SUPPLY CHAIN & INFORMATION SYSTEMS AND SUSTAINABILITY

Frameworks for Impact Analysis in Sustainable Supply Chains

As pressures for supply chain transparency increases, supply chain professionals are assessing how their products and operations create impacts on people and the environment. Numerous methods exist for gaining a data-driven, evidence-based understanding of material environmental and social risks and opportunities. 

It is common to contract with consultants, academia and/or nonprofits with the relevant scientific and technical expertise needed for such in-depth analysis. However, today’s supply chain professional must be familiar with the evaluative approaches so they can be informed partners.

Below are three common techniques supply chain professionals should be familiar with for scientifically assessing social and environmental impacts:

    • Life-Cycle Assessment
    • Environmental Impact Assessment
    • Social Impact Assessment

Life-Cycle Assessment

Leading supply chain professionals, often working with colleagues across the enterprise, develop a data-driven understanding of the full environmental and human health cost and impact of products and services. One of the main tools for doing so is Life-Cycle Assessment (LCA). According to the U.S. Government’s General Services Administration’s Sustainable Facility tool, LCA “aims to quantify the environmental impacts that arise from material inputs and outputs, such as energy use or air emissions, over a product’s entire life cycle…typically a ‘cradle-to-grave’ approach, which begins with the gathering of raw materials from the earth to create the product and ends at the point when all materials are returned to the earth.”

LCA’s are highly complex demanding disciplinary expertise across industrial engineering, environmental engineering, environmental health and safety, supply chain, ecology and many other fields depending on the industry and location. There are benefits and challenges to doing an LCA that today’s supply chain professional should be aware of.


See case examples below of how LCA provides supply chain insights for like Levi Strauss, Nike & Dell.

What is the total environmental impact of a pair jeans? Levi-Strauss did a LCA to answer this question. They hired a firm to look at a pair of Levi’s 501 jeans, a pair of Levi’s Women’s jeans, and a pair of Dockers Signature Khakis to quantify impact on water, land and climate. Among the revelations, “Washing every 10 times a product is worn instead of every 2 times reduces energy use, climate change impact, and water intake by up to 80%.” As a result, today they have a product line called Waterless Jeans.

LCA can drive product and packaging innovation and develop new standards for material or packaging choices. In 2012, Nike rolled out a “Nike Materials Sustainability Index” identifying environmentally preferred materials for their footwear. Nike MSI covers four critical impact areas: Chemistry, Energy and Greenhouse Gas Intensity, Water and Land Use Intensity, and Physical Waste. Nike’s Sustainable Materials and Innovation is industry leading and they are a co-founder of the Sustainable Apparel Coalition which aims to standardize an LCA approach across apparel brands.

Your computer has a carbon footprint even before you started using it. Dell has created a system to measure this footprint, what it calls Product Carbon Footprints (PCFs) for its products using PAIA (Product Attribute to Impact Algorithm). PAIA is a LCA tool created by MIT’s Materials System Laboratory in collaboration with Arizona State University, and University of California at Berkeley.

Environmental Impact Assessment

An LCA can help assess the full impact of a product, but another technique is needed when evaluating capital projects, raw material sourcing, and making procurement decisions. A key tool for such decision-making is the environmental impact assessment. According to the Convention on Biological Diversity, an environmental impact assessment (EIA) is “a process of evaluating the likely environmental impacts of a proposed project or development, taking into account inter-related socio-economic, cultural and human-health impacts, both beneficial and adverse.”

EIA involves a step-by-step process to first screen projects to determine whether an EIA is necessary and if so determine socioeconomic and environmental impacts and mitigation steps.

See case examples below of how EIA provides supply chain insights into gold mining in the Amazon and phosphate mining in the United States.

Children playing in Amazon river

Demand for gold is increasing due to the growth in electronics industry, electric vehicles, smart devices, and wireless technology. Supply chains in these industries depend on a reliable and sustainable supply. This case study demonstrates how necessary an environmental impact assessment approach is to responsible supply management.

Recent data from six Amazon countries, identified 2,312 illegal mining sites, 245 of which were large-scale operations involving removal of native forests and polluting rivers with mercury.

“The problem is worse than at any other time in history. We wanted to give visibility to the enormity of an issue that doesn’t respect borders,” one of the researchers stated in this NY Times article.

The Cheswick power plant in Springdale, Pa. Photo: Reid Frazier

Phosphate is a $75 billion market and necessary input for modern life, feeding critical industries like fertilizers, detergents, and water treatment. Supply chain managers are challenging to source this vital feedstock in a responsible and cost-effective manner. An EIA perspective and process can help reduce or avoid the heavy environmental costs the industry can exact on our communities.

Since the late 1800s, most U.S. phosphate has come from Florida. The industry has provided much needed jobs while also exacting a cost on the landscape, on human health and on outdoor recreation, especially on the Peace River.

A phosphate mining company is eager to expand operations and concerns about contamination and fish kills are rising. For the people who relay on on the Peace River, weighing the economic benefits against the costs has become a reality of life and livelihood.

Social Impact Assessment

To accurately account for all relevant costs, risks, and opportunities for innovation in the supply chain, social impacts must also be carefully examined.

According to the the International Association of Impact Assessment, social impact assessment (SIA) is the process of “analysing, monitoring and managing the intended and unintended social consequences, both positive and negative, of planned interventions (policies, programs, plans, projects) and any social change processes invoked by those interventions. Its primary purpose is to bring about a more sustainable and equitable biophysical and human environment.”

Another important framework for social impact assessment to mention here is AccountAbility’s AA1000 Stakeholder Engagement Standard which provides guidance on mapping, evaluating and serving the needs of stakeholders.

See case examples below that illustrate how SIA provides supply chain insights sourcing lithium and sugar. 

The world needs an abundance of lithium as the production of electric cars ramps up. However, the mining of lithium comes with its own environmental and social costs.

A project in Nevada (United States) known as Lithium Americas is facing staunch resistance from a Native American tribe, ranchers and environmental groups. The project is forecasted to us billions gallons of ground water and, the groups claim, potentially contaminating much of it for 300 years. The lithium mining process also can leave behind mountains of waste rock and sediment.

“Blowing up a mountain isn’t green,” says one of those protesting the mine, “no matter how much marketing spin people put on it.”

Sugar has been in demand by humans for centuries and too often accompanied by slave and/or forced labor conditions.  In the Dominican Republic, sugar plantation workers still use machetes, earn as little as $3/day and can work into their 80s. 

The workers are protesting poor working and living conditions. Cane cutters interviewed for the story explain they feel trapped since they are forced to go into debt.

Children playing in Amazon river

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