strategies and lessons learnt from the switch-asia programme scaling-up study … · ·...

1SWITCH-Asia | SUSTAINABLE SUPPLY CHAIN INITIATIVES

SWITCH-Asia Network Facility is funded by the European Union.

SWITCH-Asia Network Facility is implemented by Collaborating Centre on Sustainable Consumption and Production and Wuppertal Institute for Climate, Environment and Energy.

SuStainable Supply Chain initiativeS

STrATEgIES ANd lESSoNS lEArNT From THE SWITCH-ASIA ProgrAmmE

SCAlINg-UP STUdy 2013

2 SWITCH-Asia | SUSTAINABLE SUPPLY CHAIN INITIATIVES

abbreviationS

bCCi Bhutan Chamber of Commerce and IndustrybGp Better ginning practiceCoC Chain of custodyCSr Corporate social responsibilityeee Electrical electronic equipmenteSCo Energy service companieseup Energy using productse-WtS e-waste tracking systemFao Food and Agriculture organizationF&b Food and beveragesFnCCi Federation of Nepalese Chamber of Commerce and IndustryFSC Forest Stewardship CouncilFtF-i Fair Trade Forum – India Gepa Society for the Promotion of Partnership with the Third WorldGFtn global Forest Trade NetworkGhG greenhouse gashaCCp Hazard analysis and critical control pointsieC International Electrotechnical CommissioniSo International organization for Standardization

MepS minimum energy efficiency requirementMou memorandum of understandingMSMe micro-, small- and medium-sized enterpriseoeM original equipment manufacturerohS occupational health and safetyplM Product lifecycle managementppp Public and private partnershipre resource efficiencyrp responsible productionSCp Sustainable consumption and productionSFC Shop for ChangeSMe Small- and medium-sized enterpriseSMep Secondary materials exchange platformSltDa Sri lanka Tourism development AuthoritySSCM Sustainable supply chain managementtnC Transnational corporationWeee Waste electrical electronic equipmentWFto World Fair Trade organizationWte Waste to energyWbCSD World Business Council for Sustainable development

publiSher SWitCh-asia network Facility Collaborating Centre on Sustainable Consumption and Production (CSCP) Hagenauer Straße 30 42107 Wuppertal | germany

Phone | +49.202.45 95 8.10 Fax | +49.202.45 95 8.31 www.switch-asia.eu [email protected]

author Kartika Anggraeni

SuperviSion Burcu Tunçer

revieWer lewis Akenji

eDitor Alison Eades

DeSiGn Elmar Sander (design concept), Katharina olma

CopyriGht The SWITCH-Asia Network Facility

This publication has been produced for the SWITCH-Asia Programme and the European Union. The contents of this publication are the sole responsibility of the Collaborating Centre on Sustainable Consumption and Production (CSCP) and can in no way be taken to reflect the viewsof the European Union.


project abbreviation

CSr Vietnam

Higher Efficient Transformers

Clean Batik Initiative

China motor Challenge

WEEE recycle

AEmAS

get green

Automotive SSCm

greening Sri lankan Hotels

green Products

gPIoS

project title

Adopt CSr (Helping Vietnamese SmEs Adapt and Adopt Corporate Social responsibility for Improved linkages with global Supply Chains in Sustainable Production)

China Higher Efficiency Power and distribution Transfor-mers Promotion Project

Encouraging and Implementing Sustainable Production and Consumption of Eco-friendly Batik in Indonesia and malaysia

Electric motor Systems Energy-Saving Challenge – Impro-ving the operating Efficiency of Chinese Electric motor Systems

Establishing E-Waste Channels to Enhance Environment Friendly recycling

Establishment of the ASEAN Energy manager Accreditation Scheme

get green Vietnam (Sustainable living and Working in Vietnam)

greening Supply Chains in the Thai Auto and Automotive Parts Industries


green Products and labelling (green Products development and labelling in mongolia)

green Philippines Island of Sustainability

location

Vietnam

China

malaysia and Indonesia

China

India (Ban-

galore, delhi,

Kolkata, Pune)

multi-Country

Vietnam

Thailand

Sri lanka

mongolia

Philippines

liSt oF SWitCh-aSia projeCtS (that started in 2009, 2010 and 2012)



ESEEC

SC in Urban China

rEWIN

Industrial Symbiosis

VA3

Eco-Jute

lead Elimination Project

low Energy Housing

mEET-BIS

EmAS global China

Pro-Sustain

Soybean Processing (SCoPE)

project title

Improving Environmental and Safety Performance in Electrical and Electronics Industry in China

Implementing Sustainable Consumption in Civil Society of Urban China

Improving resource Efficiency for the Production and recycling of Electronic Products by Adoption of Waste Tracking Systems

Implementing Industrial Symbiosis and Environmental management Systems in Tianjin Binhai New Area

Improving Energy-Efficiency and Environmental Performance of Chinese SmEs and large Companies Facilitated by Voluntary Public-Private Partnerships

Jute: An Eco-friendly Alternative for a Sustainable Future

lead Elimination Project

low Energy Housing in Sichuan and Shenzen, China – Enable and Enforce Energy Efficient Building Construction

mainstreaming Energy Efficiency Through Business Inno-vation Support

Premium Environmental management for Companies in China

Promoting Fair Trade and Sustainable Consumption in India - Pro SUSTAIN

Scaling Sustainable Consumption and Production in the Soybean Processing Industry (SCoPE)

location

China

China

China

China

China

Bangladesh, West Bengal in India

multi-Country

China

Vietnam

China

India

Indonesia



mSmE Clusters

SmArT Cebu

greener Construction Project

SEId

SUS Bird

Cotton Production(SPrINg)

Biomass SP

Sustainable rattan

rE-Tie

SCI-Pak

Wood Processing and Trade

SUPP-Urb China

project title

Scaling Up Sustainable development of mSmE Clusters in India

SmEs for Environmental Accountability, responsibility and Transparency

Supporting a greener and more Energy Efficient Construction Industry in mongolia

Sustainable and Efficient Industrial development

Sustainable Building Interior renovation and decoration Initiative in China

Sustainable Cotton Production in Pakistan‘s Cotton gin-ning SmEs (SPrINg)

Sustainable Production (SP) of the Biomass Industries in malaysia: optimising Economic Potential and moving Towards Higher Value Chain

Establishing a Sustainable Production System for rattan Products in Cambodia, laos and Vietnam

reduction of Environmental Threats and Increase of Exportability of Bangladeshi leather Products

Sustainable and Cleaner Production in the manufacturing Industries of Pakistan

Sustainable and responsible Trade Promoted to Wood Processing SmEs Through Forest and Trade Networks in China, India and Vietnam

Sustainable Public Procurement in Urban Administrations in China

location

India

Philippines

mongolia

Bhutan and Nepal

China

Pakistan

malaysia

Cambodia, laos, Vietnam

Bangladesh

Pakistan

China, India, Vietnam

China (Tianjin, Qin-

huangdao and

lanzhou)



ACIdlooP

Food & Beverages

SPIN-VCl

Bamboo

SusTex

Tourism in Bhutan

Train the Trainers

VSBK

WtE in rice milling Sector

ZCr

location

India

Sri lanka


China (Sichuan)

India (Jaipur)

Bhutan

China

Nepal

Cambodia

Philippines

project title

Sustainable Production Through market Penetration of Closed loop Technologies in the metal Finishing Industry

Sustainable Production in the Food & Beverages Industry in Sri lanka

Sustainable Product Innovation in Vietnam, Cambodia and laos

Sustainable revival of livelihoods in Post-disaster Sichuan: Enhancing Eco-friendly Pro-poor Bamboo Production Supply Chains to Support the reconstruction Effort

Sustainable Textiles for Sustainable development

Sustainable Tourism in Bhutan: An Integrated Approach to Production, Consumption and livelihood development

Train the Trainers: A Proposal to Train Chinese Construction Sector SmEs in Energy Saving Techniques and Technologies

VSBK – Vertical Shaft Brick Kilns and other SCP – Sustainable Construction Practices

Waste to Energy for the rice milling Sector in Cambodia

Zero Carbon resorts – Building Energy Autonomous resorts Creating Appropriate Technology Solutions


Foreword 8executive summary 91. introduction 11 1.1 Sustainable supply chain management in the SWITCH-Asia programme 11 1.1.1 definition of sustainable supply chain management 11 1.1.2 The SWITCH-Asia perspective 11 1.2 The coverage of SWITCH-Asia projects within value chains 13 1.2.1 The points of intervention of SWITCH-Asia projects 13 1.2.2 SWITCH-Asia projects and different tiers of the value chain 14 1.2.3 Three issues addressed by SWITCH-Asia projects 15 1.3 Which type of corporate buyers do the projects engage? 15 1.3.1 geographic location 16 1.3.2 Position in the value chain 182. Drivers of SSCM initiatives 19 2.1 Better operational risk management 19 2.2 Better reputational risk management 20 2.3 Cost reduction potential 20 2.4 Quality management 21 2.5 Co-creation with consumers 22 2.6 Value chain transformations 233. barriers to SSCM initiatives 24 3.1 High cost of compliance 24 3.2 No operational policy framework 24 3.3 Non-transparent information flow 25 3.4 low market incentive 264. Key SSCM initiatives 27 4.1 definitions 29 4.1.1 Standards, certifications, and labels 29 4.1.2 guidelines 29 4.2 Standards 30 4.2.1 Standards for products 30 4.2.2 Standards for environmental protection 31 4.2.3 Standards for waste management 31 4.2.4 Standards for higher efficient technology 32 4.2.5 Standards in general 33 4.3 Certifications 33 4.4 labelling 34 4.5 guidelines 35 4.5.1 guidelines for technical operation 35 4.5.2 guidelines for procurement 36 4.6 Audit and assessment 36 4.7 Platforms 375. lessons learnt for scaling-up SSCM initiatives 396. Conclusions 42

table oF ContentS


i dentifying and scaling up successful sustain-able consumption and production practices in Asia sit at the heart of SWITCH-Asia Pro-

gramme. For the last decades, a wide range of SCP tools and practices have been developed and put in the service of the industry and consumer groups, but unfortunately these weren’t repli-cated adequately or spread widely. Similarly, in the Asian region, SCP policy instruments can of-ten be identified, but their effective implementa-tion or enforcement is lacking. So, SCP practices haven’t yet turned into every day practices and a switch is called for. Now, the projects within the SWITCH-Asia Programme put their full attention firstly, to identify and overcome barriers that have pre-vented the spread of SCP practices; and secondly, to locate leverage points where a big replication with small amount of effort can be made. Barri-ers could include lack of adequate financial re-sources and technical knowledge, lack of aware-ness, inefficient flow of information, inadequate policy framework and peer pressure favouring unsustainable practices. leverage areas or lev-eraging strategies could address these barriers, make untapped opportunities accessible and en-able the SWITCH-Asia target groups to take up SCP practices. In SWITCH-Asia Programme, SCP practices can be scaled up ‘horizontally’ and/or ‘verti-cally’. The projects usually focus on horizontal scaling-up as they try to gradually rollout SCP practices such as Cleaner Production within a sector or to a wider geographical area. For ex-ample, they partner with business membership organisations (Bmos) in order to put forward a convincing business case on Cleaner Production and to build capacity among a large number of SmEs in a particular sector or in a region. Few projects aim at vertical scaling-up as they work on structural and institutional changes at the local, regional and to national levels. For exam-ple, they engage with policy-makers in order to influence the legislative framework, written

and un-written rules that SmEs and consumers are concerned with. Vertical scaling-up is also about long-term sustainability of a projects in-tervention. For example, several SWITCH-Asia projects have established new entrepreneurial bodies that are set to grow and last in the long-term through increased financial resources, staff training, networking, etc. In 2010, the SWITCH-Asia Network Facility has embarked into task of gathering, document-ing and analysing projects efforts to scale-up SCP practices. While each SWITCH-Asia project has developed its own method of horizontal and vertical scaling-up, clusters of leveraging strat-egies could be identified. Initially, five main ar-eas of leverage including engaging with service providers, building partnerships within supply chains, linking with policy-makers, engaging with consumers towards ethical purchase and use, and enabling access to finance were distin-guished. These leverage areas reflect the life cy-cle and multi-stakeholder thinking that need to be in place for effective spread of SCP practices. Via desktop research and field visits, the Net-work Facility compiled project data and prepared studies within each leverage area. This report focuses on sustainable supply chain management (SSCm) initiatives found in the SWITCH-Asia projects. The study describes the barriers identified by projects for taking up SSCm initiatives and provides an overview of strategies applied to overcome them. The knowl-edge on scaling-up strategies distilled from the SWITCH-Asia projects can provide SCP practi-tioners, policy-makers and researchers with first hand tips and lessons learned.

