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Mel Wilson PricewaterhouseCoopers LLP

Environmental certification of products and supply chains. Mel Wilson PricewaterhouseCoopers LLP. Overview of this presentation. Changing view of business Current environmental certification schemes Potential future certification area. ‘Traditional’ view of a company. Owners. Suppliers.

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Mel Wilson PricewaterhouseCoopers LLP

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  1. Environmental certification of products and supply chains Mel Wilson PricewaterhouseCoopers LLP

  2. Overview of this presentation • Changing view of business • Current environmental certification schemes • Potential future certification area

  3. ‘Traditional’ view of a company Owners Suppliers Customers Management Employees

  4. Modern view of a company Owners Special interest groups Communities Suppliers Customers Management Employees Potential investors Governments

  5. More realistic view of a company Owners Sp. Int. Groups Communities Customers Management Suppliers Potential investors Governments Employees

  6. Supply chain in the spotlight sp. interest groups governments communities owners customers employees potential investors Suppliers Management What happens in your supply chain will eventually be known by your other stakeholders. This can have positive – or negative – business impacts.

  7. Natural environment Society Science Ethics Spectrum of issues re supply chain Community impacts Air pollution Climate change Hiring practices Human rights Health impacts Biodiversity Product safety Chemical use Workplace conditions

  8. Purpose of supply chain ‘certification’ • Environmental certification of supply chain: • Confirms that suppliers meet agreed upon standards • Identifies potential areas of risk • Operational • Legal • Financial • Reputational • Gives ‘comfort’ to your customers

  9. Three main types of certification • Process / Management System • Chain of Custody • Product Facility Product Custody Chain Facility Facility

  10. Process / Management System Certification • Determines whether the management processes and practices at a facility / operation meet specified environmental standards. • Examples: • ISO 14001 EMS Standard • CSA’s Sustainable Forest Management Standard • Sustainable Forestry Initiative • Forest Stewardship Council Standard • Responsible Care

  11. Chain of Custody Certification • Confirms that environmental standards have been met along the entire value chain, from initial production to customer delivery. Most common in forest products industry. • Forest Stewardship Council (various certifiers) • Program for the Endorsement of Forest Certification (PEFC) • PricewaterhouseCoopers certification

  12. Product certification • Confirms that the product performs in accordance with or meets specified environmental criteria. Examples: • EcoLogo (Canada) • Green Seal (US) • EnergyStar • PEFC

  13. Emerging trend: ‘carbon footprint’ of supply chain • Regulation of carbon emissions, through new product standards, taxes, and trading schemes is increasing as governments strive to meet their Kyoto objectives and commit to longer term carbon reduction strategies. • Managing ‘carbon footprint’ of supply chain will help organizations manage operational, legal, financial, and reputational risks relating to climate change. • But there are challenges…

  14. Total carbon generated Generic cumulative carbon footprint Use / dispose Deliver to customer Distribution centre Central warehousing/ Manufacturing site Supply chain Shipment Far East supplier Raw materials

  15. Balancing carbon benefits and impact on P&L Impact on CAPEX • Develop low carbon products/ services • Build new eco-factory Further assessment required • Make assets eco-friendly Impact on OPEX Impact on Profit and Loss • Purchase offsets • Switch to bio-diesel Cost neutral Win win • Change central warehouse location • source components from China Cost savings • Reduce / change packaging Positive Poor Medium Benefits regarding carbon footprint reduction

  16. Managing carbon often pays for itself CO2 reduction Cost reduction Achievements in energy efficiencies Achievements in process efficiencies Improvements in logistics and transportation performance Improvements in logistics and transportation performance Improvements in manufacturing and supplier performance Carbon = energy = money

  17. Potential certification: ‘Carbon Friendly’ • Management processes and practices at facility / operational level • Energy efficient processes • Reduction or offset programs in place • Chain of custody • No mixing of “high carbon” products • Energy efficient transportation / distribution • Product certification • Energy efficiency • Take-back schemes

  18. Certification already starting at grassroots level Carbon Reduction Institute (Australia) Three types of operations/product certification: No CO2, Low CO2, and Carbon Neutral Carbon Certification of BioFuels For tax benefits, manufacturers of biofuels must certify carbon reductions compared to regular fuels

  19. Conclusion • Environmental certifications have tended to focus on • Management systems • Chains of custody • Products • Significant activity in forest products industry but principles same for all industries • Potential area of future growth: carbon certification for supply chains and products.

  20. Thank you • Mel Wilson • mel.j.wilson@ca.pwc.com • (403) 509-7338

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