Supply Chain Management
Supply chain management (SCM) can be defined as a process-oriented management approach that encompasses coordination of all flows of raw materials, components, and semifinished and finished products as well as information along all actors of the value chain, from raw material suppliers to end customers; it aims to optimize resource inputs and the quality of the produced goods and services for all companies involved in the supply chain (Stadtler et al. 2015). SCM thus integrates economic performance and efficiency into key interorganizational business systems in order to improve the resilience of the organization over the short and long term (Ahi and Searcy 2013).
SCM in the context of SDG 12, in addition, aims at sustainable production and consumption, i.e., “the use of services and related products, which respond to basic needs and bring a better quality of life while minimizing the use of natural resources and toxic materials as well as the emissions of waste and pollutants over the life cycle of the service or product so as not to jeopardize the needs of further generations” (UNEP 2004). In this respect the appropriate term is “Supply Chain Management for Sustainable Development” (SCMS). In a broad understanding, it is thus a multidisciplinary approach taking into account the entire range of – intended and unintended – environmental impacts (total cost) of resource use and depletion in production and postproduction, including product end of life and recovery after disposal (Linton et al. 2007). In addition, social criteria related to certain working condition standards increasingly come to the fore (Seuring and Müller 2008; Rajeev et al. 2017).
After having analyzed the different approaches taken in the literature to define SCMS, Ahi and Searcy (2013) propose the following integrated definition: “The creation of coordinated supply chains through the voluntary integration of economic, environmental, and social considerations with key inter-organizational business systems designed to efficiently and effectively manage the material, information, and capital flows associated with the procurement, production, and distribution of products or services in order to meet stakeholder requirements and improve the profitability, competitiveness, and resilience of the organization over the short- and long-term.”
Relevance of SCM for Sustainable Development Goal 12
SDG 12 aims to “[e]nsure sustainable consumption and production patterns” (SCP). The 1992 United Nations Agenda 21 notes that “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” (UN 1992b). This observation includes, inter alia, the overexploitation and contamination of natural resources, land conversion, and high dependence on fossil fuels. In this respect, the role of supply chains is crucial: For example, 80% of greenhouse gas emissions associated by a typical consumer product manufacturing company in fact occur in its supply chains, as do 90% of the environmental impact on air, land, water, and biodiversity (McKinsey 2016). At the same time, overexploitation of work forces culminating in “modern forms of slavery” is drastically in conflict with generally accepted conventions of human rights.
SCM thus offers one powerful transformative approach toward SDG 12, which is at the same time a crucial facilitator for a set of related SDGs, such as SDG 3 (ensure healthy lives and promote well-being) and SDG 6 (availability and sustainable management of water and sanitation), as well as SDGs 7 and 13 (clean energy and combatting climate change) and SDGs 8 and 9 on sustainable economic growth and industrialization (Le Blanc 2015).
Supply chains are a very complex managerial object since they are often stretched across various continents: In order to capitalize cost differences, most companies locate their production processes at places with low costs, e.g., due to less developed legislation on environment and occupational health and safety of worker rights, in general, or due to enforcement deficits. In fact, many low-cost countries tend to compromise progress in terms of environmental and social standards as the status quo attracts foreign investments and thus gives them a competitive advantage. In addition, short-term supplier agreements imply a high volatility for the actors involved. Hence, usually, supply chains cannot be understood as a one-dimensional chain of suppliers but, rather, must be seen as a, at least partly, three-dimensional actor network, e.g., when for the same end product (e.g., a car) components are used, which were produced in different batches by different suppliers and subject to specific conditions in terms of input materials and manufacturing processes. Thus it can be stated that the “low-cost” sourcing approach in a significant number of cases has proved to be a risky business model in terms of, e.g., product quality and thus puts at stake the reputation of the suppliers.
