Posted: March 01, 2011
Greening the supply chain
From breweries and resorts to hospitals and manufacturers, businesses are paying attention to where their supplies come from and the life cycles of their productsBy Lisa Marshall
Ever wonder how they could make the little aluminum tab on your beer can in a way that uses less energy and emits less pollution? Probably not. But Leland Lorentzen thinks about it every day.
"Every time we have a meeting with a customer about where they want to be in the future, sustainability is always part of the conversation," says Lorentzen, CEO of Fort Lupton-based Golden Aluminum, which uses recycled cans, and an energy-efficient mill, to make aluminum sheeting for food and beverage packaging. In recent years the mill has, among other things, upgraded to motion-control lighting systems, less-polluting furnaces and begun to recycle its wooden pallets for use in landscaping.
"There is a drive from the top - from the Wal-Marts of the world - for their suppliers to come up with more sustainable options," Lorentzen says. "Here we are at the beginning of the supply chain, and lots of things are happening. It's really exciting."
Lorentzen is not alone. As large retailers and service providers have begun to move beyond in-house greening initiatives (like installing recycling bins and solar panels) and scrutinize their entire supply chain, everyone from raw-material suppliers to manufacturers to warehouse companies have been rising to the challenge.
The trend was fueled in part by a 2008 Carnegie Mellon University study that found most large companies overlook 75 percent of their greenhouse gas emissions - by failing to compute the resources used by their suppliers.
In 2009, Wal-Mart raised the bar with the unveiling of its Sustainable Product Index program, which promises to track the life-cycle of every product it sells and - within five years - create a label to alert consumers about how items rank. The company started by surveying more than 100,000 suppliers around the world about things like energy use, carbon emissions and waste. In October, it broadened and accelerated the agricultural piece of the program, vowing to double the amount of local produce it sells (to 9 percent by 2015) and begin asking its farmers for specifics about water, fertilizer and chemical use.
"Customers want products that are more efficient, last longer and perform better, and increasingly they also want information about the entire life cycle of a product so they can feel good about buying it," said Wal-Mart president and CEO Mike Duke, in a prepared statement. At the company's Sustainability Milestone Meeting in October, executive Vice President Leslie Dach put it this way: "This kind of transparency encourages efficiency, innovation and the optimization of resources," throughout the supply chain.
Since then, Whole Foods has called on suppliers for more responsible packaging and more sustainably caught seafood. Vail Resorts has turned its attention to the way its cleaning products and soaps are made. And Marriott has switched to pillows and pens derived from recycled materials. Even hospitals - led by trendsetter Boulder Community Hospital - are working to eradicate polluting materials like PVC from their supply stream.
"You can accomplish a significant amount with your own internal operations, but where you really start to make sustainability scalable is with the relationships you have with suppliers, vendors and other business partners," says Julie Klein, director of environmental affairs for Broomfield-based Vail Resorts and RockResorts Hospitality.
Vail's ‘balancing act'
Klein says an environmental ethic has been embedded in the company's internal operations for decades. But only in recent years has it begun to put increased pressure on suppliers. As Vail learned early on, such collaborations can come with unexpected challenges.
In 2008, the company launched its highly publicized Appetite For Life program, which promised to serve exclusively natural, hormone-free meats from Golden-based Coleman Natural Foods LLC and organic dairy products from Broomfield-based White Wave Foods Co. at its five ski areas. As the purveyor of roughly 2.5 million lunches per day, it promised to "serve more meals made with natural meats and certified organic dairy products each year than any other restaurant operator in North America."
But the Vail-Coleman relationship was quietly severed after just one year due to, as Klein puts it, "challenges they had in meeting our supply demands." Klein says that while it no longer has a formal program in place, Vail Resorts continues to look for natural products when buying meat.
The White Wave Foods relationship remains in place, and Vail has since also vowed to serve only organic, fair-trade coffee from Starbucks at all of its properties. Meanwhile, it is focusing on procuring greener supplies for its 16 RockResorts hotels.
It recently partnered with Aurora-based hotel amenity supplier Ready Care, to create a preservative and artificial-ingredient free soap that comes with no packaging at all (it's stamped with the hotel logo to show guests it hasn't been used.) Vail is also working with another vendor to come up with toxin-free cleaning supplies, and slowly replacing its PVC-based key-cards with 100-percent plant-based ones (after working out a manufacturing glitch in which the key codes weren't sticking).
"Fortunately, we can have a lot of influence in how products are made," Klein says.
But still, as a company whose primary mission is to make guests happy, Vail often faces tough decisions.
"It is a critical balancing act of finding products that not only meet your quality concerns and pricing concerns, but are also produced sustainably, and can be consistently supplied," Klein says. "I think that's why a lot of companies are slow to move in this direction."
