The Chain Is Real

The other day I’m having a call with a vendor and we get to that point early in the conversation where we ask each other what we do. They being a vendor, I know what they do, in the sense that their software is useful to us and I am familiar with it. But what he does at the org is a bit of a mystery to me. Something like product marketing he tells me and the purpose of our call is to get me to speak to a user group made up of fellow geeks from many of their other clients. Then he asks me what we do, meaning Tablecloth, and I tell him.  “We make sure companies aren’t just making a profit but are also doing right by the planet, their communities, their employees and their shareholders.” I’m pleased with myself for the concise nature of the pitch and note it for later.  He then says he used to work for BofA and they used to send a survey to all of their suppliers asking them to fill out a bunch of information about their business practices, gender and race/ethnicity makeup of their orgs, etc. “You mean like that?” He asked.  “Yep. Just like that.” “That’s a great business,” he said. “Everyone has suppliers. Everyone has that pain.” Sustainable Supply Chains have been a focus for CPGs and industrial manufacturing for a while now, but as my friend mentioned, when we talk about supply chains we are really talking about everyone who provides a product or service. The core matters at hand are traceability and risk: how do you trace your supply? And what risks are created by drawing from that particular source? For a long time, companies that rely on materials extraction are the leaders in sustainability practices when it comes to supply chain management. What we know now is largely due to their work. But first, let’s talk about why supply chains matter.

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Carbon Footprint and Problematic Materials

When it comes to carbon emissions, supply chains are responsible for up to 80% of the total carbon footprint of all goods produced. In other words, supply chains are responsible for 5.5 times the amount of carbon emissions than a company’s direct emissions. Over 30% of forest loss comes from commodity production and only 17% of suppliers can trace commodities back to the forest, plantation or farm where they originated. It’s worse in Asia and South America, where the 60% of deforestation is due to commodity production.

According to the World Bank, “water scarcity will cost some regions up to 6% of GDP by 2050. Failure to protect freshwater resources can be disastrous to communities and ecosystems.”

In 2030, total worldwide materials extraction will reach 100Gt – which is three times as high as it was in 1980. The population will have only doubled in that time.

In spite of the value materials extractions provide on a macroeconomic level, nations are realizing that their GDPs don’t need to be tied to it. In fact the OECD countries use 45% less material for every unit of economic output today than even ten years ago.

Exploitation of Labor

According to EITI, Artisanal and Small Scale Mining (ASM) accounts for a large percentage of smuggled materials from war-torn regions. As a result, these materials are essentially funding the civil unrest in places like the Congo and Afghanistan. In addition to informal extractions, child and slave labor is also something that supply chain work is trying to prevent. Meanwhile, at both formal and informal job sites, the health and safety of workers can be lax or non-existent as well.

It’s not just about what we extract from where, but who is extracting it and how. Good supply chains are not only conflict-free, they’re also staffed by adults working in the best possible conditions.

Risks: Supply, Environmental and Social

While there are no globally agreed-upon frameworks for handling supply chain risk and sustainability, companies like Apple are leading the way and open sourcing their methodologies in the hopes that others may begin to join them in the reduction of harm worldwide.

Apple frames their supply chain sustainability through the risk lens, which they have broken down into three main areas: Supply Risk, Environmental Risk and Social Risk. They have open-sourced their methodology, which they call Material Impact Profiles, as shown below.

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As you can see, each element in use in their products is scored as being high, middle, or low priority in terms of risk. You can see an element like Boron is a high Supply risk but low Environmental or Social risk. Meanwhile, Nickel is low Supply risk but high Social risk. Rare earth metals often have multiple risks, which you can see from Gallium, Germanium, Rhodium, Ruthenium and Vanadium.

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In the same report, Apply thinks of their holistic approach to measuring their impact which you can see in the chart below. Their Make-Use-Collect-Recover and Create framework means that their goal is to maintain 100% visibility into the materials going into their products AND to produce business practices that restore and recover materials where possible. There is a heavy emphasis not just on recycling but also in collecting used and unused materials to be cycled back into production before new materials are extracted.

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Finally, Apple limits their scope at the most basic level, to abiotic materials. This makes sense since they are an electronics manufacturer. Other industries would include in their purview biotic materials extracted from farmland, forests and freshwater habitats. And while fossil fuels themselves are not considered part of the supply chain, they are necessary in the production of goods. So where manufacturing and transportation are concerned, how plants and fleets are powered should also be tracked.

Different Methodologies for Different Purposes

At Tablecloth, our Workplace Practices and Workforce Fairness models are applicable to any supplier. Like my friend from our own vendor who related to me BofA’s surveys, these are the bread and butter of the very basics in understanding who provides goods and services and how equitable they are to their workforce and communities. As a staple report, you couldn’t do without them. In addition to the surveys and self-reflective reporting, we provide systems-level analytics that help mine HR and Payroll data for problematic practices such as poverty wages, health and wellness under-utilization, and a lack of equity (based on age, race or gender, for example).

For manufacturers and facilities-based work, we also have a locations-based Waste and Efficiency model that helps each of your own locations report on their energy and water inputs and waste outputs (such as gross tonnage of material inputs, recycling, etc.). On top of that we track how much it costs and where your carbon footprints are the highest, not only in your facilities but also in your transportation.

Which is to say, if you want to work with Apple, you can take Tablecloth reports to them to make the case for your own matching of their sustainability practices. Our reports are also useful for any other disclosure or reporting requirements you might have. But more importantly, anyone who wants to work with you could and should also be measuring the same outcomes. Remember, you’re only one link in the chain. Transparency and accountability throughout the supply chain make us all stronger.

Co-Founder & CTO
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