At the same time, there are increasing expectations that supply chains take into account sustainable development or sustainable patterns of production and consumption, respectively. This can be traced back to international law and policies (section “Political and Normative Context: Supply Chain Management as an Essential Element for SCP”) and regional or national legal requirements addressing product safety and SCM (e.g., EU REACH Regulation) or extended producer responsibility (Gupta and Palsule-Desai 2011). A relevant and growing fraction of companies take into account health, environment, and sustainability criteria – including supply chain impacts in third countries. Changes in the legal frameworks and in consumer behavior also influence investors’ decision-making. Transparency mechanisms provide additional stimuli; some of them are fostered by NGOs, e.g., with specific tools (International Chemical Secretariat, ChemSec 2018), by means of global awareness campaigns (Greenpeace Detox 2018) or smartphone apps (LIFE AskREACH 2018). Finally, disastrous accidents (e.g., “Rana Plaza”) with a clear connection business models based on outsourcing (Comyns and Franklin-Johnson 2018) trigger a trend to reassess the supply chain strategy.
Well-known brands are front-runners in SCMS since they are particularly exposed to public pressure and as reputational losses can cause serious costs, which sometimes outweigh costs caused by actual product damages, such as compensation or insurance premiums (Rossi 2014). At the same time, SCMS may boost reputational gains and yield opportunities for savings of costs, e.g., with respect to worker health and safety due to safer working conditions, but also production costs due to lean and circular product design, avoiding superfluous packaging and allowing for energy savings as well as extraction of raw material input (Carter and Rogers 2008). Additional benefits include enhanced product quality and reduced liability risks. At the same time, companies moving toward SCMS are in a position to “be prepared” to manage future amendments of the legislative framework as well as novel customer request. A properly managed supply chain finally contributes to establish mutual trust and less volatile business relationships, allowing thus to substantially reduce the costs of product tests. However, while taking action in waste prevention and energy savings usually pays of in short term, other SCMS investments might yield economic returns only after years in a long-term perspective; prospective thinking managers are therefore key actors and proactive company cultures pivotal.
While more and more companies see the need for SCMS, it is highly questionable whether a merely incremental approach offers promising business perspectives. Instead, business models must be radically redesigned and recalibrated (Pagell and Shevchenko 2014) in order to considerably “minimize their adverse impacts on human health and the environment” (SDG 12.4). Obviously this requires far-reaching changes to consumption and production patterns, calling thus for transformation processes involving the entire range of supply chain actors based on innovation not only in technical but also in social and behavioral terms (Führ and Schenten 2018).
Political and Normative Context: Supply Chain Management as an Essential Element for SCP
Taking into account also the political and normative context of SDG 12, summarized in this section, criteria for a more “sustainable” SCM contributing to “sustainable consumption and production patterns” (SCP) can be derived (for the main challenges in this respect, see section “SCMS Main Challenges and Related Benchmark Criteria”).
In 1992, at the United Nations Conference on Environment and Development (UNCED) in Rio de Janeiro, the international community put SCP into the international environmental policy context: Principle 8 of the Rio Declaration on Environment and Development (UN 1992a; Viñuales 2015) states that “[t]o achieve sustainable development and a higher quality of life for all people, States should reduce and eliminate unsustainable patterns of production and consumption […].” Agenda 21, a policy framework intended to pave the way to sustainable development, dedicates its 4th chapter to SCP (UN 1992b). In 1995, the United Nations Commission on Sustainable Development (CSD) – after 2012, High-Level Political Forum (HLPF) – adopted a definition for SPC, which elaborates on the definition of “sustainable development” in the so-called Brundtland Report (World Commission on Environment and Development 1987): “the use of services and related products, which respond to basic needs and bring a better quality of life while minimizing the use of natural resources and toxic materials as well as the emissions of waste and pollutants over the life cycle of the service or product so as not to jeopardize the needs of further generations” (UNEP 2004). At the 2002 World Summit on Sustainable Development (WSSD) in Johannesburg, the United Nations affirmed their commitment to foster SPC (UN 2002).
