Green Supply Chain CITI Index Released at Guiyang Eco-Forum
June 12, 2014 – The Institute of Public and Environmental Affairs (IPE) and the Natural Resources Defense Council (NRDC) today jointly release the Corporate Information Transparency Index (CITI) at the 2014 Eco-Forum Global Conference in Guiyang, China. This inaugural CITI report found that Apple, H&M, and Esquel Group are leading the pack in terms of green supply chain performance out of 147 consumer brands that were assessed.
The CITI is a new quantitative evaluation system designed to measure a brand’s performance in managing the environmental impacts of their supply chains in China. The CITI is jointly developed by IPE and the NRDC, with the generous support of the SEE Foundation.
The CITI is being released at the Greening the Global Supply Chain sub-forum, organized by the SEE Foundation and IPE, to be held at the Guiyang Eco-Forum Global hosted by the Environmental Protection Department of Guizhou. Jia Feng, Director at the Center for Environmental Education and Communications (CEEC), Fang Li, Deputy Director, Foreign Economic Cooperation Office, Ministry of Environmental Protection of China, Tian Huo, Party Committee Secretary and Bureau Chief, Guizhou Environmental Protection Inspection Department and Arthur Hanson, CCICED International Chief Advisor, are featured presenters who will be speaking on the importance of greening the global supply chain.
The CITI has been developed to help address the environmental challenges brought forth by global production and procurement. As the workshop of the world, China’s industrial production and processes have brought about severe pollution to its air, water and soil. Given the complexity of global supply chains, existing Chinese and international supply chain standards and assessment regimes have been ineffective in accounting for the environmental performance of supply chains.
“Despite the central importance of supply chains in globalized business core function, and despite the heavy impact of pollution from manufacturing in this way, company corporate social responsibility programs generally focus very inadequate attention on pollution from their supply chain. To the contrary, they focus on where it is easiest to start, rather than where it is the most important to fix,” says Linda E. Greer, Ph.D., Director of NRDC’s Health and Environment Program.
Over the past few years there has been progress made in the level environmental information disclosure in China and also developments in levels of public participation. In order to increase stakeholder participation in environmental management of supply chains, since 2010, IPE and partner NGOs have pushed dozens of brands from the IT and textile industries to use IPE’s Pollution Map database to identify and address their supply chain pollution problems. They have then conducted qualitative assessments of these brands. In August 2013, IPE began partnering with NRDC to refine its supply chain evaluation methods, and based on the input from multiple sources, developed the CITI.
Ma Jun, Director of the Institute of Public and Environmental Affairs said that, “The inaugural CITI evaluation looks at brands that have hundreds of millions of customers across the world. Our hope is that consumers in and outside of China pay attention to the CITI evaluation scores and rankings and use their own purchasing power to make more environmentally conscious choices, and be a force for pollution and emissions reduction in China.”
It is already apparent from this inaugural CITI evaluation that green procurement policies are reducing energy use and emissions. As of June 2014, Chinese and foreign brands had collectively pushed more than 1600 suppliers to issue statements on their specific pollution problems or to disclose their emissions data, and several hundred of these companies have taken corrective actions. To help more consumers understand the performance of different brands, IPE has also developed the ”Pollution Map” mobile app that allows users to use their cell phones to look up the environmental performance of different brands.
Another goal of the CITI is to create a roadmap that brands can follow to green their supply chains in China. Ma Yingying, Project Manager at IPE, said that the CITI evaluation is built upon five main themes: Communication and Follow-up, Compliance and Corrective Actions, Extending Green Supply Chains Practices, Target Setting and Data Disclosure, and Recycling and Reuse. These five themes are split into the 10 criteria the CITI uses for evaluating companies. Each of the evaluation criteria is split into five levels, from ones that are easy to implement, to more challenging ones that require a deeper level of supply chain management. The final aim is to reach a level of green supply chain best practice. So overall the CITI is also designed to be a green supply chain roadmap.
Ma Jun believes that, “The CITI reflects the brand’s will, capability, and institutional backing to solve pollution problems in its supply chain, and can also aid brands to move from basic compliance to continuous improvement and eventually best practice.”
This inaugural CITI assessment looks at eight industrial sectors with significant environmental impacts: IT, textiles, food and beverage, household and personal care, automobile, breweries, and leather. Apple, H&M, Unilever, Coca Cola, Stora Enso, and Puma were top performers in their respective sectors. However, 47 of the brands were unable to provide any sort of response to questions about their supply chains, demonstrating that there’s a long road ahead before the goal of green supply chains can be attained.
Ma Yingying says that, “The CITI evaluation is based on data platforms and information disclosure. We believe that those brands that lack transparency cannot demonstrate the effectiveness of their environmental protection work, and cannot carry out meaningful communications with stakeholders, and therefore face difficulties in ensuring supply chains can meet environmental standards given the complex social conditions in which they operate.”
Notably, this CITI evaluation includes numerous Chinese brands. While Chinese brands have lots of room for improvement, Huawei, Lenovo, Li-Ning, Youngor Group, and Toread have already started to enact green procurement policies.
Wang Limin, vice secretary of the SEE Foundation, commented that, “Over the past few years, Chinese products and services have been distributed globally, with supply chains of Chinese companies extending worldwide, and Chinese outbound investment rising. This means Chinese multinationals, in respect to their environmental management, will be subject to many different local regulations and also public supervision from consumers across the world. Therefore, it’s important that Chinese enterprises develop their green supply chain management.”
To help Chinese companies assume more environmental responsibility, and implement sustainable development practices, the SEE Foundation, in June this year, initiated a conference called the Green Agreement for Chinese Businesses- Green Supply Chain Action, in which more than 60 Chinese companies participated. Two SEE Foundation members, Han Jiahuan, Chairman of the Board at the Dachan Group, and Wang Jing, Chairman of Toread, will attend the forum, and with other guests, including Joan Krajewski, General Manager at Microsoft, Leyla Ertur, H&M China Regional Representative, Wang Jing, Chairwoman of Toread Group, Alex Wang, Professor at UCLA School of Law, and Susan Keane, Senior Analyst at the NRDC’s Health and Environment Program, will share their knowledge and experiences on how companies can make their supply chains greener.