Sustainability labels and certifications

supply chains. Due to the close relationship, sustainability will also become a priority for the supplier and within the supplier’s organization.

Bottleneck items are probably the most complicated ones for adding sustainability to procurement, as the buying company does not have much power to force the supplier into sustainability improvements or to change suppliers. Buying organizations can try to push for industry-wide standards and regulation to improve the sustainability of bottleneck items.

Improving the sustainability of leverage items, however, may be easier. Sharing best practices with suppliers enables sustainability improvements. Solutions consider a reduction of material intensity, using recyclables with a focus on leading into lower costs.

For non-critical items, sustainability needs to be included in the supplier selection criteria. To keep processes simple and efficient, certifications can be used for the achievement of the sustainability criteria. Since the number of potential suppliers is sufficient, suppliers who do not comply can be changed easily (Krause et al, 2009).

For all items the supply risk may increase as the number of potential suppliers is cut by those that do not satisfy the sustainability criteria or do not want to contribute to the sustainability agenda. Although the actions for achieving sustainability differ between the item categories, sustainability must be part of the agenda in all of them. Sustainability may become more and more a common performance criterion and therefore eventually develop into an order qualifier (Krause et al, 2009). Sustainability performance measures may also be raised as sustainability becomes common practice and buying organizations need to keep pace with the developments and sustainability performance level increases.

Understanding that sustainability must become a criterion in procurement decision making, we now need to understand how sustainability of an offered product or service can actually be judged, which is essential when suppliers are compared in a selection process.

To simplify the selection of supplier certifications and labels, external and most often independent organizations can be used. Certifications show that the supplier is following certain standards set by the awarding organization. The burden of monitoring and auditing the supplier is therefore shifted to an external auditor, usually paid for by the supplier, who is charged by the awarding organization for the use of the awarded

label. Certifications are mainly used for suppliers of non-critical items and leverage items; nevertheless, they are also found in other supplier categories. Certifications and labels are also a way to avoid the pressure from campaigners as they provide evidence that the company fulfils the set standards. However, these standards are determined by the awarding organization and often only focus on a particular aspect rather than the overall sustainability of the product or service. In the following paragraphs, we are going to look at some of the more well-known environmental certifications.

Fairtrade

The Fairtrade label is awarded through national bodies that form part of the international Fairtrade organization. It focuses on ethical aspects and aims to help producers from developing countries out of poverty. Chocolate, coffee, cocoa, sugar, bananas and other agricultural commodities are the main products certified with the label. The retail value of Fairtrade-certified products in the UK exceeded £1.3 billion in 2011. It certifies that farmers are supplying in long-term contracts and are paid a stable and ‘fair’ price. The long-term engagement enables the farmers to invest into the development of their farms and provides them with a more predictable stream of income than the global spot prices for commodities. Farmers are also paid a premium for their products which can only be used for the social and economic benefit of their workers and communities. It also favours smallscale farmers and cooperatives to support rural communities and their development (Fairtrade, 2012).

Maritime Stewardship Council

The label of the Marine Stewardship Council (MSC) was founded by the environment protection organization WWF and the frozen fish producer Unilever (WWF, 2012). It focuses on setting standards for the sustainability of wild-captured fishing. It is not auditing any fishing businesses itself, but simply sets standards for fisheries and supply chain traceability. A product can apply the MSC label if the product can be traced back under MSC standards to an MSC-certified fishery. The MSC considers the fishing stock levels, the fishing operations and the managerial procedure towards sustainability (MSC, 2012). Despite the recognition of its achievements in environmental benefits, it has been criticized for setting its standards too laxly (Smith, 2011).

Rainforest Alliance

The Rainforest Alliance ecolabel does not focus on a single product category but on the protection of the rainforest in the production of a product. It also has wider considerations towards the empowerment of forest communities and the establishment of sustainable business opportunities for small- and medium-scale enterprises in these communities. The Rainforest Alliance is a nonprofit auditing organization for its own frog-themed ecolabels and the Forest Stewardship Council (FSC) ecolabel. The FSC itself is – similarly to the MSC – only a standard-setting organization, and does not get engaged in the auditing process. Accreditation is aimed at the producers and at the traceability through the supply chain to avoid the mixing of certified wood with others (FSC, 2012; Rainforest Alliance, 2012).

Carbon Trust

The Carbon Trust is an independent non-dividend-paying limited organization. Since its creation in 2001, it has helped clients to cut CO2 emissions by 60 million metric tonnes (MtCO2) and save £5.5 billion in energy costs. Any profits made are reinvested into the trust, whose aim is to ‘accelerate the move to a global low-carbon economy’ through work for and with business and public sector. The trust is engaged in advising decision makers, supporting the development of new technology and the assessment of carbon footprints. It measures and certifies the carbon footprint of organizations, products and supply chains. For the carbon label certification, clients have a choice of the two most widely accepted carbon footprint standards: the Publicly Accepted Standard (PAS) 2050 by the British Standards Institution (BSI) and the Department for Environment, Food and Rural Affairs; and the Greenhouse Gas Protocol of the World Business Council for Sustainable Development (WBCSD) and the World Resources Institute (WRI).

In contrast to other labels it does not only focus on one particular aspect or industry sector, but covers all areas of the supply chain (although it ignores the social and economic dimensions of the triple-bottom-line concept). It awards two labels: one merely shows that an organization is working with the Carbon Trust, while the other one requires active reduction of the measured carbon footprint, with such activities assessed every two years for recertification. Organizations applying the label to their products can decide whether they want to display the carbon footprint per unit within the label or not (Carbon Trust, 2017; Greenhouse Gas Protocol, 2012).

LEED

LEED (Leadership in Energy and Environmental Design) is the certification of the US Green Building Council (see also Chapter 4 on warehousing), which sets standards towards the sustainability of buildings. The standards vary in scope and requirements depending on the type and purpose of the building and differentiate between new constructions, existing buildings and refurbishments. Those applying for certification need to submit the details of their building and pay a charge for the review and certification of the building. Different to other environmental labels is the award of different achievement levels. The best-performing buildings gain platinum status, followed by gold, silver and certified (USGBC, 2012).

ISO 14001

Labels and certifications are not only applied in a consumer-facing environment. Manufacturers and other business customers also have a need to assess the environmental performance of their suppliers. In this setting, the International Standards Organization developed standards for environmental management systems. These are part of the ISO 14000 series. Most notable is ISO 14001, which sets standards for the establishment and improvement of environmental management and aims to engage organizations in a continuous improvement process of their environmental management. However, the ISO does not perform any audits or certifications itself, but simply develops standards at an international level, leaving the certification to independent auditors. Consequently, certifications in the 14000 series often go hand in hand with certifications of the ISO 9000 series on quality management and ISO 19000 series on auditing standards. The ecolabel image shows ISO 14001 certification by the British Standards Institution.

Beside the costs and time resources associated with ISO certification, the use of the ISO 14001 standards is also subject to other criticisms (Murphy, 2012). Adopting the ISO 14001 standards does not specify environmental targets, so achievements therefore depend solely on the organization’s ambition, which makes comparison across sites, units and organizations difficult (Coglianese and Nash, 2001).

The adoption of ISO 14001 can also lead to a focus on establishing formal structures, procedures and policies rather than on increasing efficiency and improving sustainability. The formal set-up may also not always reflect the reality of activities in the organization (Meyer and Rowan, 1977).