In 2012, at the so-called “Rio+20” Summit, the UN General Assembly adopted (UN 2012a) the “10-year framework of programmes on sustainable consumption and production patterns” (10YFP) providing structure to SCP policies (UN 2012b). The Agenda 2030, adopted as a resolution by the General Assembly in September 2015 (UN 2015), affirms this 10YFP and integrates it into its “Sustainable Development Goals” (SDGs), notably in targets 8.4 and 12.1 (Bizikova and Wagner 2016; Führ and Schenten 2018).
In addition to those substantive goals, an institutional framework is needed to underpin the material ambitions and provide a level playing field for market actors stimulating innovation processes toward the SDGs, i.e., by procedural societal and organizational governance instruments. In this respect one important element of SCP is transparency, including participation in environmental matters, as stipulated by Rio Principle 10 and the more specific Aarhus Convention (UNECE 1998). This does not only include a “right to know” of the supply chain actors and general public regarding risks it might be exposed to but also paves the way for learning processes based on inclusive governance in order to fully exploit available knowledge resources for sustainable development.
Consequently SDG 12 is increasingly supported by legislative frameworks on international, supranational (e.g., EU), and national level. This includes horizontal approaches, such as legislation on chemical substances (e.g. the EU REACH Regulation; Schenten/Führ 2018), as well as vertical legislation addressing different categories of products, e.g., cars, electric and electronic equipment, and toys – just to name a few. Consequently, in order to meet the legal requirements, enhanced mechanisms of SCM are to be implemented. Of pivotal importance in this respect is the task to organize a smooth and reliable exchange of information fostering efficient communication and cooperation along the entire supply chain allowing to reply to requests related to the individual product. On the policy level strong emphasis is laid on the need for information on substances of concern for all actors, and it is expected from industry to ensure at the latest by 2030 the traceability of substances of concern in materials, including those in imported articles, through the entire supply chain, including end-of-life operations (EU Council 2018).
SCMS Main Challenges and Related Benchmark Criteria
The industry actors in the various supply chains are facing new challenges, ranging from customer requirements reflecting perceived consumer demands to legal frameworks which are increasingly enacted in different parts of the Globus along the lines of SCP. In general terms, SDG 12.4 aims “to minimize adverse impacts on human health and the environment.” In particular, and already by 2020, an “environmentally sound management of chemicals and all wastes throughout their life cycle” should be achieved. To this end, emissions to air, water, and soil are to be reduced “significantly.” Mindful of this objective, SCMS has to take into account the complexity of supply chains, the volatility of supply chain structures, and dynamic scientific findings. Decision-making in this area thus involves uncertainty, evolving decision parameters and changing decision boundaries (Wu and Pagell 2011). Transparent criteria can contribute to reducing these uncertainties.
This section identifies key criteria for SCMS. In this respect, product and supply chain design processes should be based on a life cycle approach from the very beginning of the development phase (section “Product Design Based on Life Cycle Thinking (Towards a Circular Economy)”), integrating all relevant aspects, including energy consumption (section “Energy Consumption and Greenhouse Gas Emissions”) and chemicals in products and production processes (section “Chemicals in Products and Processes”). In terms of steering the innovation process along the supply chain, social and ethical criteria are to be taken into account (section “Additional Social and Ethical Criteria”). In organizational terms the strategic level has to respond to the entire set of challenges (section “Strategic Approach: Corporate Governance and Culture”) and steer the operational level of SCMS with the tools applied in the day-to-day business (section “Operational Level: Managing Benefits and Risks”).
