2017 IMPACT REPORT
THE CALL FOR COLLECTIVE ACTION
Executive Summary
The Sustainability Consortium has a single lofty mission – to help make all consumer products, around the globe, more sustainable. Are we there yet?
When an organization or initiative is young it measures progress by its inputs. In the early days of TSC, we measured progress by the number of members we had, or the amount of funding we obtained, or how many people came to a meeting. As our initiative matured into a concrete idea, we began to measure our progress based on process. Are stakeholders happy? Are we finishing our work on time? How much of the consumer product space are we now covering?
2017 represents a landmark year for TSC as we can now begin to see evidence of the real business change happening due to the work we have done together.
In 2016, over 2,000 suppliers used our category sustainability surveys to report their progress to their retail buyers, up 25 percent from the previous year. These suppliers represented over $200B in sales to their retailer partners. This number is even bigger if we consider that any of the changes that these manufacturers make to their products or processes will benefit all their consumers.
So, we know participation in using TSC’s KPIs is up and the numbers sound big – but is anyone doing anything differently because of it?
In early 2017, we asked suppliers who had taken TSC training to share their experiences about responding to the TSC survey. Over 250 suppliers responded, and 40 percent of them replied positively that they had done something tangible to improve their KPI scores – created internal data collection and communication systems, engaged suppliers, changed products or processes, or begun to communicate publicly about their sustainability efforts.
Let’s drill down a bit more. Here’s one of the comments we received:
“We started data collection 6-7 months earlier than the survey deadline and supported all suppliers to set up their energy records and GHG inventory.”
Every organization wants to know, ‘What difference am I making?’
How many dozens or hundreds of this manufacturer’s suppliers are now tracking and improving their energy efficiency and reducing their GHG reductions? How many of the other 2,000+ manufacturers are doing the same with their supply base? In the next several years we’ll be able to gather more quantitative measurement of our collective impact on the planet, but we’re beginning to see the qualitative evidence that our theory of change is working.
TSC stakeholders are eager to act: Now that we know the hotspots, let’s get on with it! In 2016, TSC initiated several member-driven projects, such as the Agricultural Metrics Task Force, Circular Economy toolkits, Common Chemical Criteria Task Force, and the Cold Water Saves campaign. TSC was also significantly involved in supporting the corporate deforestation commitments made by the Consumer Goods Forum and under the New York Declaration on Forests. TSC’s unique membership base, representing corporate, NGO, and academic stakeholders, across different industries and parts of the supply chain, will continue to provide fertile ground for significant, pre-competitive collaboration.
Our 2017 Impact Report is presented in a serial fashion, so that we can highlight different stories of our progress throughout the year. Thanks for joining us on the journey.
When retailers and brand manufacturers agree to be stewards of our social and natural capital on behalf of their consumers, market forces can create positive change.
Preview of 2017 Impact Report
Dr. Kevin Dooley, Chief Scientist at TSC
Download the Impact Report preview presentation to follow along with the video.
ABOUT US
But who is TSC?
The new TSC website provides a kaleidoscope of who TSC is: our mission, people, partners, projects, and products. The 2016 Impact Report also has several sections explaining TSC’s role in market-driven sustainability.
But who is TSC?
TSC has always been a collaborative between leading organizations, across sectors, supply chain roles, and stakeholder types. In our early days, the collaboration was driven by a profound but simple mantra: Let’s use science to make consumer products more sustainable. We identified social and environmental hotspots using scientific publications, demonstrating that science can provide the objective guideposts for a shared understanding of what matters the most.
In TSC’s middle years, our focus was developing KPI-based surveys that manufacturers can use to report sustainability progress to their retail buyers. The collaboration shifted from interpreting science to developing business tools. While the tools needed to be true to the science, they also needed to be practical and effective in incentivizing change. The network of collaboration also grew – we now depended on a village of strategic business partners to make the whole system functional.
Moving into our ninth year, the nature of that collaboration is changing yet again. As Walmart and other retailers have implemented their reporting platforms, thousands of suppliers, who didn’t know TSC existed until now, are being asked to measure and report their sustainability performance. Now TSC has the opportunity and responsibility to extend its collaboration network beyond its members and partners – to have impact broadly in the consumer goods space. Our members and partners will be critical to our success in reaching this broader audience.
Our members and partners also see collaboration turning a corner – from understanding and measuring to acting on social and environmental hotspots. Now more than ever it’s apparent that “TSC” is not the staff in Arkansas, Arizona, Netherlands, etc. TSC is a Consortium, and it’s the members and partners of that Consortium that create the vision of what TSC needs to do to help save the planet, and the members and partners who need to work together to reach that next level of impact.