Greening health care
When Boulder Community Hospital hired its first "sustainability coordinator" in 1995, the term had yet to enter the health-care lexicon.
"When I told people what I did for a living, they really didn't know what to make of it," says Kai Abelkis, who remains in the position today and has become a pioneer in the environmentally sustainable health-care movement.
The hospital was among the first to implement an aggressive recycling program and switch from toxic mercury-filled thermometers to the digital variety. In 2003, its new Foothills Hospital became the first in the nation to achieve LEED (Leadership in Energy and Environmental Design) status from the U.S. Green Building Council.
But in recent years, Abelkis has taken the hospital's sustainability promise a step further, calling on Novation, the group purchasing organization through which it buys much of its supplies, to better scrutinize suppliers.
"You could go to one sales rep and say ‘Hey, what can your company do to reduce your packaging?' But the impact is not as great as trying to create a new culture," Abelkis says.
Novation, the largest GPO in the health-care industry, has since created an environmental advisory group, which in April called on its 500 suppliers to minimize packaging, maximize recycling, reduce water and energy use, and reduce use of potentially harmful chemicals.
Meanwhile, the hospital has also reached out to individual innovators for products like IV-bags made without PVC plastic, gloves made without latex, and biodegradable lab glasses.
"When there is a negative impact on the environment there is a negative impact on the health of the community," Abelkis says. "We are all about ‘Do No Harm' so we really have to go above and beyond. The industry is finally starting to understand that."
The life cycle of a six-pack
As a company founded on sustainable principals from its humble beginnings in 1991, Fort Collins-based New Belgium Brewery appeared to be doing everything it could to be green. It was powered using alternative energy, took great pains to recycle, and offered ample incentives for employees to do the same.
But when the company decided in 2008 to measure the carbon footprint of a six-pack of Fat Tire beer from cradle to grave, it discovered something eye-opening: Only 5.4 percent of the total greenhouse gas emissions produced during its life cycle were generated on-site, while 48 percent came from production and transportation of ingredients and packaging materials, and 46.6 percent arose from distribution, storage and disposal after it left the brewery. The greatest culprits were refrigeration at the retail level and production of glass.
In addition to continuing to reduce its own energy usage (it recently fired up the largest solar array in the state and also uses biogas from waste to generate power), the company has since begun to work more aggressively to improve its supply chain.
New Belgium met with its Windsor-based glass supplier, Owens-Illinois. (Somewhat horrified by the Fat Tire news stories, company executives visited the brewery and have since vowed to boost their recycled glass content companywide). The brewery also pulled the cardboard dividers out of its 12-packs (eliminating the need for 150 tons of cardboard annually). And its sustainable purchasing guidelines - which query all significant vendors about their environmental and social practices - have become a model for other businesses.
"Being 0.3 percent of the beer market nationally, we don't necessarily have a lot of pull, but we do have an inspiring story that engages a lot of people," says New Belgium sustainability specialist Katie Wallace. "Just by sending out that survey to suppliers, we have helped to make them aware of things they weren't doing that they could be doing, like starting recycling programs, or asking their farmers how much water they use. There has been a lot of collaboration happening."
Small companies responding to the call
In response to customer demands, Denver-based warehousing company Pro- Logis (whose clients include BMW, Wal-Mart, and Crate & Barrel) has also changed its operations in recent years, building environmental concerns into the picture as it chooses where to get the steel and concrete for building its warehouses, and switching to energy-efficient lighting in all its buildings.
Golden Aluminum CEO Lorentzen notes that his company was born out of a desire to help green the beverage-industry supply chain. Founded as Golden Recycling in 1983 by Bill Coors, its original intent was to create an energy-efficient mini-mill that could supply all of Coors beer cans out of nearly 100-percent recycled aluminum cans.
For an array of macroeconomic reasons (one of them being a glut of cheap aluminum cans from large aluminum mills in the '90s), the original plan didn't pan out, and Golden Aluminum was spun off and ultimately purchased by private investors.
Today, the $100 million company makes colored sheeting - not for entire beer cans but for such obscure parts as the can tab, the wine bottle cap and the ends of infant food formulas. It uses roughly 141 million shredded aluminum cans annually as raw material, and a unique Golden Block Caster technique said to use nearly a quarter less natural gas than conventional aluminum sheet producers. It's also working on a new technology to add color to the sheeting without the use of toxic volatile organic compounds.
"Companies want more sustainable options, and I believe I have a solution," says Lorentzen, who believes the time is ripe to get the company back to supplying aluminum for entire cans. "It's going to take a while, but it is my intention to turn our process into one that improves the entire beverage in a can industry.
"We are a tiny company, but we can make a big difference."