As a creative guy sitting between the manager of recycling for a major retailer and a supply chain expert for a large clothing brand, I certainly feel like I am bringing the knife to the metrics gunfight in this session.
But the sheer corporate heft The Sustainability Consortium (TSC) carries makes learning more about its systems and metrics pretty important for anyone working in the field.
TSC CEO Sheila Bonini starts us off with an introduction to the staggering impacts of consumer goods: they are linked to more than 60 percent of greenhouse gas emissions, some two thirds of deforestation and 75 percent of forced and child labor issues.
But, as Bonini says, just think of the change we could make by improving that.
TSC has a strong foothold from which to start that monumental climb. Created in 2009 by a group of forward-looking companies (Unilever, P&G, Walmart and Coca-Cola, to name a few) as well as academics, non-profits and governments, TSC aims to get all of its stakeholders aligned around the same issues.
Mainstream retail is one of the single biggest levers to drive sustainability, and TSC definitely has the leverage to effect serious change. Its mission as a global organization is to use science in a multi-stakeholder model to "...make mainstream consumer goods as sustainable as possible."
"The Sustainability Consortium has been able to create a system of metrics that cover 80-90 percent of the impact of consumer goods supply chains," Bonini said. "If we can get what we're doing right, the impact is enormous."
Christopher Cooke, TSC’s Director of Technical Development, then presented some of the key findings from TSC's first impact report, looking at data across $140 billion of consumer trade.
One of the key innovations of TSC reporting is the use of product category-level reporting: Reporting at the individual product level is more specific, but the data is harder to collect; while reporting at the corporate level makes it easier to collect data but not as material across the supply chain. Reporting at the product category level makes it easier for manufacturers to benchmark their results in a meaningful and competitive way.
A key data tool TSC employs is the tracking of sustainability 'hot spots.' In calculating responses to sustainability questions, one of the most frequent answers in this first year study was "we don't know" - a response that earns a score of zero. Clusters of low scores indicate a trend, or 'hot spot.'
Tracking this allows retailers to delve further into the reasons or issues behind certain low-performing products or suppliers. But Bonini stressed that it's important not to read too much into low scores at this point in the TSC process.
"I think what we are seeing in supply chains is very low visibility," she said. "The metrics indicate how much of your supply chain you can see. As suppliers get more sophisticated, we can move toward more differentiation."
But as Cooke pointed out, even in categories with low scores, you still have companies that are doing it right: "53 percent of responses are still ‘we don't know.’ But there's always a set of brand leaders who do know."
This leadership data provides usable content for further communication to consumers. Marks & Spencer uses TSC data in its Plan A report, and Walmart uses it to let consumers know which brands the retailer considers to be “Sustainability Leaders.”
Session participant groups soon got a chance to explore the idea of sustainability hot spots firsthand, as Bonini and Cooke handed out score sheets for the categories of computers, home/office copy paper and chicken.
Deciding on the most material and important issues was harder than it looked. Our table (“The People of the Chicken”) carefully considered the impact of chicken poop waste and animal rights issues, but were somewhat blindsided by the real impacts of fertilizer application upstream in the chicken feed supply chain.
The post-break discussion showed the value of defining KPIs with respect to supply chain activity, rather than ownership. Asking 'What is the impact in manufacturing?” is more relevant than being limited to what suppliers own, as many suppliers don't own their own production facilities.
The audience did have some questions about the methodology (for example, about issues of social impact that may not yet have as much science behind them, and the self-reporting [unverified] nature of the responses) and Walmart's weighting and position in The Sustainability Consortium. To the latter, Bonini and Cooke responded that TSC focuses on metrics that the retailer can answer today, but they don't sweep issues under the rug. The multi-stakeholder process and NGO involvement definitely helps, even if there are spots where things aren't yet perfectly addressed.
The presentation concluded with a bold call to action: "To create a consumer goods ecosystem that is sustainable, using a common approach to measuring and tracking the product sustainability of $1 trillion of retail sales over the next five years."
To achieve this, TSC is hoping retailers will commit to a common platform, manufacturers will drive supply chain visibility & performance, and stakeholders will partner to align and drive scale.
"In order to get at the scale of the challenge we face, we can't follow a niche strategy," Bonini concluded. "We have to go mainstream."