All other thematic studies can be accessed on the SWITCH-Asia Network Facility website at: http://www.switch-asia.eu.

ForeWorD


exeCutive SuMMary

Sustainable supply chain management (SSCm) is crucial to speed up the ‘scaling-up’ of sustainable consumption and pro-

duction (SCP) practices – cleaner production, CSr reporting, eco-labelling, environmental management systems, etc. The supply chains addressed by the SWITCH-Asia programme in-volve multiple actors and stakeholders from the design of products and services, to their produc-tion, distribution and ultimately to their use by consumers. dealing with a supply chain affects all stakeholders either directly or indirectly. The value chain concept takes account of a product’s consumption and disposal – making SSCm even more strategic for any scaling-up efforts. The SWITCH-Asia programme supports the SmEs in Asia to ‘switch’ from the old way of do-ing business to a more sustainable one. In this study, readers will find information on how SWITCH-Asia projects link with SmEs, and their (corporate) buyers and consumers.

upStreaM FoCuSFrom observation on the projects, it is clear that they focus more on the upstream part of the supply chain, particularly on the production and manufacturing chains, with less engagement downstream towards buyers or customers. This upstream-skewed focus might be due to the fact that the SWITCH-Asia programme is set to deal particularly with SmE producers to improve their production processes.

typeS oF Corporate buyerSCorporate buyers usually occupy influential posi-tions within value chains and can make interven-tions that have resonating effects on the perfor-mance of suppliers. Two categories of corporate buyers have surfaced in this study. The first is based on geographic location and the second is based on position within the value chain. most of the projects take advantage of in-ternational markets to attract SmEs to join the cause, though there are many SmEs that prefer

to focus only on the domestic market. Seeing it from the value chain perspective, SWITCH-Asia projects mainly deal with manufacturers and retailers though there might be sub-categories as well, which could include public procurers and recyclers as buyers.

FaCtorS inFluenCinG the taKe up oF SSCM initiativeSIt is important to first find out what factors drive companies to undertake SSCm, and what ham-pers them to do so. Among the drivers, opera-tional as well as reputational risk management play a key role. However, the potential of cost reductions and quality management are also re-garded as critical by the SmEs. As consumers demand more customisation, the opportunity to co-create a ‘customised’ prod-uct with consumers has been identified as a driver for SmEs to engage with SSCm initiatives. Also, value chain transformation has been the ‘core business’ of some SWITCH-Asia projects. Three barriers dominated the SWITCH-Asia projects: high costs of compliance, lack of know-how, and lack of consumer awareness. With new technologies, training and capacity building activities, companies might in the medium- to long-term enjoy cost reductions. However, the requirement for companies to comply with sets of standards, guidelines and/or certifications tend to increase their operational costs. When combined with lack of consumer awareness and thus limited corresponding preferential buying, some companies hesitate when adopting the necessary standards, guidelines and/or certifi-cations for their operations. only when govern-ment or corporate buyers require it would com-panies comply.

Key SSCM initiativeSSix SCCm initiatives covering social, environmen-tal as well as economic aspects of the supply chain were found among SWITCH-Asia projects although all deal with SSCm to a certain extent.

SWITCH-Asia | SUSTAINABLE SUPPLY CHAIN INITIATIVES 9


out of 47 projects, 20 work directly to improve their supply chain and nine directly work with in-ternational standards, certifications, guidelines, and labelling. The rest attempts to customise, or develop, new standards, certifications, guidelines and other tools to local contexts. It is worth mentioning as well, that there are more and more SWITCH-Asia projects working on standards and certifications as a way to keep the SCP practices on the ground. Several group-ings of standards have been identified among SWITCH-Asia projects that focus on products, environmental protection, waste management, and more efficient technology. Two groupings of guidelines were also found – for technical opera-tions and for procurement. other projects work to introduce certification schemes and labelling into SmEs to ensure a certain level of product quality. Audits and assessments have also been identified as SSCm initiatives that are crucial to ensure standards, certifications, labelling and/or guidelines are used by the SmEs. The last SSCm initiative identified is the building-up of platforms to enable companies (SmEs and their corporate buyers) to communicate and share ex-periences. A list of projects with the SSCm initia-tives they adopted is provided in Chapter 4.

leSSonS learntFive main lessons draw on the experiences of the projects and offer avenues for action that other companies can follow towards strengthening their own SSCm. First, to achieve a critical mass of stakeholders practicing SCP, communication is a crucial step. For SWITCH-Asia projects this means helping SmEs to reach consumers. Second, cultivating market links with the strongest actors in the supply chain (such as traders and big retailers) is essential. This pro-vides the strategic channels for SmEs through which they can market their sustainable prod-ucts on a large enough scale to be noticed by consumers. Third, for small- and medium-sized enterpris-es trying to sell sustainable products, a stable market is preferred since SmEs tend to have lim-ited capital and are small in size, making them more vulnerable to supply and demand fluctua-tions than the big companies. Fourth, no matter how sound an SSCm initia-tive may be, businesses will only succeed if there are individual (household) consumers, especial-ly in the middle class, demanding sustainably manufactured products. Therefore, it is impor-tant to raise the awareness of domestic consum-ers about sustainability issues. Fifth, building up SSCm initiatives around ex-isting policy frameworks can be a good strategy for receiving government support toward pro-jects, which eventually helps projects achieve their objectives. In conclusion, the study underlines the impor-tance of addressing corporate buyers; identifying the SSCm drivers and barriers; taking up stand-ards, certifications, labelling and/or guidelines; monitoring and evaluation to measure the im-pact of SSCm initiatives; and an entrepreneurial spirit that enables companies to quickly adapt to changing demands.

1



introDuCtion

one of the objectives of the SWITCH-Asia programme is to encourage the uptake of less polluting and more resource-effi-

cient manufacturing processes by a large number of small- and medium-sized enterprises (SmEs). The implementation of sustainable supply chain management (SSCm) can act as a leverage point to increase this uptake. Indeed, many SWITCH-Asia projects work to set up SSCm with the ulti-mate aim of reaching out to a pool of SmEs and facilitating a switch in their production practices.

The objectives of this study are:• To elaborate on the points of intervention within value chains by SWITCH-Asia projects;• To describe the type of corporate buyer that SWITCH-Asia projects address;• To highlight factors that drive and hinder firms’ engagement in SSCm initiatives;• To identify some key SSCm initiatives in which SWITCH-Asia projects are engaged;• To distil the SWITCH-Asia projects’ experience in realising their SSCm objectives into several lessons learnt.

To identify SSCm initiatives in the projects, the SWITCH-Asia Network Facility team visited the field in 2012 and conducted face-to-face inter-views with project managers and their target groups. This publication builds on the findings of these visits, on the supplementary material made available by the projects, and on informa-tion collected during a scaling-up session at the 2012 SWITCH-Asia Networking meeting in Bang-kok, Thailand. This annual networking event serves several purposes, among others, to en-courage the networking and knowledge sharing between SWITCH-Asia projects.

1network Facility expert visited the Bamboo project

SuStainable Supply Chain ManaGeMent in the SWitCh-aSia proGraMMe

1.1.1 DeFinition oF SuStainable Supply Chain ManaGeMentSustainable supply chain management (SSCm) can be defined as the strategic, transparent, in-tegration and achievement of an organisation’s social, environmental, and economic goals in the systemic coordination of key inter-organisational business processes for improving the long-term economic performance of the individual com-pany and its supply chains (Carter and rogers, 2008). This definition of SSCm is based on the

triple bottom line concept first mentioned by El-kington (1998)1 and the four supporting facets of sustainability including risk management, trans-parency, strategy, and culture (see Figure 1).

1.1.2 the SWitCh-aSia perSpeCtiveIn this study on SSCm, the focus is on under-standing how SWITCH-Asia projects are integrat-ing social, environmental and economic goals into product chains and hence the purchasing and sales processes of companies. The projects have a variety of starting points for this. Firstly, a project may focus on an existing environment friendly manufacturing/product standard, certi-fication, label, or guideline that is not widely tak-en up, and apply a strategy to expand its use in a

1.1

1) The triple bottom line is made up of social, economic and environmental factors. “People, planet and profit” succinctly describes the triple bottom lines and the goal of sustainability.


the Wood Processing and Trade project was one of the fi rst SWitCh-asia projects employing SSCM

certain sector and/or region. Secondly, a project may kick-start a new initiative, if it fi nds none in place, and may try to encourage its up-take. In both cases, the focus might be on the business processes of SmEs and their supply chain rela-tions. The emphasis is mainly on capacity build-ing and dialogue facilitation. Thirdly, a project may choose to engage direct-ly with the bulk buyers having a powerful role in product chains, such as retailers and brand own-ers, and try to shift their purchasing practices. This starting point indicates a downstream, rath-er than an upstream, focus on supply chains. This third way is rather rarely observed which could be attributed to the fact that the SWITCH-Asia programme’s Call for Proposals asks for a focus on capacity building of SmEs which are located

FiGure 1: ConCeptualiSation oF SSCM by Carter anD roGerS, 2008

EnvironmentalPerformance

EconomicPerformance

BetterBetter

Good?Social

Performance

Transparency

• Stakeholder Engagement• Supplier Operations

Strategy

• Sustainability as part of an integrated strategy

Risk Management

• Contingency Planning• Supply Disruptions• Outbound Supply Chains

Organisational Culture

• Deeply Ingrained• Organisational Citizenship• Values and Ethies

SustainabilityBest

upstream within product chains (further de-tailed in Ch. 1.2.1). As the number of projects dealing with SSCm increases in the SWITCH-Asia programme, the Network Facility could also expand the coverage of the study on this theme. The fi rst study on this topic in 2010 referenced only four projects and focused on conditions for successful SSCm. The second study referenced 11 projects and was able to identify four major strategies followed by the projects to implement SSCm2. This third study covers 25 projects and gives a detailed overview of the SSCm initiatives.

2) First study: Engaging the Supply Chain to Promote Sustainable Consumption and Production: A Thematic Study of SWITCH-Asia Projects, 2010. Second study: Engaging supply chain actors to promote sustainable consumption and production: Study on scaling-up mechanisms deployed by the SWitch-Asia projects, 2011. link: http://www.switch-asia.eu/switch-learn/scaling-up-via-sustainable-supply-chain-management.html

13SWITCH-Asia | SUSTAINABLE SUPPLY CHAIN INITIATIVESSWITCH-Asia | SUSTAINABLE SUPPLY CHAIN INITIATIVES

the CoveraGe oF SWitCh-aSia projeCtS Within value ChainS

recent and growing interest in both the sustain-ability of processes across the entire value chain, and of the end products, has resulted in a more expansive view of SSCm, particularly among pro-

1.2

What iS Meant by ‘value Chain’?

A value chain refers to the full life cycle of a product or process, including material sourc-ing, production, consumption and disposal/recycling processes. This concept has become an integral part of strategic planning for many businesses today (WBCSD, 2011).

ducers of goods for consumer retail. Consequent-ly, SSCm has grown beyond its original focus on upstream suppliers to encompass broader issues that include the transportation and packaging of products as well as disposal – this includes initia-tives by a number of producers to promote reuse and recycling of their products through take-back programmes.