Product Design Based on Life Cycle Thinking (Toward a Circular Economy)
The design of a product determines to a large extent also the production steps as well as the sourcing of its components. Moreover, the potential to reuse materials of the product after its end of life is almost entirely determined in the design and material procurement phases. In terms of SDG 12, the interplay of “design thinking” and life cycle assessment (LCA) is key when it comes to identify room for improvement toward a nontoxic circular economy. Design thinking focuses on the needs of the future user of a product (including the related services) and thus enriches the design phase, which is traditionally dominated by the economic expectations of the corporation and its established supply chain interaction (IFID 2018). LCA, on the other hand, aims at identifying the environmental and health impacts of a product system from raw materials over the production process until the end-of-life phase (ISO 14040, UNEP, SETAC 2011). Furthermore, life cycle thinking pursuant to the 10YFP combines “classic” LCA focusing on environmental impact with concepts of sustainable use of resources such as the 3Rs (reduce, reuse, and recycle) heading toward a circular economy (UN 2012b).
Energy Consumption and Greenhouse Gas Emissions
To extract or cultivate the raw materials, for the further processing until the final assembly as well as for all logistic steps in between an input of energy, is needed, usually linked with the emission of greenhouse gases. This effect, however, does not cease after a product is purchased by a consumer; in fact, the energy consumption in the use phase is often the most relevant part of the total impact. From the perspective of a circular economy approach, the energy input after the “end of life” should also be taken into account.
When looking for innovation to reduce the energy-related impact, the improvement potential along the supply chain has to be analyzed. This can be supported by means of a systematic approach based on the product carbon footprint methodology (PCF), e.g., based on the standards of Greenhouse Gas Protocol under UN Global Compact (UNEP 2018). Since energy input is a cost factor, in many cases, “low-hanging fruits” and the connected benefits are to be harvested.
The challenge, thus, lies in adequate monitoring mechanisms for all energy-consuming steps in the supply chain. In terms of the PCF, the data gained have to be combined with a sound allocation to the individual component ending up in the final article.
Chemicals in Products and Processes
The 10YFP devotes particular attention to hazardous materials and toxic chemicals (UN 2012b). SDG 12.4 takes this up by seeking to achieve, by 2020, “the environmentally sound management of chemicals and all wastes throughout their life cycle.” A number of substances are covered by international conventions, e.g., persistent organic pollutants (POPs) in the Stockholm Convention or mercury in the Minamata Convention.
Benchmark criteria can be derived from the green chemistry principles (Anastas and Warner 1998). They aim primarily at hazard reduction already in the design phase of an industrial chemical. The intention to “adequately control” the risks as required by the European REACH Regulation comes into play only secondarily. Of particular importance is the aim to avoid a recycling of risks (“risk cycle,” Bilitewski et al. 2012; Lahl and Zeschmar-Lahl 2013) calling, in line with the green chemistry principles, for a design process avoiding the use of problematic chemicals – also as an additive, such as pigments or plasticizers.
Integrated LCA-Supported Design Thinking
Life cycle thinking applied to a SCP context basically means “sustainable and efficient management of resources through the whole life cycle, and in all stages of the supply chain” (UNEP 2014). In this respect, one of the major challenges is to monitor and control the input and output in global supply chains in terms of hazardous materials, toxic chemicals, and other problematic substances as well as their impact on human health and the environment. The LCA tools most commonly used have to be enhanced since they focus mostly on greenhouse gas emission and a limited number of “classic pollutants.” Not only the effects of land use (changes) in the generation of the raw materials but also toxicological and ecotoxicological effects of emissions along the supply chain are to be included in the impact matrices of LCA tools. In terms of circular economy, all kinds of services during the lifetime of a product as well as reverse chain activities (ranging from repair, refurbish, reuse, and recycle up to redesign and remanufacture) should be covered in the LCA-supported design thinking processes. They should integrate the benchmark criteria mentioned above.