Click here to learn more about our theory of change.
IMPACT
The Call for Collective Action Across Supply Chains
TSC’s 2016 Impact Report, “Greening Global Supply Chains: From Blind Spots to Hotspots to Action” illustrated the case for more sustainable consumer goods, which lies at the core of TSC’s mission. Buried within TSC work and research is a very simple story: Consumer goods feed and advance a growing world population. But even as they advance our society, they create a huge cost and burden on our environment and other people around the world. TSC research with our members and partners shows that when you have true visibility in your supply chain, then and only then can you create more sustainable products for a sustainable planet.
Impact reports measure impact. They also can help us spot trends and actions we can only see from the mile-high viewpoint. Deep dives into TSC methodology reveal proven measurement systems and innovations, big gains and some losses in measuring progress, and impacts seen in the subtle actions taken by thousands of companies around the word turning their attention to the issue at hand. This wave of action, or collective action, is coming – we see it very plainly in the numbers, the projects and the daily conversations we have with companies.
What does sustainability impact look like to TSC? It looks like companies integrating sustainability into their every day actions. It looks like suppliers signing up to measure their sustainability progress even when the answer is “I don’t know”. It looks like retailers such as Walmart, Kroger, Amazon, Walgreens and others recognizing the cost efficiencies and risk management that come with using the TSC approach and tools. Collective action is here and happening. This year, TSC is focusing our impact story on the wave of engagement and collective action that has been a long time coming but is now here to stay.
Collective action in the numbers: When looking at the responses to TSC surveys used by retailers in 2016, the trend from suppliers is clear. Participation rate in the survey increased by 66%, signaling that suppliers are recognizing that their sustainability performance is being taken into account by merchants. The overall average KPI scores for suppliers remained roughly the same between 2015 and 2016. If many of the new respondents in 2016 were smaller companies with less mature sustainability programs, then it’s possible their slightly lower scores may have been offset by slightly higher scores by suppliers who reported in 2015. We also know that many changes to products, processes, and supply chains take more than one year, so we expect improvements to be seen in 2017 and beyond.
Collective action in their words: Over 40% of suppliers from the Index stated that they took action in their own operations and supply chains to improve their scores. They indicated they are:
Collective action in consumer demands: Consumers demanding transparency in their product choices creates a strong economic imperative for taking action. Kenny Kline of Inc states, “Consumers want to know more than what’s in your products. They want detailed insights regarding where you sourced your materials, how the product was made, what values guided the production process.” Consumer trust is sacred. Forward-thinking companies realize that they need to engage and act on this demand, not just because of the benefits of producing more sustainable products, but also because the risk of turning off consumers can affect their bottom line.
Collective action at the company level: Companies are realizing the value of visibility within their supply chains. Taking action is good for stock value and shareholder returns. Understanding their supply chains lowers risks, which is good for investors. Companies are asking questions, identifying their priorities, and declaring corporate strategies and goals around sustainability. The growing number of sustainability conferences, and their large attendance, portray a business community that is eager to learn from one another and make collective progress. It’s a movement and it’s growing.
Sustainability organizations are often criticized that they’re “all talk and no action”. There is a place for discussion and debate and there is a time for action. This growing collective action among suppliers, companies, consumers and more assures that action is the only path forward. In 2017, TSC remains committed to our $1 trillion goal – to cover $1 trillion in retail sales over the next (now) 4 years. This movement is helping us get there.
That’s why we’re calling this year’s impact report “The Call for Collective Action Across Supply Chains”. TSC calls our members, partners and those around the globe working on or caring about sustainability to create real impact at scale through collective action around more sustainable consumer goods. Throughout this report you will see examples on how TSC and TSC members are doing just that.
PART 1
Unable to Determine at this Time
In 2016, over 2,000 suppliers used our category sustainability surveys to report their progress to their retail buyers, up 25 percent from the previous year. The year-on-year growth in the number of survey responses suggests more companies see the importance of managing sustainability proactively. Additionally, there is a growing willingness among retailers to get more of their suppliers involved.
These suppliers represented over $200B in sales to their retailer partners. Also in 2016, there were over 64,000 responses to our KPIs, with more than half of the responses scoring below 10%. Of the responses that scored under 10%, 70% of those choose “unable to determine at this time” as their responses.
The shape of this chart may be surprising. Why are there so few responses in the space between “we are unable to determine…” and 100%? It seems that once companies begin to assess an issue, they quickly progress to assessing it for all of the relevant suppliers, facilities, or products. And for some, the desire to improve their score will act as an additional incentive.