1.2.1 the pointS oF intervention oF SWitCh-aSia projeCtSIn the expanded scope of SSCm, SWITCH-Asia pro-jects have a wider range of options, or points of intervention, in the value chain (see Figure 2). The illustration shows that projects focus their SSCm efforts mostly on the upstream part of value chains, particularly on the production or manufac-turing chains, with less engagement downstream towards buyers or customers (see Figure 3).

FiGure 2: value Chain

Harvesters Retailers ConsumersWeavers SMEs

Metal mining, chemical industry, power generation

Bamboo Farmers

Eco-Batik Producing SMEs Retailers/Public Procurers

Semi-processors Retailers Consumers

Consumers

End-product producers (SMEs)

EE-SMEs National/Inter-national Buyers

WEEE re-use & recycling

Better Cotton Farmers Ginning SMEs Brands/retailers

Tier 4 Tier 3

Tier 3 Tier 2

Tier 2

Tier 1

Tier 1 OEM

OEM

Sustainable Rattan

Automotive SCCM

ACIDLOOP

Cotton Production

ESEEC

Bamboo

Clean BatikInitiative

SWIT

CH-A

sia P

roje

cts

supply chain intervention points in which SWITCH-Asia projects maybe active

steps in the supply chain that are sought to be influenced by the projects

steps that are not directly addressed by the projects

Raw materialextraction

Production/manufacturing Logistics/retail

Purchase/use

Disposal/re-use/recycle

Value chain stages


FiGure 3: upStreaM-SKeWeD FoCuS on SSCM initiativeS in SWitCh-aSia projeCtS

Usual SSCM perspective

SWITCH-ASIA‘sSSCM perspective

Individual company purchase SMEs/Suppliers

Individual companiesSMEs/Suppliers sales

Corporate buyers

Corporate buyer

Corporate buyer

Corporate buyer

Starting point Perspective/focus

This upstream focus might be contradictory to the usual focus in sustainable supply chain management. Normally, companies as corpo-rate buyers become the starting point in SSCm discussions, i.e. to see how individual companies located downstream reach out to their suppli-ers. To the contrary, the SWITCH-Asia programme puts the weight on the suppliers and how they relate to their corporate buyers (retailers). This upstream-skewed focus might be due to the fact that the SWITCH-Asia programme is set to deal particularly with SmE producers to improve their production processes.

1.2.2 SWitCh-aSia projeCtS anD DiFFerent tierS oF the value Chaingenerally, the SWITCH-Asia programme involves a value chain that consists of several levels or tiers. This will largely depend on the nature of the in-dustry and, naturally, require different strategies when approaching SmEs. In Thailand, the Auto-motive SSCM project works with SmEs operating as second and third tier (tiers 2 and 3) suppliers in the automotive supply chain. meanwhile the ACIDLOOP in India works more closely with sup-pliers from third and fourth tiers (tiers 3 and 4). According to its objective, the ACIDLOOP pro-ject introduces technology innovation to im-prove resource efficiency in metal finishing SmEs leading to an improved environmental quality. The Automotive SSCM project aims at greening

supply chain management in the Thai auto and automotive parts industries to eventually im-prove their bargaining position with Korean, Japanese or german automotive manufacturers. However, it is worth mentioning that SWITCH-Asia projects might define ‘tiers’ differently, so their strategies might differ, although they do seem to similarly engage several tiers of small- and medium-sized suppliers.

For the Automotive SSCM project, the first tier holds the car producing companies – using sup-plies from tiers 2 and 3 – mainly consisting of mul-tinational automotive producers with plants in Thailand. Tiers 2 and 3 consist of SmEs that can be grouped into clusters, depending on their fields of operation, such as stamping, plastics, rubber, ma-chining, casting, forging, function, electrical, and trimming. In a different way, the ACIDLOOP pro-ject defines tiers 3 and 4 as metal finishing SmEs and parts manufacturers (see Figure 4).

the Automotive SSCM project addressed several tiers in the automotive supply chains in thailand


Working towards resource efficiency and waste management – Cotton Production (SPRING) project

1.2.3 three iSSueS aDDreSSeD by SWitCh-aSia projeCtSThere are three ‘umbrella’ issues that SWITCH-Asia projects generally want to address, i.e. envi-ronment, society, and/or economy. Projects may focus on one issue but actually deal with another as well. Typically this happens as projects put their focus on environmental issues which in-clude several approaches such as energy conser-vation, resource efficiency, reducing greenhouse gas (gHg) emissions or waste management. Un-der further scrutiny, it is clear that the projects deal with two issues, environmental and eco-nomic. By lowering gHg emissions, SmEs can be more efficient in lowering operational costs and gaining more profits. In China, the REWIN project clearly focuses on two issues, environmental and social, by working on resource recovery, pollution control, and la-bour safety. Similarly, in Pakistan, the Cotton Pro-duction (SPRING) project pursues environmental and economic goals by working more on resource

efficiency, waste management, and occupational health and safety (oHS). In a different way, the Sustainable Rattan project in Cambodia, laos and Vietnam deals with three issues at the same time. The project seeks to improve the environment by promoting the use of rattan products to reduce chemical and diesel consumption, and by contrib-uting to biodiversity conservation. It also aims at improving social as well as economic situations by promoting job generation for the villagers.

WhiCh type oF Corporate buyerS Do the projeCtS enGaGe?

In this section we focus on the engagement of projects with corporate buyers (retailers). Corpo-rate buyers usually occupy influential positions within value chains and, depending on whether there are any potential business advantages or not, can make interventions that have resonat-

1.3 ing effects on the performance of suppliers. However, the SWITCH-Asia programme’s main emphasis is on improving the sustainable performance of SmEs. Thus, the interventions made are, in the first place, on the supplier’s side rather than on the buyer’s side. reaching out to corporate buyers happens rather toward the end-stage of a SWITCH-Asia project. This might give the impression that corporate buyers are not seen as ultimate leverage points for SSCm actions, whereas an early engagement might

FiGure 4: intervention oF aCiDloop projeCt in tier 3 anD 4 oF the inDian autoMotive Supply Chain

Suppliers of paints,metal finishingchemicals, etc.

Metal finishingSMEs

(Tier 3/4)

Equipmentmanufacturer

Parts manufacturer

(Tier 3/4)

Sub-assembly /component supplier

(Tier 1/2)

Automobile brandcompany

(OEM)

Project intervention


FiGure 6: Corporate buyer CateGoriSation

Manufacturers/producers

Retailers/public procurers

International buyers

National/domestic buyers

Recyclers

Geographic location Position in value chain

looking at the activities of SWITCH-Asia pro-jects, two categorisations of corporate buyer can be recognised: first, based on their geographic locations and, second, based on their positions within the value chain (see Figure 6).

1.3.1 GeoGraphiC loCationAll of the SWITCH-Asia projects reviewed for this study are, in some way, utilising international de-

allow SmEs to utilise the potential influence of these corporate buyers over the supply chains. The importance of partnering with companies to green the supply chain has also been studied by the Worldwide Fund for Nature (WWF). In its research, 70% of the value of 15 key commodity markets is controlled by fewer than 500 compa-nies. Working effectively with this small group of companies can leverage the sustainable growth that impacts on 7 billion consumers and 1.5 bil-lion producers (Anstey et al., 2012, see Figure 5). In Table 1, below, it can be seen that SWITCH-Asia projects have involved several brand com-panies. These companies are responsible for the bulk of demand for sustainable products and generally have established world-wide markets.

mand for sustainable products as an incentive to encourage SmEs to practice sustainable production. The Sustainable Rattan project in Cambodia, laos and Vietnam assists rat-tan SmEs to meet the require-ments of their European retail-ers such as the CooP and IKEA. Similarly, the ACIDLOOP project in India promotes sustainable production using closed loop technologies among SmEs so they may have a better position

toward their international automotive buyers such as BmW, Tata motors and Suzuki. Still, there are also projects that mainly en-gage local or national buyers. In many cases SmEs are too small to engage directly with in-ternational buyers, especially when they require products above a minimum defined quality based on international standards or certifica-tions. In attempts to widen the market for SmEs, many SWITCH-Asia projects seek support from policy-makers in developing new standards that will bridge the gap i.e. where national standards are based on the adaptation of international standards to local contexts, providing clear guidelines to meet requirements from overseas customers without overbur-dening SmEs. The Pro-Sustain project in India is developing its own label ‘Shop for Change’ (SFC). It requires Indian SmEs to meet certain standards or quality requirements before their products can be retailed in the outlets selling SFC-certi-fied products.

‘Shop for Change’ (SFC) certified products

7 billion consumers

1.5 billion of primary producers/

extractors

Supp

ly ch

ain

FiGure 5: leveraGinG a SuStainable Supply Chain by enGaGinG Corporate buyerS

• Retailers• Brands• Manufacturers• Traders• Processors

500 multinational companies engage in 70% of the worlds production and trade of 15 key commodities


project title

Eco-Jute (Jute: An Eco-friendly Alternative For a Sustainable Future)

Sustainable rattan (Establishing a Sustainable Production System for Rattan Products in Cambodia, Laos and Vietnam)

SmArT Cebu (SMEs for Environmental Accountability, Responsibility and Transparency)

Higher Efficient Transformers (China Higher Efficiency Power and Distribution Transformers Promotion Project)

Bamboo (Sustainable Revival of Livelihoods in Post-disaster Sichuan: Enhancing Eco-friendly Pro-poor Bamboo Production Supply Chains to Support The Reconstruction Effort)

SC in Urban China (Implementing Sustainable Consumption in Civil Society of Urban China)

SUS Bird (Sustainable Building Interior Renovation and Decoration Initiative in China)

rEWIN (Improving Resource Efficiency for the Production and Recycling of Electronic Products by Adoption of Waste Tracking System)

Pro-Sustain (Promoting Fair Trade and Sustainable Consumption in India - PRO-SUSTAIN)

WEEE recycle (Establishing E-Waste Channels to Enhance Environment Friendly Recycling)

SusTex (Sustainable Textiles for Sustainable Development in India)

ACIdlooP (Sustainable Production through Market Penetration of Closed Loop Technologies in the Metal Finishing Industry)

Clean Batik Initiative (Encouraging and Implementing Sustainable Production and Consumption of Eco-friendly Batik in Indonesia and Malaysia)

Cotton Production – SPrINg (Sustainable Cotton Production in Pakistan’s Cotton Ginning SMEs)


Automotive SSCm (Greening Supply Chains in the Thai Auto and Automotive Parts Industries)

CSr Vietnam (Helping Vietnamese SMEs Adapt and Adopt Corporate Social Responsibility for Improved Linkages with Global Supply Chains in Sustainable Production)

project location

Bangladesh, India (West Bengal)


Philippines (Cebu)

China (Bejing, Hebei, Henan, Jiangsu, guangdong, Shandong)

China (Sichuan)

China (Beijing and Tianjin)

China

China

India

India (Bangalore, delhi, Kolkata, Pune)

India (Jaipur)

India (National Capital region, ludhiana, Pune, Ahmedabad, Hyderabad, and madurai)

Indonesia and malaysia

Pakistan

Sri lanka

Thailand

Vietnam

Corporate buyers and customers

50 bulk buyers (institutional buyers, whole-sellers, retailers, etc.)

retailers in Europe (e.g. CooP, IKEA)

European buyers

Power transmission and distribution utilities and energy intensive industries (end-users i.e. big manufacturing companies) and public purchasers in state power utilities

Wide-range of buyers, such as bamboo board, flooring, furniture and building material retailers

local retailers (supermarkets), municipal business bureaux, municipal environmental protection bureaux

National retailers offering building interior renovation and decoration products, public procurers

Chinese EEE producers, WEEE recyclers

retailers with over 135 outlets selling SFC certified products, 13 Fair Trade India Shops, 15 partner brands selling SFC certified products, 10 corporate buyers with corporate gifting programme

original equipment manufacturers (oEms) and bulk e-waste consumers

From small boutiques to gEPA and oXFAm-like fair trade organisations (European and US importers selling to boutiques)

40 international automotive manufacturers, e.g. BmW, Tata motors, and Suzuki

major retailers such as the state-owned Sarinah and Alun Alun (Indonesia)

Brand retailers, e.g. IKEA, levi Strauss&Co., marks & Spencer, H & m, Adidas

retailers (tour operators in Europe)

International automotive manufacturers, e.g. Korean, Japanese, german companies

Brand retailers in leather and textiles, e.g. gANT, levi’s, red and green

table 1: type oF Corporate buyerS or CuStoMerS that SWitCh-aSia projeCtS are enGaGinG With


1.3.2 poSition in the value ChainAs previously depicted in Figure 6 , there are two types of corporate buyers in the value chain that SWITCH-Asia projects mainly work with: manu-facturers and retailers. generally, more projects are dealing with retailers than with manufactur-ers. However there are also some projects who mainly deal with public procurers or recyclers as their buyers (see Ch. 1.3.2.2).