Additional Social and Ethical Criteria
In political processes a wide range of common welfare aspects are to be integrated. This includes the economic perspective of different industry sectors or regions as well as social and ethical considerations, partly underpinned by human rights on national and supranational level. The global standards on working, formulated by the International Labour Organization, have grown into a comprehensive system of instruments on work and social policy, which are increasingly backed by a supervisory system designed to address all sorts of problems in their application at the national level (IAO 2018). Other social and ethical aspects are linked with the keyword “child labor” and “conflict minerals.” For both different legal frameworks are applicable (e.g., SDG 8.7 and legislation on national level). However, the practical implementation at the production and assembly sites and the level of enforcement on local, regional, and national level still differ substantially. Nevertheless these requirements provide benchmark criteria for SCMS.
From a supply chain perspective, the empowerment of workers and their associations is an essential element of a SCM heading toward the SDGs. Brands and retailers see themselves obliged to address social and ethical aspects jointly with their suppliers (for an illustrating best practice example, see Tchibo 2018).
Strategic Approach: Corporate Governance and Culture
A strategic approach on corporate level has to steer all these impacts. Decisions of the supply chain actors are taking place in the regional normative context, i.e., the applicable legal frameworks and societal debates. In addition, the mission statement of the particular company is guiding the decision-making processes within the organization and its branches and subunits. SCMS strategies thus have to consider the cultural context of the suppliers. This influences the identification of priority fields of action as well as short-term and long-term objectives laid down in the overall corporate strategies (Carter and Rogers 2008). Conflicting targets, also in terms of short-term profitability vis-á-vis long-term SCP, have to be identified and balanced according to a company’s strategic goals (Wu and Pagall 2011). Despite the widespread impression that “trade-offs” between economic, environmental, and social elements bare the main challenge, it has to be emphasized that in almost every decision, all three dimensions are involved. The conflict lines therefore regularly are found within each dimension. To replace, e.g., one procured substance with another creates additional economic and social benefits for one supplier, while another is facing losses.
Strategies are usually grounded in legislation, whereas merely recognizing the legal status quo lacks ambition – thus, credibility – and, therefore, goals often go beyond compliance, at least to some extent (e.g., applying the strictest rules of one market in all markets where a company is active). Given the progressive nature of environmental and social legislation at international scale, companies that already act beyond compliance today increase the likelihood of still being compliant in the future. In addition, strategies reflect societal needs, perhaps relevant to the specific business, and may be permeable for feedback from stakeholders. Since due to the dynamics of sustainable development, SPC goals will inevitably become obsolete as new knowledge gets available (rebound effects, more sustainable alternatives), SCMS must be subject to constant review, and, in this respect, integrating views from stakeholders can help avoiding outdated performance. Thus a corporate governance structure is needed that supports a proactive culture in the sense of an open learning process taking into account the perspectives of all relevant stakeholders.
Since companies are relying on different business models and supply chain structures, their strategic approach has to reflect these circumstances and formulate an appropriate strategic response.
Operational Level: Managing Benefits and Risks
SCMS strategic goals are to be translated into operational requirements – this involves environmental and social criteria and performance indicators for supplier procurement – and integrated into the corporate risk management. When it comes to management techniques on the operational level, the same principles apply as in ISO 9001 quality management, “leadership, process approach, evidence-based decision making, improvement, engagement of people, customer focus and relationship management,” but have to be complemented by the key SCM principle of “supply chain integration” (Bastas and Liyanage 2018). Depending on the decisions at the strategic level, all areas discussed in section “SCMS Main Challenges and Related Benchmark Criteria” are to be addressed on the operational level, including LCA (section “Integrated LCA-Supported Design Thinking”) as well as the social and ethical elements (section “Additional Social and Ethical Criteria”).
Cooperation with the actors in the supply chain offers a wide range of benefits to enhance the business opportunities of a company. At the same time, however, it entails a number of relevant risks, ranging, i.e., from quality problems to suspension of deliveries and undesirable know-how transfer (section “Integrated Risk Management”). Coordinating supplier relations is one central risk management task (section “Supplier Relationship: From Control to Integration”) in order to establish closed-loop supply chains (section “Closed-Loop Supply Chain”). The precondition for this is the transparency and traceability of material flows and production conditions (section “Transparency and Traceability of Material Flows and Production Conditions”) based on multi-stakeholder cooperation (section “Multi-stakeholder Cooperation”).
