Vertical Partnership for Scale in Impact Measurement: The Case of The Sustainability Consortium

1. Vertical Partnership for Scale in Impact Measurement: The Case of
The Sustainability Consortium
Sheila Bonini, The Sustainability Consortium @TSC_News
Jim Sullivan, SAP
Thomas “T.C.” Redd, Walmart @WalmartGreen
Gil Friend, Natural Logic, Inc. @gfriend

2. © 2015 Arizona State University and University of Arkansas www.sustainabilityconsortium.org
Sustainable Products
for a Sustainable Planet
October 2015

3. © 2015 Arizona State University and University of Arkansas
Modern Supply Chains are Typically Complex, Fast-
Changing and Globally-Dispersed…
3

4. © 2015 Arizona State University and University of Arkansas
…And Prioritizing Issues is a Major Challenge
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Transportation
Palm Oil
Worker
Health &
Safety
Animal Welfare
E-waste
Climate and Energy
Packaging
Product Disposal
and Recycling
Labor Rights Sustainable
Seafood
Food Waste

5. © 2015 Arizona State University and University of Arkansas
TSC Visual Supply Chain Illustrates Life Cycle Approach
5

6. © 2015 Arizona State University and University of Arkansas
Features and Benefits of TSC Tools
• KPIs focus on environmental and social “hotspots” in the supply
chain where the impacts and improvement opportunities are the
greatest
Drives
improvement
• Gives buyers quantitative data they need to benchmark their
suppliers and set goals for improvement – without having to
become a subject matter expert!
Empowers
buyers
• Use of TSC standardized content spreads the cost and ensure the
drive towards common industry KPIs = reduced survey fatigue and
more time for action
Reduces cost
• Uses publicly available IT systems already in marketplace, low
barrier to entry
• Other retailers and thousands of suppliers already engaged on the
platform
Available now
• Uses key performance indicators (KPIs) based on scientific research
conducted by an independent third-party (TSC) and vetted by
NGOs, manufacturers, and retailers
Credible
Sustainable Products for a Sustainable Planet

7. © 2015 Arizona State University and University of Arkansas
TSC Enables Aggregation and Measurement of
Results across Categories and across Impacts
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8
19
22
22
24
24
24
25
25
26
30
31
32
32
38
39
42
43
44
47
53
Flourinated GHG
Supplier-GHG
Packaging
Transportation
Farm-Environmental
Farm-Water
Product Design
Manufacturing-Pollution
Supplier-Pollution
Manufacturing-GHG
Farm-Social
Sourcing
Supplier-Water
End-of-Life
Use Phase
Manufacturer-Labor
Supply Chain Mapping
Priority Chemicals
Manufacturing-Worker Health and Safety
Animal Welfare
Supplier-Worker Health and Safety
Average KPI ScoreResults from 2015
Surveys on PSN
3,000+ surveys
completed by over 1,700
suppliers (2014 = ~2,500)
Average Score of 33%
(29% in 2014)
Social KPIs tend to score
higher than
environmental KPIs
Supplier, farm-level KPIs
scores relatively low
KPIs differentiate: Large
variations between
impact types, supply
chain stages and
between suppliers
Supplier-Level scores
help target improvement
efforts

8. © 2015 Arizona State University and University of Arkansas
TSC’s Partnership With SAP Is Solving Survey-Fatigue
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From this…
TSC
SAP PSN SuppliersRetailers
… to this
Retailer 1 Supplier 1
Retailer 2
Retailer 3
Retailer …
Supplier 2
Supplier 3
Supplier …

9. © 2015 Arizona State University and University of Arkansas
About SAP Product Stewardship Network (PSN)
PSN is a global network. It is a cloud-based solution with web-browser access, allowing anyone to
participate. It is available in multiple languages. In consumer products industry over 50% of the top 100
global brands are already registered and have participated in one or more surveys.
Some of those top 100 companies include:
• Nestle SA
• The Procter & Gamble Company
• The Unilever Group
• PepsiCo Inc.
• Mondelez International
• Tyson Foods Inc.
• L'Oreal SA
• 3M
• Groupe Danone
• Henkel
• Kimberley Clark Corporation
• Kraft Foods Groups Inc.
• Diageo PLC
• Colgate-Palmolive Company
• General Mills Corporation
• Reckitt Benckiser
• Johnson & Johnson (consumer segment)
• Kellogg Company
• ConAgra Foods Inc.
• Smithfield Foods Inc.
• Dean Foods Co
• Beiersdorf
• Campbell Soup Company
• Mattel Inc.
• The J.M. Smucker Company
• The Clorox Company
• Maple Leaf Foods
• Energizer Holdings Inc.
• Dole Food Company Inc.
• Hasbro
PSN allows you to create a many-to-many
private network from its company directory…
…and deliver out-of-the-box or
customized surveys then…
…report the results

10. © 2015 Arizona State University and University of Arkansas
Benefits from a Performance Management Approach
• Comprehensive buyer
engagement
• Quantitative impact claims
• Reduces supplier survey fatigue
• ID both risk and opportunity
• Available and Cost-Effective

11. 11
The Evolution of Sustainability Assessment at Walmart
Packaging
Scorecard
Supplier
Sustainability
Assessment
Sustainability
Index 1.0
Sustainability
Index 2.0
• Low impact potential
• Information overload
2008
2012
2010
2015
• Digestible results
• Lacked relevance & buy-in
• Personally relevant
• Right issues; wrong metrics
• Information overload
• High impact potential
• Digestible results
Walmart Stores Inc. - Confidential

12. 12
The Sustainability Index Rollout: Progress to Date
2012
2013
2014
2015
▪ Piloted with beef, dairy, computers, TVs, and detergents
▪ Walmart commits to buying 70% of goods sold in U.S. from
suppliers who use the Index (where available)
▪ Sustainability goals are included in buyers’ objectives
▪ Over 1,000 suppliers complete over 1,000 surveys
▪ Scores already start improving
▪ Successfully transition to a better IT solution (SAP’s PSN)
▪ Almost 1,400 suppliers complete over 2,500 surveys
▪ 221 buyers have scorecards for their suppliers
Walmart Stores Inc. - Confidential
▪ Expanded into Sam’s Club
▪ Launched Sustainability Leaders Store on Walmart.com
▪ Over 1,700 suppliers complete almost 3,000 surveys
▪ 265 buyers have scorecards for their suppliers
▪ 53% of sales covered; 41% of sales evaluated

13. 13
Use Case: Proactively Manage Supplier Mix
Change supplier mix to improve sustainability performance
IndexAvg.
OverallScore
Sales Volume
0
Department: Toys
Suppliers: 120
Supplier Development Strategies
1. Big Leaders. Celebrate category
leadership (e.g. acknowledge in QBR, on-
stage recognition).
2. Big Laggards. Challenge supplier to
improve beyond median. Review action
plans and progress in QBR.
3. Small Leaders. Evaluate opportunity to
increase business (e.g. more DCs, more
shelf space).
4. Small Laggards. Explore alternative
suppliers. Evaluate reduction in business. If
no viable alternatives, challenge them to
improve beyond median.
$100M
0
100
Median
Median
1.
2.
3.
4.
Walmart Stores Inc. - Confidential

14. © 2015 Arizona State University and University of Arkansas www.sustainabilityconsortium.org
The Sustainability Consortium® is jointly administered by
Arizona State University and University of Arkansas with additional
operations at Wageningen University and Nanjing University.