The silver lining is of course that companies are reporting even if it means revealing that they have significant room for improvement. Although awareness and activity in sustainability for consumer goods is likely higher than it has ever been, it should come as no surprise that the most companies are still at the beginning of their sustainability journey. Leaders continue to lead and demonstrate the value and possibilities in pursuing sustainability. Many may be building the relationships, networks and systems they need to be able to report in the future. But, how do we change the shape of this chart? How do we shift response away from “we are unable to determine…” to 5, 10, 50%?
We know that suppliers are working hard to improve their KPI scores through creating the internal infrastructure they need to move forward: awareness, training and education, data collection, project management, supplier engagement, and improvement processes. Once the infrastructure is in place, suppliers are able to make rapid progress as they can address multiple sustainability issues at once, spreading responsibility and opportunity for sustainability throughout the organization.
Together, TSC, our members, and our partners can help and support suppliers to change these numbers and change the way they report them. Some already are making gains, others haven’t started yet. It is the call for collective action from retailers, suppliers, manufacturer, NGOs and everyone involved in creating more sustainability consumer products that will help us make real changes to these charts, bringing impact at scale to a system already set in motion.
PART 2
64 and Over Club
What do diapers, computers, household papers, leafy vegetables, and automotive batteries have in common? They were the five product categories in 2016 surveys whose average survey scores were equal to or greater than 64 out of 100. What is it about these product categories that enable respondents to provide more data about their value chains? Taking a deeper look into a couple of these product categories shows some of the possible reasons for the higher scores.
Firstly, leafy vegetables: The stages of the leafy vegetable value chain are shown in the figure below. From production, leafy vegetables go directly to packaging and then are distributed to retail, resulting in a relatively “short” supply chain. Retailers generally source this type of produce directly from growers, or from brokers that work directly with growers and then sell directly to consumers. As a result of this short supply chain, there is the opportunity for more visibility into the social and environmental hotspots that are associated with leafy vegetable farming.
But not all value chains are so short. Diapers, another category than had an average KPI score above 64, is a complex product made of many materials.
HOTSPOT 1
Access to opportunities for smallholder farmers – On-farm
Operators of small-sized farms, especially women, face a number of challenges including access to agricultural inputs, services, and markets.
HOTSPOT 2
Energy consumption – On-farm:
Fuel combustion and energy generated to power farm operations can cause climate change, deplete resources, and impact human health.
HOTSPOT 3
Fertilizer application – On-farm:
Fertilizer use can cause soil and water quality impacts, and can contribute to climate change.
HOTSPOT 4
Labor rights – On-farm:
Farm workers are at risk of several labor rights issues such as unfair pay, discrimination, and sexual harassment and assault.
HOTSPOT 5
Pesticide application – On-farm:
Pesticide use can impact biodiversity, soil and water quality, and human health.
HOTSPOT 6
Supply chain traceability:
Due to the complexity of leafy vegetable supply chains, information about where the supply chain originates is limited, which is a challenge to improving issues.
HOTSPOT 7
Worker health and safety – On-farm:
Workers may be exposed to dust, chemicals, or other hazards on the farm.
Diaper manufacturing is a relatively mature industry. Hypercompetition had led to low margins, driving consolidation and vertical integration. The materials in a diaper drive both its cost and carbon footprint, so efforts aimed to reduce one have reduced the other as well. The high degree of vertical integration increases the ability of a diaper manufacturer to connect with the different facilities across the product’s life cycle and build relationships with each of the component manufacturing facilities along the value chain.
HOTSPOT 1
Land transformation – Paper pulp sourcing:
Improper forest management can lead to biodiversity loss, water and soil impacts, and climate change.
HOTSPOT 2
Energy consumption – Processing:
Electricity generated to power plastics conversion can cause climate change, deplete resources, and impact human health.
HOTSPOT 3
Energy consumption – Super-absorbent polymer manufacturing:
Electricity generated to produce absorbent materials can cause climate change, deplete resources, and impact human health.
HOTSPOT 4
Hazardous material use – Bleaching:
Chlorine bleach used during raw material processing can cause emissions that impact environmental and human health.
HOTSPOT 5
Energy consumption – Manufacturing:
Energy generated to produce diapers can cause climate change, deplete resources, and impact human health.
HOTSPOT 6
Packaging disposal – Resource impacts:
Low recovery of packaging material results in depletion of resources and environmental and social impacts from extracting raw materials.
HOTSPOT 7
Landfill emissions – Product disposal:
Landfilling can cause emissions that lead to climate change.