Integrated Risk Management
Supply chain interaction should be underpinned on the operational level of a risk management system: “Risk-based thinking is essential for achieving an effective quality management system” (ISO 9001:2015, sections 0.3.3, 4.4, 6.1 and clause A.4). All stages of the value chain are to be included in the quality-oriented and risk-based SCM, beginning with the product design, the procurement of raw material and assembly parts, not ending with manufacturing and distribution but entailing also monitoring the product behavior and, where appropriate, redistribution and remanufacturing after the end of life. Thus, SCM has to be embedded in the governance mechanisms on the organizational level in the sense of an integrated risk management approach. This system also manages supply chain risks resulting from, e.g., natural disasters, legal liabilities, poor demand forecasting, fluctuating prices for raw materials, poor quality of products supplied, as well as poor supplier environmental and social performance. Furthermore, long-term risks such as biodiversity loss, climate change, hazards to worker, and public health are taken into account (Carter and Rogers 2008; COSO and WBCSD 2018).
Supplier Relationship: From Control to Integration
Procurement and selection of suppliers is based on evaluation criteria, including operational performance factors such as cost, quality, and delivery time. Additional SCP criteria may reflect a company’s corporate sustainability strategy and relate to environmental (energy consumption, discharges into water, air, soil, etc.) and organizational performance (risk management at facilities, labor conditions, etc.).
Procurement criteria regularly become part of the supplier contracts, breaches of which may trigger private law sanctions. Such contracts often are linked to sector-specific or individual rules such as lists of restricted substances, which, e.g., above certain thresholds, may not be present in products or may not be used in manufacturing processes. Monitoring measures ensure that suppliers stick to their contractual obligations. Different approaches with varying levels of trustworthiness are common, such as self-assessment by suppliers and audits performed by the (recipient) company or by third parties, at best involving (non-announced) visits at the facilities.
Product quality management is another building block of performance monitoring, entailing tests of product samples or prototypes on the one hand and of the final delivered product (batches) on the other, taking into account, inter alia, physical characteristics (color, haptics), technical feasibility of fulfilling any intended function, as well as compliance with corporate or legal requirements with respect to the materials used (restricted substances, conflict minerals).
Aligning suppliers with SCP is a major challenge as most of these businesses are small and medium enterprises (SME), thus more likely of lacking capabilities (resources, professional expertise) and opportunities (lack of infrastructure, availability of effective management tools) (Rahman et al. 2011). One strategy for companies is providing training to suppliers and investing in their development. Such investments imply establishment of long-term relationships, which have positive long-term cost effects as, e.g., the intensity of monitoring and control measures depends on the trust companies may bestow upon their suppliers.
Deepened cooperation among supply chain actors (vertically) paves the way to the next logical step – which has not yet reached SCM mainstream (Seuring and Müller 2008), though – i.e., supplier integration. Supply chain integration can be defined as “the degree to which a manufacturer strategically collaborates with its supply chain partners and collaboratively manages intra- and inter-organizational processes, in order to achieve effective and efficient flows of products and services, information, money and decisions, to provide maximum value to the customer” (Flynn et al. 2010) – and contributing to SCP (Bastas and Liyanage 2018).
Closed-Loop Supply Chain
SCMS strategies, e.g., in the electronics or automotive industries, must take into account (legal) requirements on collection, recycling, and recovery of their “end-of-life” products. The term reverse logistics describes the process of collecting end-of-life products from end costumers (e.g., directly or via retailers or subcontractors) and creating value by recycling, remanufacturing, and repairing. Parts not eligible for recovery are disposed of. Integrating such reverse supply chains with traditional (forward) supply chains, covering all processes and actors from raw material extraction to the final end customer, results in closed-loop supply chains (Govindan et al. 2015). Emphasizing the economics of SCM, “closed-loop supply chain management is the design, control, and operation of a system to maximize value creation over the entire life cycle of a product with dynamic recovery of value from different types and volumes of returns over time” (Guide and van Wassenhove 2006).
