Toxnot’s cloud-based software helps advance companies’ focus on material health and supply chain engagement. Shaw's Kellie Ballew spoke with Toxnot CEO and co-founder Pete Girard about the greatest challenges to supply chain engagement.
The biggest barrier companies face when managing sustainability, circularity and compliance successfully is often gathering supply chain data. Technology can be a great enabler — speeding up innovation, making product compliance easier and creating more transparent customer communications.
With this in mind, Toxnot was founded in 2016 to provide cloud-based software to help advance companies’ focus on material health and supply chain engagement. Since being named a semi-finalist in the Sustainable Brands Innovation Open in 2017, Toxnot has continued to evolve its platform to meet evolving market needs — working with a wide range of companies, from startups to Fortune 500s.
With its focus on people and planet throughout the supply chain, the company has been recognized in Shaw’s sustain[HUMAN]ability® Leadership Recognition Program. Shaw VP of Global Sustainability Kellie Ballew recently interviewed Toxnot CEO and co-founder Pete Girard about those evolving market needs and the greatest challenges to supply chain engagement.
What inspired you to start Toxnot?
PG: When we started Toxnot in 2016, every industry we had worked with was struggling to get detailed information about materials and this was slowing down sustainable innovations. In many products, the simplest questions — “what is it?” and “how was it made?” — are the hardest to answer.
With Toxnot, we set out to design a system that would allow product manufacturers and materials suppliers to track, share and protect detailed information about materials more easily. We sought to do this irrespective of which certification or regulation companies are addressing, since they all change over time. The big idea with Toxnot was that, with digital infrastructure, we could capture more detail about supplied materials and go further back in the supply chain. This allows for faster innovation, easier product compliance and more transparent customer communications.
To help facilitate this, Toxnot is free for any-size company to start managing their first 250 products and materials at Toxnot.com.
How have market needs or dynamics changed since then?
PG: Two things have really changed. On the design side, there’s a huge interest in the concept of circularity. It’s a clear design ideal that’s engaging for a wide variety of audiences. What people are finding with circularity, though, is that it’s not as simple as “let’s recycle this product.” Companies need to design recycling systems that deliver real reductions in environmental impacts like carbon emissions and water use. Even more fundamentally, they need to assess whether their materials are fit to be infinitely recycled. These issues come back to really understanding the material contents of our supply chains. In that way, circularity makes the supply chain data Toxnot is providing even more critical.
The second change is an urgency around carbon reporting brought about by the understanding that it is tied to financial risks. The link to financial reporting is important because it means that companies now believe that at some point soon, they will need to report an SEC level of accuracy on carbon impacts. This is a big shift. While most companies understand that the vast majority of their emissions are in their materials supply chain (Scope 3), they have largely used really generic estimates for this. A shift to the same level of scrutiny as financial reporting means that chief financial officers will need more accurate reporting on their supply chain emissions. Again, this brings us back to accurate supply chain data as an increasing part of the big market shifts we are seeing.
As manufacturers focus on material health and the ingredients in their products, collecting supplier data is always one of the biggest challenges. What can be done to simplify or speed up this process?
PG: Manufacturers need to be supportive and inclusive of suppliers in the process. Suppliers need to understand the context of why the data is being requested. It also helps to remember that your suppliers are also often trying to get data from their suppliers and have a lot of similar challenges.
As Toxnot is working with companies at all levels of the supply chain, we focus on two key areas for streamlining supplier data collection. The first is meeting suppliers where they are — meaning, letting them easily start with the data they have. We make it easy to start with the most basic documents, like an SDS (safety data sheet), and automatically digitize it for them to reduce hours of data entry. While this isn’t nearly enough for material health certifications, it’s a clear starting point on which to build. We also give every Toxnot user our full suite of import functions, so that it is easier to pull data from their existing systems.
The second area of streamlining is the Digital Materials Passport. Whenever a supplier answers a question with Toxnot, a passport is automatically created. The supplier can choose to share this with only the person requesting it; but they can also proactively share with others or share the passport as a response to subsequent surveys. This is a strategy that allows suppliers to reuse responses, with the ultimate goal of reducing their effort and supporting higher-quality data. The passport approach also gives manufacturers the benefit of being notified when a passport is updated. Manufacturers can also search for existing passports on the Toxnot Exchange.
With multiple standards, certifications and reporting requirements out there, how can a company best keep track of it all? And what's next?
PG: At the end of the day, almost every certification is a subset of the general questions, “what’s in the product?” and “how was it processed?”
At Toxnot, we see companies having better success by focusing on understanding those questions about their supply chain and then building certifications on top. In the long run, a company with great supply chain visibility is going to be able to move through nearly any certification process with relative ease. For companies managing a wider variety of certification requests, managing the process and access to documents with the Product Passports is going to become increasingly common. The Passport is a way to provide digital documentation about certifications and product attributes in a standardized way that can be automatically pulled into a wide variety of customer systems. The digital aspect of Product Passports also allows us to automatically transfer product manufacturers’ data into a wider variety of reporting formats. This will reduce the reporting requests on manufacturers and allow us to continue scaling up sustainability, circularity and product compliance initiatives.
This article is part of a series of articles recognizing the second slate of organizations to be honored by Shaw’s sustain[HUMAN]ability® Leadership Recognition Program. Each of the 10 organizations selected for this year’s recognition program is a leader in its own right and offers something from which we can all learn about putting people at the heart of sustainability. To read more about the other organizations recognized by Shaw, visit the landing page for this blog series.