HOTSPOT 8
Product disposal – Marine litter:
When improperly disposed of, diapers can end up in oceans and on beaches.
The electronics industry has a history of working together, in part to address the benefits of having common technical standards, and in part to address regulatory issues in a shared and standardized way. As the sector turns to addressing sustainability issues, it has these long-standing partnerships and strong industry associations, like EICC, to facilitate progress. The computer category in particular has benefitted from broadly adopted eco-certifications, like ENERGY STAR(c) and EPEAT, which has helped drive sector manufacturers to focus on the key sustainability issues within their own operations and their suppliers.
HOTSPOT 1
Mining operations, conflict zones:
Workers experience human rights abuses from armed groups at certain mining sites.
HOTSPOT 2
Chemical Use – IC manufacturing, photolithography:
Gases used during integrated circuit (IC) manufacturing can cause climate change.
HOTSPOT 3
Electricity Consumption – IC manufacturing:
Electricity generation to power integrated circuit (IC) manufacturing facilities can cause climate change.
HOTSPOT 4
Chemical Use – LCD manufacturing, photolithography:
Chemicals used in liquid-crystal display (LCD) manufacturing processes can cause climate change.
HOTSPOT 5
Electricity consumption – LCD manufacturing:
Electricity generation to power liquid- crystal display (LCD) manufacturing can cause climate change.
HOTSPOT 6
Worker Exploitation – Component manufacturing, electronics:
Workers are exposed to unsafe working conditions and experience human rights violations.
HOTSPOT 7
Electricity consumption – PWB manufacturing:
Electricity generation to power printed wiring board manufacturing (PWB) can deplete resources and cause climate change.
HOTSPOT 8
Electricity consumption – Product manufacturing:
Electricity generation to power manufacturing facilities can cause climate change.
HOTSPOT 9
Worker exploitation – Product manufacturing, electronics:
Workers can be exposed to unsafe working conditions and experience human rights violations.
HOTSPOT 10
Electricity consumption – Product operation:
Electricity generated to operate laptops and computers can cause climate change.
HOTSPOT 11
Product disposal – Informal recycling, unsafe recovery methods:
Workers, communities, and the environment may be exposed to heavy metals and other chemical emissions.
HOTSPOT 12
Product disposal – Battery disposal:
Improper handling of batteries at end-of-life may expose workers to heavy metals.
HOTSPOT 13
Product disposal – Handling and treatment:
Workers may be exposed to potentially hazardous dusts.
HOTSPOT 14
Product disposal – Incineration:
Incineration of plastics and other components create emissions that impact humans and the environment.
HOTSPOT 15
Product disposal – Landfilling:
Landfilling reduces device or material reuse, refurbishment, and recovery, and may release hazardous chemicals into the environment.
The category of household papers, which includes products such as toilet tissue, paper towels, facial tissue, and paper napkins, was another high scoring category. Like Diapers, the underlying sector is mature, with the leading brands having long-standing sustainability programs, and having great supply chain visibility via higher levels of vertical integration. The KPIs that averaged the highest scores within the category all related to sustainable forest certification, which highlights the critical role that these systems have played.
HOTSPOT 1
Community rights – Forestry operations:
Local communities can be negatively affected by forestry operations due to loss of land use, timber rights, and cultural heritage.
HOTSPOT 2
Illegal logging – Forestry operations:
Harvesting timber illegally may lead to biodiversity loss and impact land rights of local communities.
HOTSPOT 3
Labor rights – Wood sourcing:
Forestry operations may use child labor as well as violate other labor rights.
HOTSPOT 4
Land conversion and deforestation – Forestry operations:
Ineffective forest management can lead to environmental impacts and climate change from deforestation.
HOTSPOT 5
Pesticide application – Wood sourcing:
Improper pesticide use can impact biodiversity, water quality, and human health.
HOTSPOT 6
Soil disturbance – Wood sourcing:
Improper forest harvesting can lead to erosion and loss of nutrients in the soil.
HOTSPOT 7
Worker health and safety – Forestry operations:
Workers can develop serious health problems from poor working and living conditions in addition to physical injury from other occupational hazards.
HOTSPOT 8
Chemical use – Pulp production:
Chemicals used for pulping and bleaching can pollute the environment.
HOTSPOT 9
Energy consumption – Pulp and paper production:
Energy generated to power manufacturing processes can cause climate change, damage the environment, deplete resources, and impact human health.
HOTSPOT 10
Water use – Pulp production:
Water use during pulp and paper manufacture can deplete freshwater resources.
HOTSPOT 11
Worker health and safety – Pulp:
Workers can develop serious health problems from exposure to the chemicals used to make pulp and paper and physical injury from other occupational hazards.