1.3.2.1 ManuFaCturer anD retailerThe type of engagement projects have with corporate buyers largely depends on the type of product (see Figure 7). For example, projects dealing with products manufactured by SmEs using low-tech or less complicated mechanical equipment and/or involving fewer tiers of the value chain, tend to directly engage retailers as corporate buyers (see Table 1). The Bamboo pro-ject in China works with a wide range of retailers who produce bamboo board, flooring, furniture and building material. In Indonesia, the Clean Batik Initiative project works with major retail-ers such as the state-owned store ‘Sarinah’. on the other hand, when products need high-tech production equipment and involve many tiers in the production or manufacturing chain, such as the case of Automotive SSCM project in Thailand, then projects tend to work with manufacturers as corporate buyers.

1.3.2.2 publiC proCurer anD reCyClerThere might be a sub-category of buyers that consists of public procurers or government in-stitutions. Public procurers encourage SCP prac-tices by buying sustainable products in bulk from SmEs. These public procurers play an important role in several projects, such as Higher Efficient Transformers and SUS Bird in China. The recycler can be another type of corporate buyer, operating at the end-phase of the value chain, to recycle and reuse the waste or the so-called ‘secondary raw materials’. The number of SWITCH-Asia projects directly dealing with waste management is still quite few. The pro-ject Establishing E-Waste Channels to Enhance Environment Friendly Recycling (WEEE recycle) in India works to link small recyclers with original equipment manufacturers (oEms) and compa-nies that recycle and dispose of the e-waste. In China, the project Improving Resource Efficiency for the Production and Recycling of Electronic Products by Adoption of Waste Tracking System (rEWIN) tries to close the loop by engaging pro-ducers of electric and electronic goods as well as e-waste recyclers.

more examples of corporate buyer engagement in SWITCH-Asia projects can be seen in Table 1.

only two projects in the SWitCh-asia programme focus on e-waste in 2013

FiGure 7: type oF Corporate enGaGeMent in SWitCh-aSia projeCtS

Retailers Manufacturers

• Less high-tech input• Fewer tiers

• High technology input• Complex supply chain

2


the SWITCH-Asia Network Facility docu-mented a range of motivating factors at work in SmEs and with their corporate

buyers in the up-take of SCCm initiatives.

better operational riSK ManaGeMentA disruption anywhere in the supply chain can have a direct effect on a company’s ability to continue operations. This domino effect is worse when the supply chain consists of hundreds of inter-dependent companies involving various tiers. Thus, taking up SSCm can help companies be better prepared for such an operational risk. The CSR Vietnam project illustrates how com-pliance to CSr requirements in the fields of envi-ronment and labour may help Vietnamese SmEs overcome barriers to trade with transnational corporations (TNCs). major buyers of Vietnamese products, including TNCs and retailers, are tighten-ing their procurement guidelines to comply with strict international requirements and this can be a serious constraint for SmEs. In this project, SmEs from textile/garment, leather/footwear and elec-tro/electronic sectors are targeted. The project helps to standardise the integration of CSr and fulfil the needs of international buyers and do-mestic consumers. Furthermore, through partner-ship programmes and matchmaking events, local SmEs become more aware of the emerging de-mands of international buyers, prompting them to improve their social and environmental perfor-mance and competitiveness in the supply chain. In another location, the Greening Sri Lankan Hotels project supports 350 small- and medium-sized hotels, 200 main hotel suppliers, hotel customers and tour operators to enhance their environmental performance by improving their energy, water, and waste management systems. Embracing sustainable practices will help these target groups to minimise their business risks since the ministry of Tourism, in co-operation

2.1with the project, has planned to issue a green certification and scheme. In the future, the green certification will be available to all hotels regis-tered under Sri lanka Tourism development Au-thority (SlTdA). Under the scheme, hotels which get certified will receive incentives that will en-hance their competitiveness. In India, the ACIDLOOP project engages SmEs in tier 3 and 4 of the automotive supply chains - metal finishing SmEs and parts manufactur-ers. one of the project’s objectives is to enhance SmEs’ competitiveness. Sustainable production in the metal finishing industry will help to re-duce risks and reduce costs, to increase options, to gain customers, and to propel companies to-wards global competitiveness. metal finishing SmEs provide parts to the parts/component manufacturer. Then the com-ponent manufacturer, either directly or through one more level, delivers to the automobile man-ufacturer. In this way, customer (car maker) de-mand is a driver for the SmEs to change their way of production. managing the supply chain well, for example by maintaining a clear com-munication with suppliers located in various tiers, might help the car makers to manage their operational risks better. Clearly in the ACIDLOOP case, any problems hampering the SmEs in tiers 3 and 4 will affect the car makers’ ability to deliver cars to their customers. Eventually, if this opera-tional risk is well managed, car makers can ben-efit from cost reduction and better quality of car parts delivered by the SmE suppliers. given the project’s emphasis on capacity building, the SmEs involved in metal finishing operations will benefit as a result of reduced re-source use and pollution, and have better pros-pects in terms of exports thus becoming inter-nationally competitive. Also, auto manufacturers and fabricators, who receive the finished metals, participate in a greener supply chain leading to improved export potential.

2DriverS oF SSCM initiativeS

the CSR Vietnam project puts CSr at media’s attention for awareness raising


CoSt reDuCtion potential

Cost reduction might be the strongest under-lying reason for companies to engage in SCCm initiatives. This was repeatedly highlighted by SWITCH-Asia projects during discussions at the SWITCH-Asia Annual Networking Event in Bang-kok, Thailand (2012). The Sustainable and Efficient Industrial De-velopment (SEId) project in Bhutan and Nepal works with micro-, small- and medium-sized en-terprises (mSmEs) – those active in tourism and agro-based industries and members of leading associations Federation of Nepalese Chamber

2.3 of Commerce and Industry (FNCCI) and Bhutan Chamber of Commerce and Industry (BCCI) – to reduce operational costs, improve companies’ re-source efficiency and optimise their existing op-erations. To achieve these goals, SEId gives their activities an emphasis on training and capacity building for resource efficiency (rE) and respon-sible production (rP) techniques and technology. The Tourism in Bhutan project helps Bhuta-nese hotel and tourism operators to identify potential spots for the reduction of operational costs. This is achieved by improving energy ef-ficiency and management and identification of available solutions including alternative technol-

better reputational riSK ManaGeMentBased on several inputs from SWITCH-Asia pro-jects, one motivator for companies (SmEs and their corporate buyers) to take on SCCm is the brand image. Companies cannot afford the risk of a bad reputation, given that customers in-creasingly basing their decisions on sustainabil-ity issues may shift away, with a negative influ-ence on the companies’ long-term performance. Taking this as one of its business cases, CSR Vi-etnam targeted SmEs that are, or are about to be-come, subcontractors and independent exporters in the textile and garments, leather and footwear, and electrical and electronics sectors. In (mostly trade-based) buyer-driven chains (characteris-tic of labour intensive, non-durable consumer goods industries such as garments and leather), SmEs have to deal with a proliferation of codes of conduct and procurement guidelines. In (mostly investment-based) producer-driven chains (e.g. in electronics industries) independent local produc-ers need to be involved as full partners, but their roles are limited at this time. Adopting CSr as an integral part of a firm’s business strategy can en-hance its reputation and competitiveness in both buyer-driven and producer-driven chains. To strengthen the tourism sector in the coun-try, the Greening Sri Lankan Hotels project helps hotels to improve their energy, water and waste management efficiencies. This is done not only to reduce costs and improve profits, but especial-

2.2

ly to minimise risks and to increase market ac-ceptance of hotels by promoting them as green hotels with low-carbon footprints. likewise, the Sustainable Rattan project at-tempts to enhance the reputation of rattan processing businesses in Cambodia, laos and Vietnam by introducing cleaner production tech-niques and technology, through chain-of-custo-dy certification of raw rattan. As a result, their rattan products will have a stronger positioning among the competition.

Footwear company in vietnam – beneficiary of the CSR Vietnam project


ogies (e.g. renewable energy, solar panels, water saving technology, recycled paper, electric trans-port). The project also provides innovative meth-ods of solid waste management and waste water treatment, and encourages water conservation and rainwater harvesting. Experience shows this could increase awareness and market demand amongst domestic and international tourists for low-carbon and sustainable tourism products in Bhutan. There are plans under the project to pro-mote a minimum of 2 000 units of low-carbon and sustainable tourism products and services to domestic and international tourists. Similarly, the China Motor Challenge project assists Chinese SmEs to be aware of the tremen-dous potential saving in energy and related costs through upgrading their motor systems. The pro-ject facilitates over 400 major industrial users of

Electric motor systems account for about 60% of China’s electricity consumption

electric motor systems to improve the operating efficiency of their systems, saving about a total of 1 million tons of Co2 emissions per year, and increas-ing the demand for high-efficiency motor systems.

Quality ManaGeMent

To succeed, supply chains should compete on cost as well as quality. The SWITCH-Asia project Sustain-able Production in the Food and Beverages (F&B) Industry in Sri Lanka seeks to improve the perfor-mance of the F&B sector in general and to ensure the quality of products through the promotion of cost-effective production techniques and best practices in sustainable production among SmEs. This is also the case with the Greening Sri Lan-kan Hotels project that seeks to enhance the envi-ronmental performance of local hotels by improv-ing their energy, water and waste management systems. The project addresses an initial number of around 200 main hotel suppliers in order to im-prove their competitiveness and profitability, with the broader view to greening the entire supply

2.4 chain. The project partner, the Ceylon Chamber of Commerce, has direct links with tourism clusters and affiliated national and regional hotel sector trade associations. The project works closely with nine hotels, each representing a major tourism-dominated region, to showcase the benefits of having management systems for their use of natural resources. Shining a light on these hotels encourages peer communication amongst their owners which, in turn, encourages many more hotels to replicate the successful achievements of the project. In the Philippines, to remain competitive Cebu SmEs need to align themselves with market reali-ties. European buyers are increasingly demanding their supply chains to be part of their programmes for reducing carbon emissions. So, suppliers must demonstrate that they are energy and resource ef-

The Greening Sri Lankan Hotels project addressed hotel suppliers


ficient and are using sustainable materials, reduc-ing waste and providing a safe working environ-ment for their employees. For this purpose, the SMART Cebu project helps SmEs develop their resource efficient and cleaner production (rECP) programmes including the use of sustainable raw materials and eco-design tech-niques. European consumers have little awareness and knowledge of Philippine products. The project is helping Cebu SmEs enter these markets with

well-designed and good quality products, in com-pliance with sustainability standards. The project enables SmEs to manufacture innovative green products, and assists them in developing market-ing and export strategies, including promoting their products through trade fairs. Samples and products have been exhibited in Paris, Cologne and Frankfurt showing European visitors that Cebu is a hub for sustainable materials, design and products in the country.

