Chemical Management: A Complex Environmental Challenge for Businesses

12-08-2015
Driving long-lasting environmental improvement in your global supply chain - while increasingly critical to long-term business success - represents a major endeavour, of which chemical management is a core part. In today’s globalised business arena, complex requirements and pressure from stakeholders such as legislators and NGOs can seriously impact your business, products and services, customers and consumers. Here we outline the business risks reflecting on recent cases in the media, and share some tips and starting points to get ahead of this crucial supply chain management priority.

Managing Chemicals in a Globalised Marketplace

Policy and legislation define what you can, should and should not do as a business in the country in which you operate. However, there is a big gap between these requirements and producers’ capacity to meet you on these critical areas. Many producers across the globe struggle with legislation in their own countries, and may be doubly unfamiliar with the rules by which your business has to abide. They may lack the expertise or manpower to understand or handle your requests.

One example of the scale of potential negative fallout for businesses was underlined by a recent case reported on in The Wall Street Journal, where Nestle’s Maggi noodles, claimed by Indian legislators to contain excess levels of lead, were recalled. Despite an appeal and retesting, which showed allowable levels of lead, Nestle announced that the value of the recalled noodles and related materials is estimated around 50m US$.

Demands for transparency are increasing from all sides. Greenpeace’s Detox Campaign continues to impact apparel and footwear companies. In China, particularly, the Institute of Public and Environmental Affairs (IPE) joined efforts with Greenpeace to support the collection of detox-related discharge data. More recently, IPE co-created the Corporate Information Transparency Index with the Natural Resource Defence Council (NRDC), evaluating companies in different sectors. But even that is changing. The rapidly changing environmental legislation in China is now being followed through with real-life consequences for manufacturers. Not only is the China government stepping up the enforcement of its environmental laws, textile dyeing and finishing plants could face substantial fines or even face being shut down.

Practical Steps to Get Started

China is of course just one example. Many other sourcing countries have specific requirements on substances and chemicals. It all comes down to the same issue – who is in your supply chain and what risks might they bring?

Some useful questions are:

  • Do I know my supply chain? Often we think we do, but further digging will show we only know the tip of the iceberg, also known as tier 1 producers
  • What do I know of my supply chain? You only have time and staff to interact directly with your most strategic suppliers. So who are the others? How are they handling your product and requirements?
  • What risk does my supply chain represent to my business? Is there a risk not knowing your entire supply chain?

Mapping your supply chain is a starting point to understanding your producers, and how they fit into your risk management strategy.

BEPI: A Holistic System for Assessing and Improving Your Supply Chain

So how can BEPI assist you in enhancing this critical business challenge? BEPI offers a three-pronged approach to managing environmental risk in your supply chain. It does so across eleven environmental performance areas (EPAs), one of which is pollution prevention and chemicals. However, before looking at chemicals management, BEPI requires all producers to assess their Environmental Management Systems (EMS), a mandatory EPA for all producers, as a lack of EMS aggravates all other areas. BEPI believe that every producer should benefit from a foundation level environmental management system in place before tackling more complex environmental performance needs.

As many companies can attest, the most significant risk to good chemicals management is not at tier 1 of your supply chain, where you have more direct visibility on operations, but at your tier 2 and 3 producers. BEPI helps you tackle this, particularly through the BEPI platform, an online producer performance database that allows your tier 1 producers to invite their own business partners and producers to join BEPI. Not only will this help you map your supply chain, it will also give you a better insight into who these producers are and eventually provide easier access to deploy different programmes to address chemical issues in the various tiers. BEPI provide a solid trajectory for your producers to follow along the path of improved environmental performance, based on management systems principles and capacity building. This ensures a strong foundation on which specific chemical management challenges can be identified and addresses, and more long-lasting programmes can be built.

FTA Seminar on REACH

All companies that are FTA members are welcome to register for the forthcoming 9th Seminar on REACH and Regulatory Compliance taking place on 22 September in Brussels. This seminar will provide practical advice on how to improve supply chain communication along with the upcoming REACH review 2019 which may lead to stricter rules and additional administrative burdens.

For more information, consult the agenda or log in to the FTA website to register.

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