Benefits of public sustainability reporting to electronics-industry supply chains

by Nikki Pava, TFI Environment Consultant

In the May 21st TFI Friday Best of Blogs, we pointed to the electronic-product companies’ (OEMs) complete swing from vertically-integrated manufacturing in the 1980s, to outsourcing the entire supply chain a decade later. In the current outsourcing model, it is necessary for OEMs big and small to ensure that the materials in their products are from ethical sources, that all companies they work with uphold fair labor standards, and that they do everything possible to avoid being connected with a disreputable supplier with egregious environmental violations. Having your supply chain and operations be as transparent as possible to customers, investors, and non-government organizations is one of the best ways to reduce risk.

Fostering transparency are many frameworks that a technology company can use, depending on the aspect of sustainability goals and objectives. For example, electronics companies have settled on using LEED as the framework for green buildings and the Carbon Disclosure Project for reporting their carbon emissions and plans to reduce them. Many companies involved in electronics supply-chain management are ISO 14001 certified, addressing continual environmental improvement of operations.

I consider the Global Reporting Index (GRI) to be a particularly effective framework, because it helps management to ensure that a wide spectrum of business decisions lead to continuously improving sustainability performance. Companies within the electronics supply chain — including OEMs, contract manufacturers, and component/materials suppliers — could greatly benefit from this recognized, public sustainability-reporting framework. Notable large players in the electronics industry, including Samsung, Applied Materials, and IBM, all reported to the GRI in 2009.

When a company publicly shares all of its sustainability information, it demonstrates management’s commitment to pursuing sustainable business practices. The GRI makes the information public, so potential customers or investors have quick access to this information. Additionally, as more companies are putting more scrutiny into the types of suppliers they select, they look to create relationships with companies that have similar values. Thus, by using the GRI reporting framework, management can quickly assess other companies’ environmental performance, human rights record, and regulatory actions before collaborating with them.

There are two parts to the GRI: first, it’s a “network-based organization that has pioneered the development of the world’s most widely used sustainability reporting framework, and is committed to its continuous improvement and application worldwide.” Second, the framework itself is a set of indicators and principals that companies can use to measure all parts of their business operations (economic, environmental, and social performance). The framework allows for comparisons between companies, as well as for benchmarking and informed target setting.

If you would like to learn more about the GRI and become a Certified Training Partner in the USA, I recommend that you attend the upcoming conference hosted by the ISOS Group and Triplepundit. It will take place at the Faculty Club at the University of California Berkeley, on July 29-30. Please let me know if you would like to register: NPava@TFIenvironment.com.

What do you think: does public sustainability reporting truly benefit supply-chain management? Please reply at the bottom of the blog.

Posted by Pamela J. Gordon, July 1st, 2010