Co-Creation With ConSuMerSSupply chain management can help a company synchronising its processes with its suppliers and customers with the goal of matching the materi-als, services and information with customer de-mand. To achieve this synchronisation, Get Green project, aiming at an increased share of sustainable consumption by Vietnamese consumers, tried to go beyond the traditional approach by embracing co-creation (see Figure 8). It is a fairly new form of involving the customer within the company and of sharing ideas between customer and company especially that are already engaged in the SPIN-VCL project – another SWITCH-Asia project that has be-gun earlier in 2010 and is still working to encour-age sustainable product innovation in Vietnam, Cambodia and laos. This new approach leads to the involvement of consumers, who form ‘getgreen’ groups, in the product development process lead-ing to improved supply/demand side interaction. Similarly, instances of creat-ing products according to cus-tomers’ needs and/or demands can also be found in the SMART Cebu project. It raises aware-ness about international mar-ket requirements: exposure at international trade fairs and during study tours motivates entrepreneurs to participate in eco-design workshops to inno-vate on their products. European designers trained Cebu design-ers and product developers in eco-design as well as environ-

2.5

SMART Cebu project exhibits its projects to european customers at ambiente in Frankfurt

mentally sound product life-cycles, which helped them adopt eco-friendly approaches to product design and development, particularly taking the following important eco-issues into consideration: health (people), ecosystems, renewable resources (planet) and marketability of products (profit). The efforts on the production side are complemented by the marketing and export strategy to stimulate demand for these ‘green’ products from Cebu. The project is linking up with financial institutions and policy-makers for increased financial sustenance.

FiGure 8: Co-Creation Matrix

Co-creation (co-innovation)

Mass collaboration (Wikinomics)

Co-production

User generated content

Personalisation("Tailor made")

Massproduction

Consumer lead

Producer lead

Product type (value): PersonalisedProd

uct t

ype

(val

ue):

Stan

dard

Mass costomisation


lead in paints still harms customers in many asian countries

value Chain tranSForMationSBy collaborating across industries through com-mon actions in their respective value chains, sharing similar interests, as well as in partnering with Ngos and governmental organisations, the dynamics of an industrial sector can be changed. Value chain partnerships can also accelerate changes in both adoption of clean technologies and environmentally friendly business practices. An example of an initiative to transform a traditional business practice into a more sus-tainable one can be observed in the Lead Paint Elimination project that runs in eight participat-ing countries which are Bangladesh, India, Sri lanka, Nepal, China, Thailand, Philippines and Indonesia. It promotes sustainable production and consumption, and contributes to global ef-forts aimed at the elimination of the production and use of all decorative lead paints. The project’s approach is to ensure a decrease in the produc-tion and use of lead paint, and then to gradually phase it out completely. Another example is from the Higher Efficient Transformers project in China. The project envi-sions a change in the market that favours higher efficient transformers (S11 to S15), and for the

2.6

lower ones (S7/S9 transformers) to be eventually phased out. Using a total-cost-owning tool (see Ch. 3.3), they demonstrate to users how higher efficient transformers can reduce the electricity losses and offer companies the opportunity to reduce costs.

FiGure 9: the leaD paint eliMination projeCt – an initiative to tranSForM a buSineSS praCtiCe via pull anD puSh StrateGieS

Regulatoryframework

Paintmanufacturers

Capacitybuilding

Labellingprogramme

Mediacampaigns

PUSH

PULL


an assessment of stakeholder perspec-tives would reveal some of the challeng-es in undertaking SSCm as illustrated

in the table below. Three dominating barriers emerged from the SWITCH-Asia project: high costs of compliance, lack of know-how, and lack of consumer awareness. With new technologies, training and capac-ity building activities, companies might in the medium- to long-term enjoy cost reductions. However, the requirement for companies to comply with sets of standards, guidelines and/or certifications tend to increase operational costs. When combined with lack of consumer awareness and thus limited corresponding preferential buying, some companies hesitate to adopt the necessary standards, guidelines and/or certifications for their operations. only when government or corporate buyers require it would companies comply.

hiGh CoSt oF CoMplianCe Standards and certification can make it easier for SmEs to demonstrate the sustainability of their operations and products, and those of their sup-

3.1

pliers. However, there are also significant barriers to their use in developing countries. The first bar-rier is cost: direct costs, such as the fees need for adopting international standards; and indirect costs, such as staff time spent to ensure compli-ance with requirements for the standard or certi-fication. In China, the Wood Processing and Trade project is working to get wood processors signed on to an existing WWF programme, the global Forest and Trade Network (gFTN), that assists wood processors in complying with chain of cus-tody requirements for certified forest products. In mongolia, businesses have expressed con-cerns about the potential costs associated with obtaining the planned ‘green label’. In Cambo-dia, the Sustainable Rattan project partner AAC acknowledges that fair trade certification is a difficult and time consuming process and that rattan processors are likely to require techni-cal assistance to help them achieve it. A second barrier is the lack of adequate support services necessary to implement credible standard and certification programmes such as the laboratory services needed to conduct certification tests. Even where services are available, their cost can be a barrier.

GFtn meeting in india organized by SWitCh-asia project

no operational poliCy FraMeWorK government policy is important for creating a favourable environment for businesses to adopt SCCm by providing policy frameworks that offer incentives for them to do so. This can ultimately create demand for sustainable products and jump start the market where private consumer demand is too weak to support companies pro-ducing sustainable products.

3.2

laundry targeted by the VA3 project

barrierS to SSCM initiativeS3


In China, the VA3 project took advantage of such a policy framework by supporting the cen-tral government’s 12th Five year Plan. In the period 2011-2015, the national and local government wish to reach China’s new energy and environ-mental targets, and have therefore developed policies which offer a series of financial incen-tives for SmEs practicing SCP. The project worked with waste-intensive industries – 550 laundry and dyeing SmEs in Nanjing and 150 textile SmEs in Jingzhou – providing SmEs with tools for SCP and EE & ErPS (energy efficiency and emission reduction potential scans) measures. To encour-age the up-take of cleaner production practices by SmEs, the project promoted the creation of public and private partnerships between SmEs, local governments and financial institutions.

In mongolia, the Green Products project has two activities that illustrate how government policy frameworks can create greater demand for sustainable products. The first activity is the green labelling programme. The programme reflects the mongolian government’s wish to encourage domestic enterprises to prepare themselves for more international trade but it is also educating mongolian citizens about the value and desirability of locally produced goods. Secondly, the government hopes to capitalise on the traditional and low-tech production methods predominating in mongolia and promote their domestic sales at the expense of less sustainable foreign goods by developing the green label.

non-tranSparent inForMation FloW For a company wanting to shift to sustainable supply chains, lack of information is a challenge. Why does the efficient use of resources push up prices? Corporate buyers have little means by which they can answer questions like these. And without such information on product qual-ity and pricing, i.e. with a lack of transparency on these issues, end-users are confused and limited in the actions they can take.

In the SWITCH-Asia project Higher Efficient Transformers, the biggest barrier for end-users in buying the new transformers was the una-vailability of this sort of information. In the use phase of transformers many variables affect op-

3.3 erational costs which make it difficult for prices to be compared. In the past, consumers had no indicators for their purchasing decision process. Now, with the total-cost-owning (TCo) tool pro-vided by the project, energy managers and pro-curement officers can calculate potential cost reductions as they reduce electricity losses and, therefore, electricity costs as compared to the business-as-usual scenario. According to the project, this voluntary tool has an indirect impact on upstream suppliers. So the project and its TCo tool receive strong sup-port from the China Electricity Council which is now promoting standards and TCo as purchas-ing policy. The lack of information affects not only one but all actors in the value chain so it is essential to build an information channel along it. The im-portance of such a channel has been realised by many projects and almost all of them are prepar-ing online information platforms for their stake-holders. online internet platforms provide not only information but also training materials and tools that can be used by other SmEs not yet cov-ered by the SWITCH-Asia projects.

transformer production in China


loW MarKet inCentiveInsufficient market demand for sustainable products might be another challenge for com-panies, especially SmEs whose capacity and ca-pability are somehow limited, to engage with SCCm initiatives. This is especially true for Asian countries where the market is still in an early stage of development and the majority of con-sumers are still either unaware of such products or limited by their premium prices. To address this challenge, the SC in Urban China project is affecting the way consumers take buy-ing decisions. The project works with consumer associations in China (50 organisations in Beijing alone) as they are trusted by the general public. Working with suppliers and consumers at the same time (market push and pull approach), SC in Urban China is bringing three main actors togeth-er in agreements: 1) memoranda of understand-ing (moU) between local retailers (supermarkets) and SmE suppliers cover the supply of sustainable products, 2) voluntary agreements between con-sumer associations and retailers where the asso-

3.4

ciations inform their members of the advantages of purchasing sustainable products. Such a moU can be important since the lo-cal retailers cannot rely on the support of price sensitive Chinese consumers. The project has identified some drivers in the process which could persuade retailers to sign agreements to sell more green products. These concern: 1) mar-ket potential, 2) brand image and reputation, 3) competition with some international retailers who do well with high quality products, and 4) the general trend towards buying higher qual-ity products.

SC in Urban China project meeting with retailers

FiGure 10: SC in urban China projeCt

4

RetailersSME

suppliers

Localauthorities

Choice editing

influencesupervision

Choice editing

Scaling upsustainable consumption

MOU

Project Consortium

Consumer Associations Beijing and Tianjin

coop

erat

ion

Service providers:Beijing University of Civil Engineering and Architecture, Nankai University, Institute for Public Policy Research, The City 2020 Foundation

MOU


Six SCCm initiatives covering social, environ-mental as well as economic aspects of the supply chain were found among SWITCH-

Asia projects. However, the main idea here is for companies to take responsibility for their entire supply chains; an approach akin to product life-cycle management (managing a product from its conception, through design and manufacture, to service and disposal), see Figure 11.

To a certain extent SWITCH-Asia projects all deal with SSCm directly or indirectly. out of 47 projects, 20 work directly to improve their supply chain. Nine are known to directly work with in-ternational standards, certifications, guidelines, and labelling. The rest attempts to customise, or develop, new standards, certifications, guidelines and other tools to local contexts (see Table 2 in the next page).

FiGure 11: SCCM initiativeS FounD in SWitCh-aSia projeCtS

• FSC• CoC• Shop for Change• Green Furniture Certification

• Green Building Label Pro- gramme

Social• ISO26000

Manufacturing• ISO14001• Occupational Health and Safety (OHS)• ISO2200:2005• ISO50001• HACCP

• Fair Trade Forum - India• Conformity Model• Responsible Purchasing Guide• Eco-design Guidelines• Green Certification Schemes for Registered Hotels• Green Building Criteria

• Supplier Roundtables• Customer Roundtables• Virtual Secondary Materials Exchange Platform (SMEP)• GetGreen Clubs• Social Media Interaction Platforms

SSCM initiatives found in SWITCH-Asia projects

Certifications

Labelling

Standards

Guidelines

Platforms

Key SSCM initiativeS4


Standards

National Standards for Energy Efficiency Ratios S11 to S15;

Minim

um Energy Perform

ance Standards (M

EPS)

E-Waste M

anagement

and Handling Rules

Green (fly ash) construction

producss standards

Lead-free paint standard

National building standard

WtE Equipm

ent Standard

Eco-Batik Standard

NationalNational

NationalNational

ISo14001

oHS/oHSAS18001

ISo26000 (CSr)

IECStandards

Hazard Analysis Critical Control Point (HACCP) Systems

ISo 22000 Food management System

dIW Factory Act

ISo 50001

EU rEACH

InternationalInternational

International

ESEEC

China Motor Challenge

Sustainable Rattan

CSR Vietnam

RE-Tie

Wood Processing and Trade

Food & Baverages

Higher Efficient Transformers

WEEE Recycle

Greening Sri Lankan Hotels

Pro-Sustain

SUS Bird

Cotton Production (SPRING)

Greener Construction Project

REWIN

Lead Elimination Project

Low Energy Housing

WtE in Rice M

illing Sector

Soybean Processing (SCOPE)

Clean Batik Initiative

Certifi cationslabelling

Travelife

Fair Trade Forum –

India (FTF-I)

Green Certi-

fication Scheme

for registered hotels

Shop for Change-Fair Trade

Shop for Change-Fair Trade

Green Construction Label

Eco-labelling programm

e

National G

reen Building Label Program

me

Eco-friendly tofu and tem

peh label

Eco-Batik Label

New

energy-efficiencylabel for electric m

otors

Fair Trade Forum

– India (FTF-I)

Lead-free paint certification

Eco-friendly Tofu and Tem

pehCertifications

CoC

Guidelines

Eco-efficiency, OH

S & CSR G

uidelines

China Motor

Challenge Club

Sustainable Tourism

Forums

Producers Group

virtual Secondary M

aterialsExchange

Platform (SM

EP)

Assessment

standard &

monitoring schem

e

WtE operating

licence procedures

Conformity

Model

Compliance

monitoring &

m

arket supervision for eco-label

‘Reap26’ tool box

Several practical guidelines

Responsible Purchasing Guide

Total-cost-owning tool, Eco-design guidelines

Sustainable BIRD Project G

uidelines; Conform

ity Model

Better Ginning Practice (BG

P) Guidelines,

Cotton Quality Assurance G

uidelines

e-Waste tracking system

, WEEE m

aterial flow

analysis guideline, Design for Recycling

WtE O

perating Guidelines

ISEAL Code of G

ood Conduct

Integrated (Environment, O

HS &

Food Safety) M

anagement System

s (IMS) G

uidelines; Green

Supply Chain Managem

ent Guidelines;

Sustainability Indicator Guidelines

platforms

table 2: Key SCCM in

itiativeS Fou

nD in

SWitCh

-aSia projeCtS

International

audit &assessm

ent

FSC (Forest Stew

ardship Council)

CoC


DeFinitionS

The following section provides definitions as used in this chapter, since the terms tend to be used varyingly in different contexts.

