As the world’s largest designer, manufacturer and seller of networking equipment, Cisco Systems faces many supply chain sustainability issues, including energy, waste and climate change impacts, among others. To address these challenges, Cisco has worked to improve energy efficiency, implemented circular economic methods to turn waste into resources and recently announced a new goal to avoid one million metric tons of greenhouse gas emissions from its supply chain operations by 2020.
Meanwhile, many of the company’s technologies are fueling new sustainability solutions across the economy — most notably, the Internet of Things, which can help improve efficiency in energy, water, waste and more.
To get a better idea of how Cisco has been improving sustainability across its supply chain, we recently caught up with Kathleen Shaver, Cisco’s Director of Value Protection.
What does the concept of ‘supply chain sustainability’ mean to Cisco?
- Driving respect for human rights throughout the supply chain
- Reducing carbon impacts of manufacturing and logistics practices
- Building on circular-economy initiatives, including enhancing product design and increasing take back
A key enabler of our progress has been the digitization efforts we are driving across our supply chain. Digitization is advancing sustainability by creating access to big data and permitting us to measure, analyze and communicate environmental-related metrics and build the business case for sustainability initiatives. This is accelerating our ability to integrate sustainability performance data into business decision-making processes.
What are Cisco’s largest environmental supply chain impacts and what is being done to address them?
In the manufacturing phase our largest impacts center around energy consumption and greenhouse gas (GhG) emissions. We also recognize that there is a big opportunity for the supply chain team to contribute to Cisco’s commitment to drive the circular economy by further increasing the return of hardware so that we can refresh and extend its useful life or recycle it.
The sourcing, manufacturing and extensive quality testing of our products is an energy intensive process. The investment and focus we are putting into our GhG reduction goal is a big step forward in our sustainability work. Last year, as we rolled out our Integrated Greenhouse Gas Reduction (IGR) roadmap, to bring together a diverse set of initiatives aimed at reducing our carbon footprint.
Cisco has been measuring and reporting on various supply chain issues for many years, particularly with its Integrated Greenhouse Gas Reduction (IGR) program. What is your goal this year, and how is it different from previous goals? What was the driving force behind going this new route?
We’ve recently announced a new goal to avoid one million metric tonnes of GhG emissions from our supply chain operations by the year 2020. While this goal is new, it’s important to note that for several years, Cisco has been focused on multi-year carbon reduction goals for our owned and operated facilities. We have also previously set targets encouraging suppliers and partners to report emissions and set reduction goals. What’s new about this goal is that it’s our first quantitative scope three supply chain emission goal. It encompasses supply chain activities that Cisco directs or influences such as sourcing strategies, product testing protocols, and packaging and transportation modes executed by third parties. The goal also is intended to drive emissions reductions related to contract manufacturing.
The foundation of our new goal is to ensure we are making strategic choices that will drive our sustainability progress across our supply chain, in a measurable way. As we outlined our roadmap last year, we were able to see a bigger picture of impacts and opportunities beyond Cisco’s owned and operated resources. We see tackling this issue of measuring, goal setting and driving outsourced supply chain emission reductions as critical to making progress. Part of being a leader in this space is sharing what we have learned to support others seeking to advance supply chain related sustainability.
What have been some the biggest challenges Cisco has faced during its sustainability journey, and in setting this new goal, in particular?
Driving change and setting quantitative goals for a completely outsourced model was new territory. One of the biggest challenges we faced was how to express a meaningful goal and create a methodology that would allow us to effectively measure progress given the complex and dynamic nature of our supply chain with more than 700 suppliers and 30,000 orderable items. The mix and volume of products, as well as changes in manufacturing sites, can make it very difficult to set a clear boundary necessary to set an efficiency based reduction goal in this scope three space. Our team, working together with carbon reporting experts, developed a process to track and measure the carbon emission avoided from each of the specific initiatives that comprise our IGR roadmap. The cumulative emission avoided from each of these initiatives is consolidated for reporting against our 2020 emission avoided goal.
We also recognized that we can’t do this alone. For more than half a decade we have asked those we do business with us to report their own impact as part of the CDP. Tools like CDP, which now has a high participation with our suppliers, help showcase our overall impacts and allows us to identify the most effective opportunities for improvements. By leveraging CDP data, we have more insights into emissions reductions than ever before because it includes input from hundreds of our suppliers. We also can take into account the maturity of that data, to help prioritize the opportunities that best fit with our supply chain and then bolster our reporting.
How will Cisco report progress?
We will report on our progress in our annual CSR report and through our reporting to CDP. We expect to release our 12th report later this year. This level of transparency in our reporting is important to Cisco, and to our team, which is why we chose to release this goal publicly. For us, it’s crucially important to continue promoting the participation of our supply chain partners, as well as champion transparent reporting. The growth of participation in the CDP’s supply chain platform underscores that.
Is supply chain sustainability being measured by your customers and other stakeholders?
On a regular basis, we engage with customers that are seeking to better understand how they can advance their own sustainability strategies and how Cisco can help. Customers are increasingly incorporating social and environmental sustainability criteria into their technology sourcing decisions. Another sign that sustainability is becoming a criteria for evaluating leading supply chains is the step that research and advisory firm Gartner recently took to formally include sustainability performance as 10 percent of a company’s score when determining their annual top 25 global supply chains in industry best practice and leadership.
These trends speak volumes to the importance sustainability plays across organizations. Ensuring your stakeholders — whoever they may be — are aligned and working toward the same goals simply has to be a business imperative.
What are Cisco’s long-term plans/aspirations for improving its sustainability performance?
This new goal gives us a great start, but we are already looking ahead. There are some exciting opportunities on the horizon, including further manufacturing and logistics digitization projects that demonstrate how connected systems can save time, money, energy and materials while also improving customer satisfaction and doing right by the planet. We don’t see sustainability as a trade-off that needs to be made. We see it as an integrated business imperative in our global supply chain.