Transparency and Traceability of Material Flows and Production Conditions
SCMS involves transparency vis-á-vis stakeholders on two levels. Transparency in terms of (public) reporting of performance, including failure to perform, maintains legitimacy and establishes reputation. It also preempts and thus may lower the likelihood of negative publicity in the event of malpractices (realization of risk becomes true), which will come to light anyway and rather sooner than later. Besides, inclusive governance mechanisms such as feedback channels for stakeholders and for supply chain actors help improve strategic goals and supply chain processes and can increase supply chain partners’ motivation and commitment (Carter and Rogers 2008).
Besides, as SCMS entails coordination of all flows of raw materials, components, and semifinished and finished products, enhanced traceability facilitates product design based on LCA and circular mass flows, supplier evaluation and selection, as well as establishing compliance with product safety and material sourcing requirements. An assessment of different tools for and approaches to managing material information in global supply chains by the UN “chemicals in products” project found IT-supported information exchange systems providing for “full material disclosure” (FMD) provide the most advanced solution (UNEP 2015). FMD means disclosure of supplied (part) products down to basic substance level, i.e., all used substances and not only the regulated ones. With this degree of traceability, companies can ensure to be compliant today and tomorrow concerning future requirements. Supplemental information such as test reports, emissions of greenhouse gases (product carbon footprint, PCF), material sources, and human rights monitoring data can be easily linked to the datasets.
Moreover, the data collection enables the company to soundly report on corporate social responsibility (CSR) impacts linked to the business activities, including the production conditions in environmental and social terms at the sites of the suppliers.
Besides vertical integration in supply chains and stakeholder engagement, SCMS can also benefit from horizontal cooperation schemes. For instance, whole industry networks agree on standardized specifications and auditing criteria, thus lowering transaction costs of all supply chain actors involved (Carter and Rogers 2008). One example in textiles is the global industry collaboration Zero Discharge of Hazardous Chemicals (ZDHC 2015). Besides, in 2018, driven notably by consumer information rights pursuant to the European REACH Regulation, a “Proactive Alliance” has shaped gathering representatives from various industries (automotive, electrical and electronic, textiles), collaborating to develop a global cross-sector standard for communicating substances in products information along the supply chains, with the longer-term goal of full material disclosure (FMD). Such inter-sectoral cooperation on a meso-level will reduce the proliferation of multiple “negative lists” of restricted substances and in consequence lower the burden placed on supply chain actors.
Rethinking the functioning of value chains, not only for plastics, is closely interconnected with creating nontoxic material cycles; to this end the “key role of governments” has been identified “in creating incentives to engage actively with the private sector and other stakeholders to commit to a Circular Economy and to fully integrate the benefits of closed resource-cycles in the value chain of products, processes and services taking into account consumer behaviour” (EU Council 2018). A further enhanced institutional framework in terms of legal requirements on supranational and national level is essential (macro-level). This has to be underpinned by strategic and operative measures by companies (micro-level) as well as sectoral and cross-sectoral institutional arrangement (meso-level), most notably a globally consented standard for supply chain communication.
Against this background a trend to reintegrate upstream suppliers can be observed in different sectors, including textile (Inditex model, Aftab et al. 2018) and automotive (suppliers to OEMs cover in their corporation entire components and not only single assemblies).
In order to achieve SDG 12, a dynamic transformative process is indispensable. From a research and development perspective, there are numerous topics for future research (Rajeev et al. 2017). In particular the incentives and impediments for the various supply chain actors to contribute to SCP are to be analyzed allowing to develop a “responsive governance framework” (Schenten et al. 2017) offering business opportunities for proactive companies.
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