Sustainability Scores and Small Business

Sustainability Scores and Small BusinessSmall companies looking to break into major retailers these days have to contend with something other than just coveted shelf space:  Their sustainability “score.”

Increasingly, big-name corporations are assessing and selecting their suppliers based on environmental benchmarks. The concept gained traction when Wal-Mart a few years ago unveiled ambitious plans to assess suppliers using its “Sustainability Index,” which considers everything from packaging materials and waste disposal to energy efficiency and greenhouse gas emissions. In 2009, the retailer began sending 15-question assessment forms to 100,000 U.S. suppliers and plans to eventually start labeling products in the store based on their overall environmental friendliness – similar to a nutritional label on food.

In recent weeks, Procter & Gamble and Kaiser Permanente launched similar types of programs. (Some companies, such as Patagonia, have utilized such sustainability assessments of suppliers for a long time.)

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Major corporations figure they have the leverage to push environmentally friendlier practices onto their suppliers, and such initiatives, of course, bolster their own reputations as a eco-conscious companies.

But what does this mean for the suppliers, or wanna-be suppliers? It’s more important than ever for small businesses to know their total environmental impact and, if they don’t, to figure it. Wal-Mart’s assessment, for instance, asks its suppliers for detailed information including: “Do you know the location of 100% of the facilities that produce your product(s)?,” “Have you publicly set solid waste reduction targets?” and “What are your total annual greenhouse gas emissions in the most recent year measured?” (Read all of Wal-Mart’s 15 supplier questions.) Procter & Gamble’s assessment gives extra points for using renewable energy.

Small businesses hoping to work with these large corporations should anticipate questions about their environmental practices when they pitch company representatives, and thus be prepared with answers. The more details and real numbers you can mention, the better.

Here are some of the steps a small company can take to ensure its up to snuff when it comes to sustainability scoring:

  • Evaluate packaging. Too much packaging creates waste and consumes carbon to produce and transport. Seek ways to keep packaging minimal and use recyclable materials whenever possible.
  • Reduce energy usage. Make sure your business is energy efficient, since energy use a big factor in many of the sustainability indexes. Use high-efficiency lights, such as carbon fluorescent lights (CFLs), LEDs or T-8 fluorescents, whenever possible and employ other energy-saving tactics. The government’s Energy Star program offers guidance to small business.
  • Select your suppliers carefully. The sustainability indexes don’t just look at your business’s green practices – they care about your suppliers’ and manufacturing facilities’ practices as well. Make sure you do your own assessment on environmental practices when determining which suppliers to use.
  • Find organizations that can help. Some local non-profits, economic development initiatives and local governments are dedicated to helping businesses in their area lower their environmental toll. Do an Internet search for groups in your area or ask around. You may be able to get free help.

Kelly Spors Kelly Spors is a former small-business and entrepreneurship reporter and blogger for The Wall Street Journal who has also written for Yahoo!, Entrepreneur, NFIB's MyBusiness magazine and The New York Times. Kelly is now a freelance editor and writer based in Minneapolis and has previously managed communications for an environmental non-profit that helps businesses find ways to be greener.

8 Reactions
  1. My real question with an effort like this would be how genuine the sustainability really is. Seems like there are a lot of ways a supplier could window-dress their sustainability score without actually doing much good to the environment.

  2. Most small businesses have the wrong impression about sustainability or CSR and see it as a cost rather than a investment or area of new business opportunity.

    As for the motives for sustainability and the superficiality mentioned by Robert, I agree it’s not ideal, but even shallow first steps can provide a learning platform, and something is usually better than nothing.

    Make no bones about it, sustainability is coming flying down the supply chain to a small business near you and is already a tangible differentiator.

    It is not about early entry into this area anymore if you aren’t managing your environmental AND social impacts efficiently (including practically and appropriately for the size of your business)you are currently at a commercial disadvantage.

  3. Just to build on David’s points: sustainability Indexes are just the first beach-head in being able to (re)introduce transparency to the brand / customer relationship.

    It is no longer tolerable or acceptable for brands to dumb down consumers and expect to maintain loyalty based around two largely inconsequential variables (in the greater scheme of things) of price and quality.

    So recognising this, retailers and leading FMCG brands, are investing in sustainable supply chain measurement initiatives.

    Because to stay as a top-tier brand for the next 5 to 10 years will require moving beyond just price and quality and being able to provide full transparency to customers at point of sale.

    When enabled through RFID and told through digital labels, sustainability/transparency will become ubiquitous & allow us (consumers) to make enlightened decisions.

    Smaller suppliers have the opportunity to build their whole business model with this new world in mind – it’s not so easy for P&G, Kraft and Unilever (to a lesser extent) to “retool” – but they are trying to different extents.

  4. We beat this to death 2 months ago for 3 days, 90 companies, 120 people, each of the 40 steps and stages in the apparel supply chain from the dirt to the shirt. It may be a top down program, but its a bottoms action plan that takes a chain, and each of that link’s chain, and each if their link’s chains.

  5. Those small steps are a perfect way to start! I would have to agree about being able to “window-dress”, but at the same time, even if they are “window-dressing” they are still making themselves even the slightest bit more sustainable and green. That’s what we are after anyway. Any change is a welcome change; and who knows, maybe that smaller change will lead to bigger ones.

    For other easy ways to start making your business more sustainable check out Jim Simcoe has been helping businesses become green and more profitable for years and would like to help anyone and everyone who is interested.

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