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Reverse Logistics: "2 for 1" Carbon Footprint Reduction Strategy
Green Edge focuses its sustainability lens this month on opportunities to improve organizational performance and bottom line results through the greening of supply chains.  Every year, American companies incur costs of over $100B managing and disposing of products that have been returned by consumers. These products range from electronics to appliances to apparel. The continuing economic downturn, coupled with increasing concerns about the environmental ramifications of waste, has led to both new "extended producer responsibility" mandates and voluntary manufacturer "take-back" programs.
Both of these monikers refer to initiatives where the manufacturer of a product takes back its product after the customer has finished using it. Organizations that either choose, or are required, to participate in take-back or extended producer responsibility programs have an opportunity to transform their discarded products back into the raw materials they were composed of. This process is often referred to as "reverse logistics." |
Extended Producer Responsibility Mandates
Let's first take a look at a new regulatory initiative in Vancouver, BC: A novel zero waste mandate requires product manufacturers to take-back their products when their customers have finished using them.
 Thus far, Vancouver's efforts have been highly successful, primarily due to high consumer participation rates and an infrastructure that can accommodate recycling beyond glass, plastic, and paper. Its programs currently cover most electronics, paints, oils, lightbulbs, and batteries. By 2017, all hazardous waste will be covered, as will over 60% of all landfill and incinerator waste. Vancouver's zero waste mandate will not only help the city achieve its zero waste goal, but will also bolster the economy. According to the Product Policy Institute, take-back programs in metropolitan Vancouver have created over 2,000 new jobs and achieved emissions reductions equivalent to removing 73,000 cars from the road. The private sector initiatives used to accomplish this revolve around the notion that consumers want only the services provided by a given product. A consumer who purchases a refrigerator wants only the cold space it offers, but not the heavy metals and chemicals inherent in the appliance. Producers, on the other hand, value technical nutrients such as metals and chemicals and pay for them as supply inputs. By closing the loop between suppliers and consumers, producers can lower input costs while simultaneously internalizing full life-cycle product costs.
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Voluntary Take-Back Programs
Although comparable zero waste regulations in the United States are still years away, a handful of progressive companies have preemptively established voluntary take-back programs. In our January newsletter, we discussed promising efforts in the electronics industry to increase recycling through take-back programs. Since its creation in late 2007, Electronic Manufacturers Recycling Management Company ----a dedicated recycling company created by Panasonic, Sharp, and Toshiba ---- has recycled more than 112 million pounds of electronic waste. While progress in other sectors has been slower, innovative companies are gaining market share as a result of reverse logistics strategies. |
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Preserve Transforms Yogurt Cups into Toothbrushes
Take Massachusetts-based startup Preserve for example. Preserve is one example of a company that has had great success with take-back and recycling programs. Since the company's inception, one of its most impressive business strategies has been a program called Gimme 5.
The name is derived from number five plastic, a plastic that ----despite being more easily recyclable and technically useful than other plastics ----is not widely recycled. Preserve urges consumers to either send in their number five plastic or drop it off at a local Whole Foods. The company then uses the plastic for its 100 percent recycled tableware and toothbrush product lines.  Once these products are sent back to Preserve they are completely recycled again. To make it easy for consumers to return their used products, Preserve designed packagingg that doubles as a mailing label. With substantially lower input costs than other companies, the small startup has grown quickly, roughly tripling revenue since 2007. By taking back products that Preserve has not produced originally in addition to its own products, the Gimme 5 program enables Preserve to apply its reverse logistics strategies to a much broader universe of raw materials that would otherwise be treated as waste. We see this as a win-win or a 2 for 1 carbon footprint reduction strategy: Preserve gets to both push down its supply costs even further while it diverts even more potential waste from landfill. |
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We Look Forward to Hearing from You
If you have questions about anything you've read in this newsletter or if you are wondering how to meet your own green challenges, contact me and I will be happy to respond via email.
Warmly,
Ellen Sinreich
President
greenedgellc.com
ellen@greenedgellc.com
212 828 3840
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 Ellen Sinreich is President of Green Edge, LLC, which helps organizations leverage the power of green through Green Edge Workshops and Consulting Services.
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Update on Supplier Sustainability Score Cards
In early June, General Mills became the latest addition to a group of successful multinational corporations that have begun systematically assessing the environmental impact of their suppliers. The Minneapolis-based food-processing giant will be using Procter & Gamble's supplier environmental sustainability scorecard----which was made publicly available more than a year ago----as a basis for its new system. General Mills joins Procter & Gamble, Walmart, IBM, Kaiser Permanente and Westpac in assessing the environmental impact of its suppliers and incorporating that assessment into its evaluation of suppliers. Supply chain management is an effective way for organizations to broaden the reach of their sustainability goals. Companies such as Walmart----which estimates that its indirect emissions are more than one hundred times greater than its direct emissions----are starting to realize that the greatest sustainability and cost-reduction opportunities may lie beyond their own four walls. |
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Patagonia's Common Threads Initiative
Another company that has eagerly embraced the opportunity provided by reverse logistics and extended producer responsibility is California-based outdoor clothing company Patagonia. This historic environmental champion launched a program called Common Threads in 2005, the goal of which is to make every Patagonia article of clothing recyclable. More than half of Patagonia products are currently recyclable, including all polyester, nylon, and cotton clothing.
Under Common Threads, customers are expected to drop off used clothing at local stores or ship these garments to Patagonia's distribution center. The company has had success with the program, collecting a little less than 10 thousand kilograms of clothing since 2005.
Patagonia pays about $2 per kilogram to recycle old garments and the recycled fiber costs about 20% to 30% more than virgin fiber. This added cost reduces carbon and energy impacts by close to 80%, even when the impacts of collecting and shipping used clothing are considered. In addition to reducing environmental impact, Patagonia uses Common Threads as a means to distinguish itself from its less environmentally conscious competitors. Sustainability is so important to Patagonia that it invests rather than reaps money from recycling clothing, but Common Threads could easily become profitable as oil prices continue to rise, economies of scale lead to lower recycling and shipping costs, and as Patagonia designs products that are more easily recycled.
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Green Edge Opportunity: Greening Your Supply Chain
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Green Edge Newsletter
If you'd like your company to be featured in one of the next issues of the Green Edge Newsletter, we'd love to hear from you. We are always looking for great green stories to share with our community of clients, colleagues and friends. If you missed our previous issues, link to our archives home page or our blog. The Green Edge Newsletter is published monthly by Green Edge, LLC. EDITOR: Ellen Sinreich CREATIVE DIRECTOR: Sara Mears CONTRIBUTOR: Moss Amer Copyright © 2011 Green Edge, LLC
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