Whether for ethical reasons or primarily for corporate reputation reasons, progressive companies increasingly try to present a positive environmental image. To do this they not only have to improve and validate their own activities and processes, but must also focus externally to ensure their suppliers adopt environmentally friendly processes too.
New research, from ESADE Business School in Barcelona and the Universidad Carlos III in Madrid, highlights the need for companies to engage in collaborative projects and initiatives with their supply chain to ensure the highest environmental performance. Many companies, recognizing the reputational risk that can come from the poor environmental reputations of their suppliers, monitor suppliers’ environmental performance. Typically monitoring can involve sending their suppliers environmental audits, requesting the details of their practices and processes.
This study shows that monitoring is not enough and urges companies to adopt a different approach by proactively collaborating with suppliers on pro-environment practices and processes. Collaboration can include providing suppliers with resources such as materials, standards or technologies; jointly developing more environmentally friendly products; and helping them to implement sustainable production processes.
The researchers also point out that internal and external factors known as ‘environmental drivers’ fact an impact on the success of a company’s monitoring and/or collaboration activities. Government regulations, top management support, influence from customers and best practices from competitors are examples of some of these drivers, which can be categorized as either coercive (e.g. government regulations, environmental standards) or non-coercive (e.g. top management support, customer influence, industry best practices).
The study, undertaken by ESADE professors Cristina Giménez Thomsen and Vincenta Sierra and Universidad Carlos III’s Elcio Mendonça Tachizawa, was based on survey answers from more than 70 purchasing and supply chain managers working in a variety of Spanish industries. The surveys questioned the managers on their green supply chain management practices, environmental performance (e.g. reduced waste, reduced environmental risks, and improved environmental reputation), and green environmental drivers.
The results of the survey study revealed the following:
- Monitoring alone does not have a direct impact on suppliers’ environmental practices. For example, simply monitoring suppliers’ waste and pollution levels does not inspire them to have environmentally friendly production processes.
- On the other hand, collaboration through the joint efforts described above does have a direct impact on environmental performance.
- Monitoring supports the collaboration effort, which means that it is still important. For example, monitoring can help identify in what areas firms need to be collaborating with their suppliers. Thus, monitoring has an indirect impact on environmental performance.
- Non-coercive drivers encourage and support both monitoring and collaborative green supply chain management activities.
- Coercive environmental drivers have a mixed impact. While they encourage monitoring, they do not seem to have a real effect on how much companies collaborate with their suppliers on green practices — and, surprisingly, may even have a negative impact.
Access the research paper: Green Supply Chain Management Approaches: Drivers and Performance Implications. Elcio M. Tachizawa, Cristina Gimenez & Vicenta Sierra. International Journal of Operations & Production Management; November 2015.