4.1.1 StanDarDS, CertiFiCationS, anD labelSdefinitions used below are provided by FAo. Standards are documented agreements con-taining technical specifications or other precise criteria to be used consistently as rules, guidelines or definitions, to ensure that materials, products, processes and services are fit for their purpose. To be able to demonstrate conformity toward cer-tain standards, companies have to undergo a cer-tification process. Certification is a procedure by which a third party gives written assurance that a product, pro-cess or service is in conformity with certain stand-ards. Certification can be seen as a form of com-munication along the supply chain. A certificate acquired through due process will demonstrate to the buyer that the supplier complies with cer-tain standards, which might be more convincing than self-issued assurances.

4.1 different from a certificate, a certification label is a label or symbol indicating that compliance with standards has been verified. While the certificate is a form of communication between seller and buyer, the label is a form of communication with the end consumer. An authentic label is not only backed up by a good certification system but the system must also be transparent. Acquiring certi-fication and/or a label will increase a company’s credibility and potentially its competitiveness.

4.1.2 GuiDelineSQuite different from standards, guidelines aim to streamline particular processes according to rou-tine or sound practice. Several SWITCH-Asia projects have shown that taking up standards and certifica-tions can be too costly and complicated for SmEs, so guidelines are used to fill in the gap or as stepping stones to standardisation. guidelines have been a means of ‘customising’ international standards, cer-tifications and/or labelling to a country’s situation. The figure below illustrates the relationships between the six SSCm initiatives: standards, certifications, labelling, guidelines, audit and as-sessment, and communication platforms.

FiGure 12: the relationShip betWeen the Six SSCM inStruMentS anD initiativeS FounD in SWitCh-aSia projeCtS

Guidelines

Communication Platforms

The six key SSCm initiatives identified are stand-ards, certifications, labels, guidelines, audit, as-sessments, and platforms. Each one will be dis-

cussed separately (from Chapter 4.2 onwards) to show how different projects choose different approaches to engage in SSCm.

Audits & Assessments

LabelsCertificationsStandards


StanDarDS

In its most formal sense, SSCm encompasses the process in which end-product manufacturers3 develop and enforce sustainability standards (e.g. supplier codes of conduct) that their suppli-ers (and their suppliers’ suppliers) must meet. The experience among SWITCH-Asia projects suggests that the need to meet international standards to increase foreign trade opportuni-ties has already been somewhat successful in encouraging SmE participation. Today, the mini-mum international requirements for sustain-ability have mostly been formalised in European, US and other standards (in Europe, the U.S. and elsewhere) and must be met by manufacturers exporting to these markets.

4.2.1 StanDarDS For proDuCtSIn India, the Pro-Sustain project implements SSCm by developing standards for fair-trade products which are communicated through two kinds of brands or labels. First, it created an um-brella brand for members of the Fair Trade Forum – India (FTF-I) who had dedicated fair trade shops. According to the project, 13 shops are dedicated to

4.2

this FTF-I brand. Taking this approach further, the project created the ‘Shop for Change’ (SFC) brand. Several mainstream brands and retail chains have been approached and agreed to distribute products with this SFC label. The distributors and retailers are asked to sign licensing agreements for using the certification label and for selling certified products. Along the value chains covered by the Shop for Change brand, the organisations of certified producers and partner brands meet standards that guarantee the makers of certified products are getting a fair deal by which they can support their families and the environment (see Figure 13). In the case of certified producer organisa-tions, the fair-trade and SFC standards must be

proudly presenting Shop for Change products

FiGure 13: Creation oF value Within a Fair traDe proDuCt Chain by Shop For ChanGe

Shop for Change

primary production

producers(Farmers)

• Fair price• Bargaining power• Improved skills through capacitybuilding• Environmental awareness• market awareness

• guaranteed sales• long-term relationship building with buyers• Capacity building• Improved environmental performance

producer organisations(Cooperatives)

processing

• Added brand value• Improved market visibility of ethical product portfolio• Improved trust in brand• Capturing life Style of Health and Sustainability (loHAS) consumers• CSr action taken

buyers(Traders, retailers)

Sales

• Informed decision- making• Trust in brand• Possible health benefits (e.g. no allergy) and more comfort (e.g. organic cotton)• reduced environmental footprint

Consumers(Households,

Public Authorities)

use

• ...

Disposal

Consumers(Households,

Public Authorities)

Stag

e in

Val

ue C

hain

Acto

rs in

the

Valu

e Ch

ain

Bene

fits

Production standards for all produce

from a registered farm

Standards for procure-ment, post-harvest

handling, and internal participatory systems for producer organisations

Standards for the purchase of certified

products from a producer organisation or

intermediate buyer

3) SSCm can encompass the provision of both goods and services. For simplicity, however, this paper uses the term SSCm with reference to production of goods only, as the SWITCH-Asia programme is focused primarily on manufacturing operations.


4.2.2 StanDarDS For environMental proteCtionIn Cambodia, the Sustainable Rattan project is using the potential expansion of Cambodian rat-tan product sales into Europe as an incentive to recruit rattan furniture producers. Indeed, many leading companies assess the environmental per-formance of their suppliers and do business only with those that meet the standards they set. The standards cover environmental protection, chem-icals, fire prevention, hazardous and non-hazard-ous waste, worker health and safety, and so on. As an example, IKEA’s code of conduct the IKEA Way on Purchasing Home Furnishing Products (IWAy), defines what suppliers can expect from IKEA and specifies what IKEA requires from its suppliers.

The Sustainable Rattan project focuses on dif-ferent standards in each of the three countries involved, according to their market demands and potential for partnerships. The rattan Asso-ciation of Cambodia was established in 2009 and became a provisional member of the World Fair Trade organization in 2011. In lao Pdr, a Chain of Custody certification from the Forest Stewardship Council was achieved. In Vietnam, rattan compa-nies signed a memorandum of understanding with local communities, which included clear ac-tivities and roadmaps for cleaner production. In the meantime, the Wood Processing and Trade project in China, India and Vietnam envi-sions the development of certifiable standards

Selling sustainable rattan products to local customers

Quality control training of the Wood Processing and Trade project in vietnam

for forest management based on best practice. The standards have to be credible and yet af-fordable, and able to verify that the wood in a product has been legally harvested and traded. moreover, sufficient chain of custody auditing capacity is needed to facilitate verification and meet anticipated demand.

4.2.3 StanDarDS For WaSte ManaGeMentIn India, the WEEE Recycle project works to es-tablish standardised processes and certification for both waste electrical electronic equipment (WEEE) recycling and products. It provides ca-pacity building for both informal and formal e-waste recyclers where the training modules are based on the precaution and safety princi-ples, including both environmental and health standards while recycling e-waste. Furthermore, r&d activities are undertaken to develop envi-ronmentally-sound recycling technologies for specific waste streams, in order to increase ef-ficiency in recovery and to standardise the recy-cling product. As part of the efforts to standardise WEEE re-cycling processes and products, the project sup-ports the government of India in preparing the ‘WEEE legislation’, i.e. the ‘WEEE rules’. This legis-lation, which is passed already and in force since may 2012, is compulsory unlike the guidelines for the Environmentally Sound management of E-Waste issued in 2008 by the ministry of Envi-ronment and Forest. The new law addresses all stakeholders, their roles and responsibilities, for the safe collection and disposal of e-waste. Similarly, the REWIN project seeks to adapt the European technical standards in WEEE recy-cling processes to specific conditions in China. The project aims at improving the efficiency of e-waste recycling by linking the supply and de-mand sides. To achieve this, it creates online plat-

truly embedded in the structure and daily opera-tions. The standards and certification system are guided by a set of core principles for fair produc-tion and business practices (de Vera, et al, 2011).


the WEEE Recycleproject approached the informal e-waste recyclers

promoting efficient transformer via conferences

forms, for example, an e-Waste Tracking System and a Secondary materials Exchange Platform, where the data on waste stream is pooled and where producers and recyclers may interact to exchange information. For recyclers, this is ben-eficial since they can efficiently and effectively plan their recycling practices. For producers, they can access a list of best practices on how to se-lect and use secondary materials in their product design (design for recycling). In this way, the pro-ducers may use more recycled components and materials in new products.

4.2.4 StanDarDS For hiGher eFFiCient teChnoloGyIn China, the Higher Efficient Transformers pro-ject supports the introduction of new national standards for more efficient transformers. This is increasing the mandatory minimum energy efficiency requirements which effectively push inefficient transformers off the market. Trying to transform the market, the project also addresses manufacturers with an eco-design standard. The project partner China Electrical Equipment Indus-trial Association is closely involved to ensure that Chinese manufacturers accept new the standard. Similarly, the China Motor Challenge project is drafting and developing a new China motor energy efficiency standard which is practical for the China electric motor industry and is also

harmonised with the specifications set in the International Electrotechnical Commission (IEC) standards and Energy using Products (EuP) direc-tives. The challenge is twofold. Firstly, the project has to address the problem of SmE motor manu-facturers often lacking awareness and technical information about international product stand-ards (e.g. IEC, EuP, etc.) and their testing require-ments. Secondly, current Chinese standards are not in line with IEC standards, meaning products have to be tested multiple times. So, there is a real need in the producer community for infor-mation on the latest international standards and their testing requirements, and for more infor-mation on the standards emerging from within China, to facilitate compatibility and compliance. Therefore, the project engages industrial motor system users, energy service companies (ESCos), manufacturers of electric motors and system components, and Chinese national and local policy-makers. To ensure compliance to the standards, the project is designed to support the Chinese government in developing a new energy efficiency label for electric motors and an effec-tive market supervisory mechanism to ensure the extent of energy efficiency advertised on products is genuine and reliable. In Cambodia, the project Waste to Energy (WtE) in Rice Milling Sector works with the minis-try of Environment to develop a standard for WtE equipment. It promotes sustainable production of milled rice by replicating existing WtE rice milling technologies and promotes sustainable consumption of rice by developing new stand-ards for WtE technology. WtE manufacturers will be required to comply to this standard and there-fore produce a WtE high-performing system. The Federation of Cambodian rice miller As-sociations, as one of the project partners, will


share information about manufacturers that adhere to the standard to inform member rice millers of possible options for good quality WtE installations. The Cambodian gasifier manufac-turers will benefit from this as it will contribute to build trust in the technology. This will create a positive incentive for manufacturers to produce equipment with the highest possible quality.

the efficient technologies are brought forward by the envisioned standards

CertiFiCationS

The project Sustainable and Responsible Trade Promoted to Wood Processing SMEs is using the prospect of trade with Europe and the USA as a means for recruiting SmEs in China, India and Vi-etnam. Participants who join WWF’s global For-est Trade Network receive training in certification practices that will enable them to meet European and US requirements for certification – basically that their products contain only wood that was harvested legally and from sustainably managed forests. like the Sustainable Rattan project, this project has managed to link Chinese wood pro-cessors with potential international buyers.

