As I have discussed frequently in this column, the consumer packaged goods (CPG) industry is facing a major shift in response to consumer demand for more sustainable products. Although it is easy for the average shopper to identify 100 percent recycled packaging as being a step in the right direction, even the most sustainability-savvy consumer might not be able to judge if that same product made it onto shelves in the most environmentally efficient way. Many educated consumers may be well-informed on the origin of their favorite products, as well as on their labeling once it’s packaged neatly at the retail location, however the missing link in the product’s overall sustainability often lies in the supply chain.
One reason that consumers and retailers may not consider the sustainability of a company’s supply chain is that it isn’t always as easy to judge as the “Made with 97 percent sustainable ingredients” sticker stamped on the label. Many CPGs have identified this problem and implemented a system of sustainability scoring that their suppliers and manufacturers must adhere to.
At The Strive Group, we use a scorecard to continuously rate our performance in four key areas: economic (cutting costs by streamlining processes), social (conditions for employees), environment (limiting wasteful packaging or identifying efficient shipping routes) and governance (ethical behavior). Although actual criteria may vary by company and industry, most scorecards are designed to measure environmental performance and assess the company’s environmental footprint by measuring key factors such as energy use, water use, waste disposal and greenhouse gas emissions. Where differences may lie is how these factors are assessed, and what levels of each are deemed compliant.
The reason for implementing a scorecard in the first place is two-fold; it ensures efficiency throughout the supply chain while also making it clear to consumers that sustainable practices are being upheld. Employing this type of scorecard allows companies to quantify their sustainability efforts in a meaningful way that will then translate easily to the consumer.
Unfortunately, while larger companies such a Procter & Gamble and Walmart have the resources to put these systems in place, many smaller companies do not. The result of this is that supply chain partners that are working with multiple companies are either adhering to multiple sets of standards, or none.
It is for this reason, among others, that it is a necessity that CPGs implement an industry-wide scoring system that is universal amongst all suppliers and their partners.
Implementing Industry-wide Standards
The first obvious benefit of an industry-wide standard is that it will increase the rate of adoption of sustainability initiatives amongst organizations that may not have the internal assets to create those tools themselves. This will represent a significant savings to companies that do not need to create these systems in-house.
Secondly, supply chain partners that are dealing with multiple CPGs can adhere to one set of standards. The current lack of one standard creates challenges for supply chain partners who end up placing a significant amount of energy and focus on mapping to each of their CPG clients’ specific sustainability requirements. These efforts could be better spent delivering against more strategic and impactful sustainability initiatives, which ideally a uniform set of standards would allow for.
Finally, having a universal set of standards that can be reflected on labeling will make purchasing decisions easier for consumers, who will be able to see the complete sustainability picture. This translates into an obvious benefit for CPG suppliers in that those that score highly will earn points not just on the scorecard, but with their environmentally conscious marketers.
Some companies who have identified the need for such a universal scorecard have come together around trends like sustainability to trade best practices. The Foundation for Strategic Sourcing (F4SS) is a collaborative, non-profit, membership organization within the CPG industry that counts Johnson & Johnson, General Mills and Procter & Gamble as members. Doug Sharfstein, President of The Strive Group, also serves on the board. The formation of groups like F4SS is definitely a step in the right direction in terms of increasing communication on sustainability issues amongst CPGs and their suppliers.
For any company, no matter what their industry, implementing sustainability standards within their own organizations is an obvious first step. Creating a universal scorecard will not only help smaller companies without resources take that next step sooner, but will also help larger organizations streamline their processes and achieve sustainability more efficiently.
Jeff Sharfstein is president and CEO of The Strive Group. The Strive Group is comprised of four operating entities that design, manufacture and pack-out point of purchase displays for major consumer products companies. A fifth entity, Strive Logistics, LLC, provides transportation solutions to display customers and others. Jeff Sharfstein began his business career with Pride Container Corporation, a company founded by the Sharfstein family, in 1968. He left in 1990 to start World Distribution Group (now Strive Logistics) and returned to Pride Container Corporation as its president in 1997.