Expert Opinion

Expert OpinionIn light of climate change concerns, protecting the environment has become a priority for many organizations, both in the private and public sectors. As with most paradigm shifting initiatives – in its early stages – the line between awareness and action is still tentative. However, all indications are that the emphasis on reducing greenhouse gas (GHG) emissions is not something that will go away any time soon.

Although greening applies to the broad range of environmental issues, given global warming/climate change nexus, the current emphasis is on reducing greenhouse gases (GHG). The current U.S. administration’s goal is to reduce GHG emissions 83 percent below 1990 levels by 2050. Inevitably, there will be new and tighter government regulations with regards to GHG emissions.

Often, pollution prevention programs discover that supply chain processes such as transportation, manufacturing, packaging and material handling are the primary source of environmental impacts.

For this reason, the supply chain organizations of all companies are going to need to do more about environmental management.

Green initiatives are not something that are distinct and separate from other supply chain activities. Just as cost is an intrinsic part of all projects, we can expect that, in time, green aspects – like the level of GHG emissions – will be a core consideration in every supply chain activity. This is because environmental management has evolved from controlling air, water and waste pollution to a more holistic attempt to prevent pollution and manage the entire ecosystem. Green supply chain management integrates environmental management with the traditional supply chain management.

As the focus on efficiency and the environment increases, the initiatives tend to converge on how to use resources efficiently. The definition of efficiency is sometimes dictated by parameters established through regulations, and sometimes decided by the marketplace through supply and demand. These are not contradictory. “Cap and trade” initiatives are a good example where the market is established by regulations, but the actual trading follows the rules of supply and demand.