Skeptics once may have considered the movement toward sustainable practices in American business to be a temporary detour from business as usual. To make those practices, well, sustainable, they argued, required more than a social conscience. They required a payoff on the bottom line.
That is exactly what has happened. Companies that have embraced sustainability and implemented new practices and technologies in a careful and rational fashion have realized not only environmental and social benefits but financial benefits as well.
"Companies are starting to recognize that things can be done be in a sustainable way ... that could save money and affect the bottom line," says Richard Bank, a director of the Washington, D.C.-based Sustainable Supply Chain Foundation. The organization supports research to identify best practices and technologies aimed at furthering sustainable practices in supply chains.
The companies that continue to take the initiative to adopt sustainable practices and programs across their supply chains are some of the biggest names in international business—companies like Walmart, UPS, and W.W. Grainger.
Now, a major trade group for third-party logistics service providers (3PLs) has joined the cause. Earlier this year, the International Warehouse Logistics Association (IWLA) announced its own program. Called the Sustainable Logistics Initiative, the new program was developed by IWLA in concert with the Sustainable Supply Chain Foundation.
IWLA says the new initiative is the first of its kind. It is not a certification program like LEED, the U.S. Green Building Council's accreditation program, but rather a way for participants to demonstrate their progress toward more sustainable operations. The initiative is designed specifically for warehouses and DCs, not broader transportation and logistics companies. "One of the commonalities of our 500 or so members is that we all operate big warehouse boxes," says IWLA chairman Linda Hothem. "Our focus is inside the box."
Making change, box by box
IWLA announced its initiative in July and subsequently made it available to its membership base. Hothem, who is CEO of Pacific American Group and a senior adviser to Matson Global Distribution Services Inc., says the idea grew out of conversations among the group's executive committee members about the market's increasing interest in all things green.
Third-party service providers are seeing growing demands from customers and potential customers for evidence of sustainability efforts, says Bank. "Companies big and small are asking and in some cases demanding that [3PLs] have sustainability programs before issuing a contract," he says. "This program will give customers some sense of assurance that 3PLs are engaged in sustainability."
Conversations on how to demonstrate that opened the door to developing the program. "We were bemoaning the fact that the industry did not have any metrics [on sustainability]," Hothem says. "The construction industry had LEED, but in logistics, we really don't have any of those metrics or any sort of certification process. We decided to take the initiative to determine what the logical metrics would be."
More than green
Although the program started out as a green initiative, its scope has since expanded beyond environmental stewardship. Hothem credits Dale Rogers, a professor at Rutgers University who has conducted numerous studies on sustainable supply chains, with persuading the group to adopt a broader focus. "Dale steered us away from 'green' and steered us into the sustainability camp," she says. The difference: While green initiatives focus primarily on carbon footprint issues, sustainability also takes into account social responsibility and corporate good citizenship.
"Sustainability involves people," Hothem says. "It is more subjective, but we are looking at some quantitative measures like safety, training, and development." Sustainable measures can also include things like community service and charitable donations, she adds.
Enrollment in the new program is done on a facility-by-facility basis. Participants first fill out an online questionnaire for each facility they want to register, providing data on energy use, recycling, water consumption, community service, and more. A representative from the Sustainable Supply Chain Foundation will then visit the facility to verify those numbers.
Once the responses have been validated, the numbers provide the benchmarks against which subsequent performance improvements are measured. Facilities will be able to achieve silver, gold, or platinum status by demonstrating progress against their own benchmarks. The program does not use cross-industry—or even cross-company—comparisons.
Hothem explains that this allows for the wide variance in warehouse operations—for instance, energy use for refrigerated warehouses would vary markedly from non-refrigerated buildings. "There are so many variables, it's hard to measure one against another," she says. By allowing members to establish their own benchmarks, the Sustainable Logistics Initiative sidesteps those issues, she says. "You'll measure what you've done on your own rather than versus what your neighbor does."
As for the program's cost, ILWA members pay a $200 enrollment fee for the first facility and $50 for each subsequent site. There's an additional $1,000 charge for the assessment by the Sustainable Supply Chain Foundation.
Although the program carries a cost, IWLA leaders believe the initiative will lead to immediate benefits for members. It will allow them to tout their participation in an industry best-practices initiative. And as facilities achieve specific sustainability goals, they can promote their newly attained silver, gold, or platinum status.
Left unsaid, but likely equally important as more business adopt sustainability goals, is that the members can assure their old and new customers that they, too, are on board with the movement.