Dare and Care

The following briefing note has been prepared by Hill&Knowlton on behalf of the Moderator for Session 2, Elaine Cruikshanks, at the 2009 European Business Summit. The summit – titled Dare and Care – will be held on 26th and 27th March 2009.

Please feel free to comment before and after the session about the topic below.

Stuart Langridge
Director of Blogactiv.eu

Sustainable production & consumption: greening the supply chain?

1. Introduction

Background

The major cause of the continued deterioration of the global environment is the unsustainable pattern of consumption and production, particularly in industrialized countries, which is a matter of grave concern, aggravating poverty and imbalances.
Agenda 21, 1992

Sustainable Production and Consumption implies continuous economic and social progress that respects the limits of the Earth’s ecosystems, and meets the needs and aspirations of everyone for a better quality of life, now and for future generations to come. (World Summit on Sustainable Development 2002)

• In 2002, at the World Summit on Sustainable Development, world leaders expressed their commitment to the development of a 10-year framework programme to accelerate the shift towards sustainable consumption and production by delinking economic growth and environmental degradation through improving efficiency and sustainability in the use of resources and production processes.

• The Marrakech Process (June 2007), is a global multi-stakeholder process which guides the formulation of the 10-Year Framework of Programmes on SCP (10YFP) by bringing all stakeholders together to share best practice on possible mechanism and tools.

Greening the supply chain

The emphasis of sustainable production is on the supply side of the equation, focusing on improving environmental performance in key economic sectors, such as agriculture, energy, industry, tourism and transport.

Governments have been playing an increasingly significant role by developing policies favouring long-life products, renewable energy and natural materials. Some instruments have been playing a crucial role in that regard. The following are worth being highlighted:

o Life-Cycle Analysis: to show the level of input of resources in a product, such as the use of energy, of water, solid materials, toxins, land-use, transport. It is the presentation of the ecological rucksack of a product from its production to its use and possible re-use or recycling, and its eventual disposal. Informing consumers about the products and allowing them to make choices on this base is thought to place pressure on suppliers since customers can indirectly influence environmental impacts in distant places, such as the effluents from factories in China.

o Extended Producers Responsibility (EPR): aims at encouraging producers to prevent pollution and reduce resource and energy use in each stage of the product life-cycle. The model example of EPR is the ‘product take back’, where the producer takes back a product at the end of its life. Take back laws are usually accompanied by an obligation to recycle.

o Improve energy efficiency through mandatory EMS & Reporting: in terms of integrated permit conditions, firms may be required to implement a structured environmental management system and to make public information on their environmental performance.

o Financial and Technical Incentives: governments may provide grants, loans and favourable tax regimes, and supply targeted technical assistance to relevant industrial enterprises in order to stimulate greener production methods.

Best-practice

1. Unilever

Partnership with UNEP and others to promote refrigeration technology that is both ozone and climate friendly. Unilever developed training materials to facilitate the acceptance and safe handling of the new freezers using “natural” hydrocarbon refrigerants, which have significantly less impact on global warming. By the end of 2006 Unilever had 100,000+ cabi¬nets in the market globally. The company has already replaced 32 tons of HFCs with hydrocarbons, and foresees potential for a further 300 tons over the coming years.

2. Adidas

In 2006, the adidas Group developed a new football boot, but one whose entire environmental life cycle has been evaluated – from natural resources to disposal or re-use. Having this complete picture will allow adidas to intervene more effectively in the future to reduce the environmental impacts of its footwear. This is significant since each pair of boots produces 0.057m3of wastewater, needs 20.5g of volatile organic compounds, 2.93 KWh of energy and creates a waste ratio of leather and synthetic materials of 10% and 12% respectively.

3. Industrial park Kalundborg, Denmark

As the first example of “industrial ecology”, the park involves the cooperation of an electric power generating plant, an oil refinery, a biotechnology production plant, a plasterboard factory, a sulfuric acid producer, cement producers, local agriculture and horticulture, and district heating. The power station supplies power to the pharmaceutical plant, refinery, and district heating system. Gyproc, the wallboard producer, buys surplus gas from the refinery along with industrial gypsum, a byproduct of the desulfurization process that makes the gas cleaner. In addition, fly ash from the power plant is used for cement making and road building. The power plant also uses surplus heat for warming its own seawater fish farm. Sludge from the fish farm is used as fertilizer by local farmers.

2. EU sustainable consumption and production policies

The European Commission published on 16 July its Action Plan for sustainable consumption, production and industry, seeking to improve the overall environmental performance of products throughout their life-cycle, promoting and stimulating the demand of better products and production technologies and helping consumers to make better choices through a more coherent and simplified labelling.

