SAP's CSO on sustainability in the supply chain

by Scott Priest, Editorial Director, Financials & GRC

September 30, 2010

My colleague Jackie Howard passed along an article about sustainability in the supply chain featuring some quotes from Peter Graf, SAP's chief sustainability officer.

Trust is also a constraint within companies. “You would be shocked at the innovation when you just get a few people talking about the same thing,” said John Gagel, Manager of Sustainable Practices for Lexmark. He noted that engineers sometimes need the push to rethink a product, and that for Lexmark, bringing in engineers who deal with the end of life of a product to talk to the design team has been essential. “It’s screws versus snaps, plastic versus metallic,” he said. “Those conversations need to happen at the beginning of the design phase.”

Although the guidelines for getting down the supply chain and measuring it accurately are just coming out of the starting gate, the panel agreed it’s imperative to start digging deep. The result is cash savings, according to all of the panelists. Cutting carbon equals cost savings, and more importantly, risk reduction. “Sustainability is a mega-trend,” said Graf. “If you want to cover all of your risk, you have to go all the way down [the supply chain].”

The whole article is worth a read, namely in clarifying that while many folks associate sustainability with environmental responsibility, it's really about r isk management -- keeping the business sustainable over time, which obviously saves money and reduces risk.

The measurement of such processes is in its infancy, but is on the way. (One interesting note in the article: companies focused on outdoor recreation are ahead of the curve on sustainability.) I would like to think sustainability is more than a "trend" though, given how interrelated major companies' successes are to the overall global economy.

Seeing sustainability connected more directly to the supply chain is interesting, and worth reading about. If you can prove sustainable practices -- both green and otherwise -- you can improve relationships with vendors and customers who give preferential treatment to responsible companies, all while reducing risk and perhaps limiting your harm to the environment. It's clear why it's becoming a "mega-trend", when you think of it that way.

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