Many major companies are actively pursuing sustainability as a business strategy.  Among the larger companies in many industries, the focus of activity is shifting (or expanding) from internal operations (e.g., energy efficiency, green building, toxics reduction) to consideration of the firm’s full value chain, including not only the composition of products and components supplied by vendors, but also their environmental and social performance.  This trend is being driven both by improvements in the maturity and sophistication of corporate sustainability programs and by the development and deployment of tools and methods to quantify the life cycle environmental and social impacts of a firm’s products and services.  Application of these methods has often shown that the largest impacts of a product are not generated by its manufacture per se but instead by the production steps involved in making some of its component parts.  And because the ultimate product manufacturer may have hundreds of suppliers and very limited knowledge of and control over how these components are produced, it can be very challenging to fully understand and take steps to reduce the adverse full life cycle impacts of its products.

Some firms, though, are accepting this challenge.  Sportswear and sporting goods manufacturer Puma has very recently announced that it will provide financing to its suppliers in emerging markets to help them improve their environmental, health and safety, and social performance.  This new program is being launched in partnership with the International Finance Corporation and is a first-of-its-kind financing structure for the apparel industry.  The first phase of the program is being rolled out in Bangladesh, Cambodia, China, Indonesia, Pakistan, and Vietnam, but in partnership with European bank BNP Paribas, PUMA and IFC expect to expand program to additional countries.  Click here for further details.

Large company demands that their suppliers adhere to defined specifications, quality procedures, environmental and health and safety standards, and specific management and reporting practices are nothing new, but it is encouraging to see companies demonstrate real leadership by investing effort and resources into helping their suppliers overcome some of the important barriers to improving their performance.  It will be interesting to see whether and how other multi-national corporations respond to this example, and provide greater incentives and assistance to their own suppliers.