HOTSPOT 12
Packaging disposal – Resource impacts:
Packaging material with low recovery rates, like poly film, result in depletion of resources and environmental and social impacts from extracting raw materials.
Finally, the automotive batteries category: As in some of the other high scoring categories, leading brands are larger and more mature. The highest scoring KPIs in the category involved worker health and safety, where the industry has invested in systems and technology. Also scoring high were KPIs involving product stewardship and recycled content, demonstrating the category’s commitment to closing the loop.
HOTSPOT 1
Resource extraction – Conflict minerals:
Workers experience human rights abuses from armed groups at certain mining sites.
HOTSPOT 2
Resource extraction – Lead mining:
Lead mining and refining can cause acidic runoff which leads to impacts to the ecosystem.
HOTSPOT 3
Energy consumption – Lead production:
Energy generated to produce lead can cause climate change, deplete resources, and impact human health.
HOTSPOT 2
Resource extraction – Lead mining:
Lead mining and refining can cause acidic runoff which leads to impacts to the ecosystem.
HOTSPOT 3
Energy consumption – Lead production:
Energy generated to produce lead can cause climate change, deplete resources, and impact human health.
HOTSPOT 4
Energy consumption – Plastic production:
Plastic production is energy intensive and can emit gases that lead to climate change and pollution.
HOTSPOT 5
Electricity consumption – Battery manufacturing:
Energy generation to power battery manufacturing and recycling can cause climate change and pollution.
HOTSPOT 6
Lead emissions – Battery production:
Battery manufacturing and recycling with inadequate air quality controls can lead to pollution and human health impacts.
HOTSPOT 9
Worker health and safety – Battery supply chain:
Recovering lead from recycled lead-acid batteries may lead to human health impacts in workers.
HOTSPOT 5
Electricity consumption – Battery manufacturing:
Energy generation to power battery manufacturing and recycling can cause climate change and pollution.
HOTSPOT 6
Lead emissions – Battery production:
Battery manufacturing and recycling with inadequate air quality controls can lead to pollution and human health impacts.
HOTSPOT 7
Worker health and safety – Battery manufacturing:
Workers in battery manufacturing facilities can develop serious health problems due to exposure to hazardous materials.
HOTSPOT 8
Battery disposal – End of life:
Lead released during improper battery disposal can lead to environmental and human health impacts.
HOTSPOT 8
Battery disposal – End of life:
Lead released during improper battery disposal can lead to environmental and human health impacts.
HOTSPOT 8
Battery disposal – End of life:
Lead released during improper battery disposal can lead to environmental and human health impacts.
HOTSPOT 9
Worker health and safety – Battery supply chain:
Recovering lead from recycled lead-acid batteries may lead to human health impacts in workers.
HOTSPOT 8
Battery disposal – End of life:
Lead released during improper battery disposal can lead to environmental and human health impacts.
In summary, high scoring categories are characterized by the category’s brands doing well on many things, and doing excellent or near perfection on a few things. Some of this excellence has to be attributed to individual brands who have taken leadership on sustainability for many years now, and part can be attributed to the collaboration that exists within supply chains and even across competitors.
Interested in learning more about the sustainability issues around our everyday consumer products? Visit our ProductFinder search tool to search and download Sustainability Insights.
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Downloads
Greening Global Supply Chains: From Blind Spots To Hotspots To Action
2016 Impact Report
The report showcases a consistent, science-based measurement and reporting system that can serve as an important barometer for the entire consumer goods industry globally. It was vetted by more than 100 diverse stakeholders to assist both manufacturers and retailers in improving transparency and making progress towards their goals for addressing key environmental and social impacts within their product supply chains. Additionally, TSC sets a goal to create a consumer goods eco-system using a common approach to measuring and tracking the product sustainability of $1 trillion of retailer sales over the next five years.
The Call for Collective Action Across Supply Chains
2017 Impact Report
2017 represents a landmark year for TSC as we can now begin to see evidence of the real business change happening due to the work we have done together. In 2016, over 2,000 suppliers used our category sustainability surveys to report their progress to their retail buyers, up 25 percent from the previous year. These suppliers represented over $200B in sales to their retailer partners. This number is even bigger if we consider that any of the changes that these manufacturers make to their products or processes will benefit all their consumers. Our 2017 Impact Report is presented in a serial fashion, so that we can highlight different stories of our progress throughout the year. Please stay tuned and thanks for joining us on the journey.
TSC is funded primarily by contributors and members. To make a tax-deductible donation to support TSC and its mission, donate now.