train more fun.  On any given day, there could be a pianist playing the outdoor upright piano, people playing minigolf, a farmer’s market or an art installation. The relatively-new Schuylkill Banks park has increased the green space along the river and now hosts kayak tours, interpretive nature signage and a “movies on the green” series. Penn Park, the University of Pennsylvania’s expansive revitalization project, has also added to the green space along the riverfront, with trees, playing fields and walking trails.

Penn Park (image from PennConnects)

Forest Certification Schemes for Corporate Supply Chains

(Post by Caroline D’Angelo, IGEL Communications Coordinator and lead author of the report from which this post is adapted. This research and report was made possible by a Wharton Global Initiatives Research grant.)

Forests are the planet’s biodiversity reserves: One hectare of tropical forest may contain up to 750 species of tree and millions of other species of insects, fungi, bacteria, reptiles and mammals – and of course, the most intelligent of primate, humans. This biodiversity provides medicine, income, food and shelter for millions of people around the world, as well as supply materials and products for corporate supply chains. Beyond hosting an impressive array of species, trees are also reserves for carbon, consuming and storing this greenhouse gas in their soils, bark and leaves. (Indeed, protecting and re-generating forests may be the cheapest way to mitigate climate change - see REDD+.)