4.3

4.2.5 StanDarDS in GeneralThe Green Products project in mongolia is work-ing with two government ministries – the min-istry of Nature, Environment, and Tourism and the ministry of Food, Agriculture, and livestock Industries – to develop product labels and cer-tification schemes that ultimately will be in line with international standards. This helps to pre-pare mongolian enterprises for entering interna-tional trade which few of them currently do. The project’s ‘green Products Challenge’ is intended to help select mongolian SmEs with proposals to develop products that might meet more rigor-ous standards.

Similarly, the Greening Sri Lankan Hotels pro-ject works with the Sri lanka Tourism develop-ment Authority (SlTdA) to develop a green certi-fication scheme for hotels, to ensure sustainable operations can be recognised by tourists, tour operators and government institutions. SlTdA is expected to provide incentives by way of reduced annual registration fees for those hotels being certified under this scheme. This will be a volun-tary scheme that will give recognition to hotels for their environmental efforts and provide them with a marketing advantage. The need for certified products is also realised by the project Soybean Processing – SCOPE in In-donesia. This one is improving the situation of mi-

it starts with harvesting – sustain-able rattan production in Cambodia

the Soybean Processing - SCOPE project helps the SMes producing tofu and tempeh to take up cleaner production


cro-, small-, and medium-sized factories producing tofu and tempeh in urban and peri-urban areas of Indonesia by helping them to access more energy efficient technologies. The certification is neces-sary to help consumers identify sustainably pro-duced foods, son adding to the value of switching to sustainable technologies for producers. The project therefore works to develop a cer-tification scheme which includes monitoring as well as promotion that will reward producers

who employ better practices and help to spread the adoption of improved and energy saving technologies. It engages the ministry of Environ-ment and other government actors in the pro-motion of consumer awareness and in the im-plementation of the certification scheme, which will strengthen the regulation of sustainable production, and demonstrate an effective policy instrument for supporting SCP.

labellinG

In China, the Higher Efficient Transformers pro-ject contributes to the redesign of a mandatory energy efficiency label and a higher efficiency certificate for top performing transformers. This initiative is paving the way for efficient trans-formers to be included in the China Catalogue of High-Efficiency Products. This catalogue is used in public procurement and products included can bring tax advantages for the producing com-panies. The following figure illustrates how the project approaches this labelling initiative.

4.4 In a similar case, the China Motor Challenge project envisions a new energy efficiency label for electric motors. There is a need in the indus-try for revised electric motor energy efficiency standards, which are currently outdated. The pro-ject supports Chinese policy-makers in making the revision, taking into account the most recent work in the IEC 60034-30 Standard. In turn this will increase the minimum energy efficiency re-quirements, pushing low-efficiency products off the market. The energy efficiency standard for electric motors is indeed the technical basis of the mo-

Macro-level energy policy frameworks:

China's National Climate Change Target: Reduce emission intensity 40% - 45% by 2020

China's Medium and Long-Term Energy Conservation Plan

Ten Key Energy-Saving Projects (Project No. 6: Energy System Optimisation Project)

Development of higher Mini-mum Perfor-mance Stand-ards (MEP) for transformers

Design of a new energy effi-ciency label for transformers

Update 'China Catalogue of High-efficiency Products' for public procure-ment

Development of a Eco-Design Standard for higher efficient transformers

Development of a Total Costing Tool to address end-users of transformers

}}

Supporting policy imple-mentation action

New policy instruments

FiGure 14: poliCy iMpaCt FraMeWorK oF the hiGher eFFiCient tranSForMerS projeCt in China

1 2 3 4 5


GuiDelineS

4.5.1 GuiDelineS For teChniCal operationThe project Waste to Energy in Rice Milling Sector in Cambodia plans to develop operating guidelines with which WtE operators must comply before be-ing licensed. Currently, there is no operating licence for WtE systems. However, it is known that other industries are required to have general operation licenses, which often include some environmental regulations. The WtE operating license will be intro-duced as a means of quality assurance or trademark for environmental and carbon friendly production processes. This could eventually also benefit the rice milling sector, especially for rice exports. For this purpose, the project is creating a mul-ti-stakeholder dialogue platform that will jointly draft and validate WtE guidelines for approval by the ministry of mines, Industry and Energy. The guidelines will serve as the testing criteria for is-suing annual operating licences. The license will include means of verification and corrective ac-tion in case of non-compliance. The project will incorporate this licensing process in a training course for WtE operators. For existing WtE instal-lations, in case the WtE does not pass inspection to meet the standards for the operating license, the operator will be given time to make improve-ments. However, the next check will be stricter with penalties for a repeated failure to comply. While the WtE in Rice Milling Project promotes stricter guidelines to follow, the Sustainable Cot-ton Production in Pakistan’s Cotton Ginning SMEs project develops guidelines for better ginning prac-tices that are voluntary in nature. The guidelines will cover three main areas: better cotton sourcing and tracking, ginning efficiency (including process effi-ciency, energy efficiency and waste management), and decent work. meanwhile, the project will build the capacity of 200 small- and medium-sized gins and key supporting institutions as they adopt and support the better practices.

4.5

a Cambodian rice mill in operation

tor energy label. Since the standard will be re-vised, the label implementation rules will have to be adjusted accordingly. The project works so that all information such as label sample and specification, requirements on energy efficiency

testing, label printing and sticking, registration methods and label notification will be clearly in-dicated in the label implementation rules.

In China, the REWIN project plans to develop a guideline for material flow analysis in the electron-ics industry. This guideline is intended for SmE pro-ducers to identify potential for improving resource efficiency and reducing e-wastes via material flow analysis. The guideline will also address key pro-cesses in the electronics industry including recycling processes for typical wastes from the electronic in-dustry and end-of-life electronic appliances. Typical examples for the closing of material cycles between manufacturers and recyclers are the reuse of elec-tronic components (e.g. power supply, printed cir-cuit boards) or the recycling of plastics for housing.


4.5.2 GuiDelineS For proCureMentIn China, the Wood Processing and Trade project developed a responsible Purchasing guide for the Chinese Timber Industry. To support SmEs in their export activities, the project produced a practical guide on how to comply with US leg-islation protecting fauna and flora. In Vietnam, the project and other partners developed a High Conservation Value Forest Toolkit, providing for-est owners with a tool for conservation plan-ning. The India project team developed an export guide to increase access to US and EU markets and also developed a Framework for Assessing legality of Forestry operations, Timber Process-ing and Trade- Principles, Criteria and Indicators. In another example, the CSR Vietnam project identified the lack of corporate social responsi-bility (CSr) standards as a major barrier to trade. over 90% of SmEs do not have sufficient capac-ity to comply with CSr requirements in the fields of environment and labour, while major buyers of Vietnamese products, including trans-nation-al corporations and retailers are tightening their procurement guidelines to comply with strict requirements. Incorporating CSr will improve labour practices and provide economic and envi-ronmental benefits, but it can also pose a serious problem since many Vietnamese SmEs still lack the knowledge and capacity. So, the project developed the CSr tool box ‘reap26’ which provides comprehensive docu-

Discussing CSr at project workshop

auDit anD aSSeSSMent

many leading companies want an assessment of the environmental performance of their suppliers to ensure that they meet their standards. In the Sustainable Wood Processing and Trade project, gFTN-China provides an annual audit to assess a company’s compliance with gFTN requirements, such as timber sources, chain-of-custody man-agement, procurement, and legal requirements. An example is the relatively simple supply chain of an export-oriented plywood mill. The mill purchases timber from a number of farmers, processes it in the sawmill and a veneer work-shop, and makes it into plywood for export. Audit

4.6 results show that the mill has a system to con-trol its entire supply chain. A qualified internal auditor can be responsible for undertaking this audit. Staff in charge of timber procurement will ensure that timber is from a legal source.

SMe assessment by the ESEEC project

ments and tangible tools for SmEs and CSr con-sultants as they develop a company’s CSr policy. This will make CSr more feasible and tangible while taking into consideration the practical environment of Vietnamese companies. Among others, the tool box includes CSr starters, a policy guide, implementation guide, and a ‘CSr – roadmap’. However, the experience of CSR Vietnam shows that the need to comply with standards and/or codes of conduct is often pushed to mid-dle-sized producers / suppliers by major retailers, rather than to the smaller suppliers located up-stream in the supply chain. oftentimes, middle-sized suppliers have to deal with many stand-ards and certifications, especially as each major retailer has its own code of conduct for which it demands compliance. Not surprisingly, this myri-ad of standards and codes burdens the suppliers, increasing process complexity and operational costs (see Ch. 3.1).


platForMS

Since a supply chain involves many actors in vari-ous tiers of the chain, a platform in which all stake-holders can communicate becomes essential. This platform can serve as a framework for knowledge and experience sharing in using certain standards as a strategy, for example (see Figure 15). This com-munication and coordination among various stake-holders may bring several benefits, for instance through cost savings for the users of certification. This might happen through reduced transaction costs in getting clear comparative information about certification options, in improving access to training and support tools, and in reducing dupli-cations in multiple certifications (liu, et al 2004).

4.7 The CSR Vietnam project has a platform for the exchange of information, knowledge, and ex-perience, for example, to help standardise regu-lations. A series of CSr multi-stakeholder events, including roundtables and conferences, attract-ed about 1000 participants from enterprises, Ngos, government agencies, international or-ganisations, research institutes, universities and media; and the project has a CSr award based on ISo 26000 to help define best practice. In China, the ESEEC project created an e-learn-ing platform that now offers knowledge on en-vironmental protection, oHS, energy efficiency and CSr. SmEs can find simple explanations of sustainable production standards in the Chinese language and tailored to their sectors. Similarly, the China Motor Challenge project established a China motor Systems Challenge Club, a national information platform for Chinese motor system users, energy service companies, electric motor manufacturers and energy saving administra-tors. Through the club, best practices in the de-sign and application of energy efficient motor systems are promoted and shared.

In China, the project Improving Environmen-tal and Safety Performance in Electrical and Electronics Industry (ESEEC) project consortium developed a ‘conformity model’ and award scale as a framework for assessment and voluntary audit of enterprises. Companies can use the assessment and voluntary audit as a step to-wards improving their environmental and safety performance. The conformity model serves as a basis for ultimately granting awards to high-achieving SmEs during the final stages of the

project. Based on how successfully they have im-plemented suggested measures to upgrade their environmental and safety performance, partici-pating SmEs can reach four levels of compliance, including internal assessment and external as-sessments, each corresponding to a detailed set of indicators and targets, from basic to proactive. SmEs can be assessed according to the level at which they have implemented suggested meas-ures, and high-achievers will receive awards at the end of the project.

FiGure 15: FunCtionS oF platForMS

Strategyoptions

Updates (e.g. new

standards)

Capacityimprovement

Commonunderstanding

SCM issueprioritisations

Tools

Platforms

the ESEEC workshops promote the e-learning platform


The SUS Bird project established the Sustain-able Building Initiative (SBI) Alliance platform, which provides member-SmEs with specific ser-vices, such as training programmes or information packages. Within the Alliance, stakeholders like BIrd SmEs, local decoration associations, govern-ment agencies, standardisation and certification bodies, and European and international sustain-able building experts, play an active role in shar-ing their insights and experiences on the different phases in the life-cycle of products for interiors. Improving the supply chain engagement also happens in the Wood Processing and Trade pro-ject. Through the project, the participating SmEs enhanced their supply chains through active en-gagement with WWF’s global Forest and Trade Network (gFTN) in the target countries. The gFTN provides a full range of support to mem-ber companies. It maps the supply chain through working with the target companies to set them on the path to procuring sustainable timber for their wood processing businesses. The gFTN supports participating companies with market links, best practice workshops and by identifying sources of legal and certified timber. This mecha-nism accelerates the adoption of SCP in the tar-get timber industries.

