Corporate Value Chain Approach to Measuring Material Impacts

Sep 1, 2011 3:00 PM ET

Corporate Value Chain Approach to Measuring Material Impacts

By Agnieszka Rum 

A few weeks ago, CBSR facilitated “Measure What Matters” Retail Learning Circle, attended by a group of leading Canadian retailers & consumer goods companies and hosted by Canadian Tire. The aim was to brainstorm material issues across the value chain - each stage of the product including sourcing and disposal, explore how to link sustainability metrics to business planning, and consider already existing international and industry initiatives to adopt.

Identifying and agreeing on what the most material (or important in the context of business and stakeholder risks and priorities) issues are, across the value chain is not always obvious – and depend on the value chain segment of a given product. For example, water is less material to manage and report on if your company is manufacturing products in Canada, however, if the manufacturing occurs in India - where freshwater resources are scarce - materiality becomes high.

Therefore, embedding water in your sustainability strategy and reporting on performance becomes more necessary. Consequently, the importance of some key metrics clearly shifts depending on (1) the issue measured and (2) its position in the value chain. These are important considerations for Canadian companies. 

In terms of monitoring performance, the Retail Learning Circle participants identified areas that are commonly measured, such as emissions, energy, and waste. They also identified measurement gaps, many of which are quite common – such as the sourcing of materials, and impacts generated through consumer use. It was agreed that there is a need to improve measurability and access to performance data for those stages over which retailers have less control.

Identifying the need to measure impacts across the value chain is one step. Making it happen, however, is another hurdle. The following represent three key “take-aways” from the session, which address this challenge. 

Understand ’hotspots’ and their respective impacts
Isolating each stage of the value chain and understanding impacts on a product-level is definitely a challenging task, especially for companies with thousands of products where a full account of impacts on a product level is labour-intensive to obtain. However, understanding ‘hotspots’ (or, risky areas) is essential to appropriately managing and prioritizing relevant risks.

Understand potential cost-savings and engage senior leadership
Generating an account of potential cost savings from sustainability initiatives is important – as this can represent a ‘key catalyst’ behind senior leadership commitment. Furthermore, assigning metrics to senior management engagement on sustainability is conducive to escalating commitment, in order to get initiatives off the ground, and to allocating higher levels of priority to measurement.

Take a systems approach and collaborate
Ultimately, a shift from ‘silos’ to an integrated systems approach in managing and reducing impacts is instrumental to drive positive change. Collaboration among various business units, buyers, suppliers, and peers needs to happen to deliver positive results both efficiently and effectively. For instance, industry collaboration on consumer facing education is crucial to mitigate the material impacts generated through consumer use.

The next potential topics the group would like to narrow down on are (1) embedment of sustainability priorities and metrics into the corporate structure (along with the business strategy) and (2) exploring opportunities to work together with suppliers. The discussions from these additional Retail Learning Circles will facilitate the actual implementation of the above “take aways”.

Many thanks to the participating companies and experts, who have contributed to the Retail Learning Circle discussions: Canadian Tire, Mountain Equipment Coop, The Pineridge Group, Sears, Tim Hortons, VF Outdoors Canada, Five Winds, International Institute for Sustainable Development, Sobeys and Sustainalytics.

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