Last week, I had the opportunity to present at the Sourcing Interest Group’s (SIG) meeting on Green/Sustainability in Sourcing in Seattle. Talking with the other speakers and attendees, I was once again struck by just how seriously companies are taking this issue. This is not a feel good effort by people in Prius’s (or is the plural Priui?) and Birkenstocks. Instead, world class sourcing organizations are devoting significant attention to plotting a strategy that balances both the economic needs of the company and the green demands of their leadership, employees, shareholders and customers. This is further complicated by the increasing length of the typical supply chain and outside influences.

The key topics addressed included:

• Legal and regulatory environment. Multiple outside influences are pushing companies to get moving, including institutional shareholders, regulatory bodies (especially in Europe) and customer groups. Expectations are that some sort of Cap & Trade system will be implemented in the US within the next few years, most likely similar to the structure of the European ETS (Emission Trading Scheme).
• The Green Landscape. Companies are bundling environmental efforts with product safety, supply chain risk, etc. into a coherent approach under a single corporate ownership.
• Near-term opportunities. There’s a broad recognition that we can’t boil the ocean (forgive the global warming pun) and efforts need to be focused where they’ll have the most impact. Approaches have been developed that leverage the established methods of building a sourcing pipeline by adding environmental and supply chain impact criteria to the assessment. The end result is an opportunity map that highlights categories where there is both green and economic value, so that sourcing groups can best allocate scarce resources.

Overall, I was left with the impression that this is a trend that’s not going away and is in fact likely to accelerate over the coming years. Companies need to have this on their radar so that they’re not surprised when it becomes mandatory.

Kris Colby, a Director of Ariba’s Spend Management Services group, recently authored a white paper on the subject of minimizing risk – An Ounce of Prevention: Steps Your Organization Can Take Now to Reduce the Risk of a Product Safety Incident.