In the Philippines, the ZCR project created strategic alliances with key communities in order to build synergies with them. It set up the Zero Carbon resorts virtual platform with two com-ponents: one for the public, and one for members only. The public site serves as a platform for dis-semination of information. The member site is built on the Zero Carbon resorts database where participating SmEs can register and enter data on their own consumption of resources. Users can discuss topics within the forum.

5Zero Carbon Resort beneficiaries form strong networks – online and offline


part of the challenge in learning lessons from SSCm initiatives and scaling them up, is that it demands an understanding

of the unique features of each initiative and an individual approach developed for each. Scaling-up demands greater numbers of producers and buyers subscribing to SSCm initiatives in order to reach the necessary critical mass that can create significant change in the markets. Chapters 2 and 3 analysed factors encour-aging as well discouraging companies from engaging in SSCm initiatives; Chapter 4 then discussed initiatives taken by SWITCH-Asia pro-jects so far. Chapter 5 presents five main lessons that draw on the experiences of the projects and offer avenues for action that other com-panies can follow towards strengthening their own SSCm.

Strengthen communication muscles To achieve a critical mass of stakeholders prac-ticing SCP, communication is a crucial step. For SWITCH-Asia projects this means helping SmEs to reach consumers. In many projects, showcas-ing best practices, especially at trade fairs has been part of their standard operations. An ex-ample is with the Clean Batik Initiative in Indo-nesia where the project not only attempts to link eco-batik producers with major retailers, it also actively joins exhibitions around the country to promote eco-batik to the general public. By do-ing so, more and more consumers can be aware of, and come to prefer, eco-batik products to the unsustainable alternatives. In turn, if demand for eco-batik products increases, this can attract other batik producers to join and take up the sus-tainable practices.

nourish market linksFrom the experiences of SWITCH-Asia projects, cultivating market links with the strongest ac-

tors in the supply chain (such as traders and big retailers) is essential. This provides strategic channels for SmEs through which they can mar-ket their sustainable products on a large enough scale to be noticed by consumers. The Wood Processing and Trade project in China, India and Vietnam links small- and medium-sized wood processors with WWF’s global Forest Trade Net-work. By integrating this network, the SmEs have an opportunity to build new partnerships with traders and big retailers who are WWF partners. However, one of the challenges is how to en-gage with, and instigate behaviour change of, corporate buyers. one experience is from the Sustainable Rattan project which engages with international buyers through raising awareness about rattan, deforestation, certification, and introduces retailers to rattan producers in situ, and inviting both to trade fairs. These were par-ticularly successful in cases where the business expectations of both parties were clear and close business relationships built. European retail-ers learnt about important pro-environmental aspects of production of which they were not previously aware. The Bamboo project is another example, promoting the use of bamboo for con-

leSSonS learnt For SCalinG-up SSCM initiativeS5

only few retailers offer sustainable batik in indonesia

the Sustainable Rattan project markets its products at ambiente


struction through fairs and campaigns. Through the use of demonstration houses, it assures re-tailers of the quality and safety of bamboo as a building material. making the business case clear to corporate buyers might be another challenge faced by pro-jects. In India, the Pro-Sustain project develops the Shop for Change (SFC) brand, not only to ensure quality standards, but also to attract re-tailers. With over 135 outlets selling SFC certified products, 13 Fair Trade India shops and 15 partner brands, the project can deliver a strong message to corporate buyers on how they might benefit from the SFC broad network as well as from the sustainable products.

Make a convincing business case for SMes and sustain itFor small- and medium-sized enterprises trying to sell sustainable products, a stable market is most preferred since SmEs tend to have limited capital and are small in size, making them more vulnerable to supply and demand fluctuations than the big companies. Quite often, the main demand for sustainable products comes from the international market since local markets are still not able to absorb the products in signifi-cant enough quantities to support SmE produc-ers or suppliers. To help registered hotels reach-ing out to international tourists, the Greening Sri Lankan Hotels project addresses tour operators and informs them about Sri lanka as a sustain-able destination through frequent meetings, presentations and speeches at the International Travel Foundation Annual meeting, World Travel market or the International Tourism Fair Berlin. It also assists the hotels in engaging guests in their ‘greening’ efforts by developing and issu-ing a certificate through which international as well as domestic tourists may recognise ‘green’ hotels. Similarly, small producers or suppliers work-ing together with the Pro-Sustain project may maintain their SCP practices by joining and sell-ing their products through SFC-certified retail shops. Backed by its number and networks, an SFC retail shop may provide stable demand for sustainable products sold by the SmEs.

Catalyse consumer demandNo matter how sound an SSCm initiative may

be, businesses will only succeed if there are in-dividual (household) consumers, especially in the middle class, demanding sustainably manu-factured products. Therefore, it is important to raise the awareness of domestic consumers of sustainability issues. The SWITCH-Asia projects may identify several subjects, most relevant to the country in which they operate, that can be used for their awareness-raising campaigns. The Lead Elimination Project aiming at the eradica-tion of the chemical element lead in paints in eight countries, builds its case around health and works on a campaign to support its ob-jective. By raising consumer awareness of the harmful impacts of lead, the project may create a market for producers of lead-free paints. In In-dia, the Pro-Sustain project also, to establish the market for sustainable products, works with sev-eral top fashion designers, such as Anita dongre, and with celebrities like Jackky Bhagnani and Puja gupta.

Start from existing policy frameworkBuilding up SSCm initiatives around existing policy frameworks can be a good strategy to receive government support toward projects, which eventually helps projects achieve their ob-jectives. The Higher Efficient Transformers project

Raising consumer awareness by engaging top designers

product test are part of the campaign of the Lead Elimination Project


has used as its access point the Chinese government’s 11th Five year Plan objective of reducing the energy intensity of various sectors and products by 2020. The project is designed to fill a gap which it has identified: the government cannot actively promote higher efficient trans-formers because of an absence of standards. one of the pro-ject’s main activities is to work with the China National Insti-tute of Standardization and the Standardization Administration of China to draft a new standard for higher efficient transformers. In the same way, the REWIN project, aiming at developing adequate recycling infrastructure for e-waste from the Chinese electronic producing industry, may work with full support of Chinese government since the project is actually sup-porting the 12th Five year Plan objective of energy saving and emissions reduction. The project pro-vides policy-makers with recommendations for e-waste regulations.

Aiming at improved SmE capacity for eco-effi-ciency, oHS and CSr in the Chinese electrical and electronics industry, the ESEEC project worked to provide Chinese policy-makers’ knowledge on national and international CSr and oHS stand-ards, and successful implementation strategies. The project ensures China’s future policy devel-opment is compatible with international best practices, thus reducing technical barriers to trade. Specifically, the project reviews the Euro-pean legislation relevant to the sector and con-ducts a comparative analysis with relevant legis-lation in China. This includes identifying relevant

Chinese standards which have been adapted to meet international standards (e.g. ISo/IEC/EN standards). An example of this harmonisation is gB 17799-2001 standards on electromagnetic compatibility, generic standards for industrial environment, which are fully harmonised with the IEC 61000 standards.

Capacity building on standards is important to the ESEEC project

Developing adequate recycling infrastructurefor e-waste in China: the REWIN project

leSSonS learnt at a GlanCe:

• Strengthen communication muscles• Nourish market links• Make a convincing business case for SMEs and sustain it• Catalyse consumer demand• Start from existing policy framework


tapping into corporate buyer’s power by understanding its procurement strategySustainable supply chain management

(SSCm) is essential to the scaling-up of SCP practices. By definition itself, a supply

chain involves multiple actors/stakeholders from the creation of a product, to its production, dis-tribution and ultimately its presentation to con-sumers. Taking this further, the value chain con-cept takes account of the product’s consumption and disposal – making SSCm even more strategic for any scaling-up efforts.

addressing corporate buyersCorporate buyers usually sit in a powerful po-sition within the value chain and their buying strategies often shape the sustainability perfor-mance of upstream suppliers. From experiences of the SWITCH-Asia projects, two categorisations of corporate buyers can be identified. Based on their geographic locations, SmEs deal with in-ternational and domestic buyers of which three types were observed: the manufacturer/produc-er, the retailer and/or the public procurer, and the recycler. Identifying corporate buyers within the value chain can significantly help SWITCH-Asia projects and SmEs in understanding more about their procurement strategies. This in turn will enable the projects and SmEs to create effective production processes and marketing strategies. What is even more important is that addressing the right corporate buyers with the right ‘offer’ can make sustainable products more visible to individual consumers, since they (traders and re-tailers) generally buy products in bulk and have established markets worldwide.

Motivating and discouraging factorsrecognising factors that promote or discourage the uptake of SSCm initiatives by companies (SmEs as well as their corporate buyers) may help SWITCH-Asia and other projects to formulate

effective methods with partner companies to adopt more sustainable business practices. How-ever, many times SWITCH-Asia projects work with innovations and new approaches, which are probably not in the business mainstream. In this case, building a business case for each target group is essential, so it will want to join in and contribute to the SSCm initiatives.

taking up standards, certifications, labels and guidelinesSSCm initiatives, such as standards, certifica-tions, labels and/or guidelines have increasingly become important for companies (SmEs and their corporate buyers) seeking to green their supply chain and broaden their markets. The adoption of these initiatives can be a strategic approach for scaling-up SCP practices, since their existence facilitates communication among pro-ducers, sellers and consumers on the quality of sustainable products.

ConCluSionS6

Corporate buyers such as energy utilities benefit from the higher efficient transformer standards


It might be too early, however, to conclude that their use is the best strategy for the up-scaling as SSCm itself is still a relatively new ap-proach. Clear indicators of success are required. The impact of SSCm needs to be measured so that the effectiveness of activities can be as-sessed and modifications made where neces-sary to fit them to local conditions. In the case of the SWITCH-Asia programme, most co-funded projects are pioneering in nature and therefore need more time to arrive at a conclusion of what works and what does not in the SSCm field. Still, based on what they have accomplished so far, it is clear that for them the standards, certifica-tions, labeling and guidelines are strategic start-ing points for scaling-up SCP practices in indus-try and within the SmE way of doing business.

Monitoring and evaluationAccording to ISEAl Alliance’s Code of Good Prac-tice, Assessing the Impacts of Social and Environ-mental Standard Systems v1.0 (2012), it is vital to analyse why expected objectives may or may not have been achieved. If an expected objective is achieved, then the external factors provide in-formation about conditions under which those results are likely to occur. If the objective is not achieved, then the factors provide clues as to why not. Understanding these influencing fac-tors gives projects and/or companies the basis on which to adjust their strategies to positively influ-ence those external factors where possible and to mitigate the risks where influence is not possible. Therefore, the next step for projects (and also for any companies engaged in the projects) is to measure impacts through monitoring and evalu-ation. The following figure illustrates the process flow for taking SSCm initiatives, through moni-toring and evaluation, to producing feedback.

entrepreneurial spirit key for sustainable supply chain managementAs SWITCH-Asia projects deal with small- and me-dium-sized enterprises, it is becoming clearer that SSCm requires an entrepreneurial spirit. The abili-ty to quickly adapt to changing demands, improv-ing, refining and customising products to meet consumer’s needs, is just one indispensable trait. global trends show that international con-sumers are demanding more and more environ-ment friendly and high quality products, which

requires SSCm. Acting like an entrepreneur by seizing a new opportunity and taking leadership to undertake SCP practices may give companies the ‘first mover’ advantage, attracting others in their wake, as showcased by the Wood Processing and Trade project.

Various SSCMinitiatives

Company‘s set ofsituations/priorities

Results as expected Results achieved

Take up of SSCM strategies

Feedback

SSCM initiative impactassessment

(monitoring & evaluation)

Results

FiGure 16: the FloW oF proCeSSeS in the taKe up oF SSCM initiativeS


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Further reaDinGS