In particular, the Action Plan includes the following:

Proposal for the extension of the Ecodesign Directive: the objective is to enlarge the frame from “energy-using products” to all “energy-related products”. Energy-related products are defined as “products that have an impact on energy consumption during use”. In addition to mandatory minimum requirements that need to be attained by the product in order to be allowed on the internal market, the directive also defines voluntary benchmarks of environmental performance. As a general rule, benchmarks would correspond to the level achieved by the top performing products available on the market.

.Proposal for the revision of the Ecolabel Regulation: the Commission proposes that mandatory labelling of products according to their energy or environmental performance is extended to a wider range of products, including energy-using and energy-related products. The labelling will be used for indicating 1) use phase energy consumption/savings, and 2) other relevant and significant environmental parameters of the product. As for the EU Ecolabel scheme, it will be strengthened by simplifying and streamlining the process of obtaining an ecolabel and extending the products coverage. It will act as a voluntary “label of excellence” to signal to consumers those products that perform at such a level when many environmental criteria are considered over the whole life-cycle.

. Proposal for a revision of the EMAS Regulation: the voluntary EU eco- management and audit scheme, EMAS, helps companies to optimise their production processes and make more effective use of resources. The scheme will be significantly revised to increase the participation of companies, and reduce the administrative burden and costs to Small and Mediums Sized Enterprises (SMEs).

. Communication on Green Public Procurement: the Commission will provide guidance and tools for public authorities to green their procurement practices. This includes common environmental criteria, the setting of targets and providing model tender specifications. This shared approach will help to avoid market distortions in Europe. A separate Communication on Green Public Procurement details these measures.

. Creation of an EU Retail Forum whereby the European Commission expects large retailers to commit to concrete actions and identifying clear objectives, timelines, deliverables and monitoring indicators.

3. Issues and challenges

• The development of integrated and universal policies. To ensure that progress is made in parallel on three fronts – economic development, environmental protection and social cohesion – and that initiatives to promote any one of them do not undermine either of the other two.

• Current incentives for investment in low carbon, energy and resource efficient technologies are not sufficient if these technologies are to be commercially available in the future.

• Fostering smarter consumption. This is particularly challenging if one considers that households are responsible for most of the environmental problems across the EU and that smarter consumption will only happen through behavior change.

• Ensure industry competitiveness is not endangered by environmental requirements necessary to make sustainable production a reality. Also linked is the need for a level-playing field at a global scale on issues such as mandatory environmental standards.

4. Possible questions for the thematic session

1. The EU published its Action Plan on Sustainable Consumption, Production and Industry in July 2008. To what extent do the measures proposed correspond to the vision shared by industry in particular regarding issues such as eco-labeling and eco-design?

2. What is the timescale for the implementation of the provisions in the Action Plan and how will companies be encouraged to not take a “wait – and – see” approach?

3. Industry favours the Extended Stakeholder Responsibility (ESR) instead of the Extended Producers Responsibility (EPR), as the former disperses responsibility onto consumers. To what extent should industry be responsible for the lifecycle of products it manufactures?

4. Given the lack of incentives to invest in greener technologies for more efficient production how can industry be given incentives to produce “greener products”? Can they be solely financial?

5. What skills do manufacturers need to acquire to be able to implement a sustainable production strategy? And should its implementation be monitored and evaluated?

6. Is the renewable energy option suitable for all manufacturers, namely for SMEs – is it cost effective? And is there enough renewable energy to meet demand?

7. What are the options and viability of onsite energy generation and is energy efficiency a realistic corporate strategy?

8. What are the main road blocks to successful Life Cycle Assessment? Is it always accurate? How is the Commission promoting the diffusion of LCA?

5. Further reading

• EU policy documents:
Action Plan for sustainable consumption, production and industry (July 2008)
• European Union’s renewed Sustainable Development Strategy (EU SDS)
Background document on the consultation on the Action Plans for Sustainable Production and Consumption and on Sustainable Industrial Policy (2007)

• 2002 Johannesburg Summit on Sustainable Development
Agenda 21
Marrakesh Process
• Eco-Management and Audit Scheme (EMAS)
Caring for Climate: tomorrow’s leadership today, climate change, environmental responsibility and examples of corporate leadership, UNEP
• Business Premier, Sustainable Consumption and Production, University of Cambridge, Programme for Industry
• Euractiv Sustainable Consumption and Production (2 July 2008)

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