Incorporating Environment Into Business

By Flavia Micilotta 15 September, 2015

Companies are struggling to understand their producer's environ performance. Micilotta on how BEPI can help

Companies are incorporating environ performance in business; suppliers need to follow or risk losing customers
As the 'world's factory' China is facing significant supply chain requirements from international co's & local govt
BEPIs' various supply chain services & 3 stage assessment help producers identify & address key environ risk factors

In today’s global and fast moving competitive markets, businesses face significant and numerous environmental challenges within their supply chains. The increasing scarcity of natural resources and environmental degradation have led to greater demands for regulation and heightened societal expectations for more transparency and accountability.

Supply chain requirements are particularly significant for Chinese industry as the “world’s factory”

All over the world companies are incorporating environmental performance in the way they do business. This means they require their suppliers to follow suite in meeting certain environmental standards. Supply chain requirements are particularly significant for Chinese industry because of China’s role as “the world’s factory” and leading global exporter – accounting for as much as 10% of the world’s total exports. The risk, if they do not comply, is potentially to lose their international customers.

Companies are incorporating environmental performance in the way they do business
This means suppliers need to follow suit or risk losing customers
China’s 12FYP had already set the stage for heightened pressure on environmental targets

In 2011, China’s 12th Five-Year Plan had already set the stage for heightened pressure on non-economic targets, i.e. increase non-fossil fuel while reduce energy use, CO2 emissions and other pollutants like sulfur dioxide. Five years on, low-end manufacturers have considerably come under pressure as China has started its shift to higher value-added products and services. Added to that, the external pressure from customers in the West to conform to higher environmental standards, clearly lead the industry towards further consolidation in the years to come. This process will only be quickened by the latest national requirements as since January, this year, China formally began to implement the updated PRC Environmental Protection Law.
How can Chinese companies thrive while dealing with grave environmental issues such as water pollution, probably one of the most relevant challenges in China today? Their client companies are already struggling trying to understand how their producers are actually doing with regards to the social and environmental legislations in their countries of operations and if they are going to face some risks and their license to operate will be at stake.
In order to help companies keep track of the continuity of their operations and have a clearer view of how resilient their businesses are the Foreign Trade Association has developed a range of specific services to enhance the transparency level of the safeguards needed for successful business to thrive.

The Business Environmental Performance Initiative – a business-driven service to help

The Business Environmental Performance Initiative (BEPI) is a business-driven service developed by the Foreign Trade Association (FTA) for retailers, importers and brand companies committed to improving environmental performance in supplying factories worldwide.

BEPI, developed by the FTA, helps companies improve the environmental performance of their supply chain

In 2003, FTA created the Business Social Compliance Initiative (BSCI) to provide companies with a practical and efficient system to improve social compliance in global supply chains. In 2011, in light of the success of BSCI, FTA adopted a new governance structure and integrates sustainability into its core business. In 2014, FTA developed BEPI to support companies committed to improving environmental performance in their supply chain. Today, FTA unites more than 1,600 member companies. These members reflect the diversity of the commercial sector in terms of consumer goods, turnover and country of origin.
Through BEPI, participating companies benefit from:

  • Enhanced environmental financial performance: through improved environmental performance at the production site, participants and their producers benefit directly from effective environmental management and reduced costs;
  • Reduced risks and improved credibility: BEPI reduces environmental risks at factory level and builds credibility by providing environmental information to share with stakeholders; and
  • Improved relations in the supply chain: By taking part in BEPI, participants can work together with their producers to develop strong business relations throughout their supply chains.

By joining BEPI, companies gain access to a range of services that support their work towards making improvements to the environmental performance of their producers.

BEPIs’ services tackle the whole supply chain from real-time monitoring to a support network and training & support for producers

BEPI allows companies to monitor their producers through its network of local experts who get accredited to deliver BEPI services. Gaining access to the BEPI platform means getting real-time data on your producers’ environmental performance and be able to rely on a robust methodology based on the GSCP Environmental Module to target a comprehensive range of environmental areas specific to each producer.
In addition to Environmental Management Systems, high priority environmental areas are identified, improved upon and assessed. This approach ensures that key target areas are addressed in a tailor-made manner rather than applying one homogenous framework that may not tackle the specific environmental aspects of each producer.
Producers are empowered through Workshops, e-learnings, and coaching sessions with BEPI recognized consultants who provide face-to-face support on-site to meet BEPI quality standards. Producers also gain the advantage of accessing our local experts available through the directory of local BEPI-recognised service providers.
Companies participating in BEPI also engage with an interesting network made of participants facing similar environmental changes in their supply chain and they can exchange interact with the diverse range of stakeholders BEPI works with for greater impact.
The BEPI process assists producers to identify and address key environmental risk factors in three stages: self-assessment, improvement and assessment. Each stage guides towards practical environmental improvement.

The BEPI process assists producers to identify and address key environmental risk factors in three stages
Each stage guides towards practical environmental improvement

BEPI Process

  1. Self-Assessment: After an introduction to the BEPI system, the producer completes the BEPI self-assessment, which identifies high priority environmental areas based on the production processes
  2. Improvement: A BEPI-recognised environmental consultant delivers on-site environmental support to the producer on the priority environmental areas. This includes:
    • Practical recommendations
    • Tailor-made coaching
    • Highlighting the business benefits
    • Assessment preparation
  3. Assessment: The assessment is completed by an assessor recognised by BEPI and addresses environmental performance in each of the priority environmental areas. Producers aim to achieve one of the three BEPI assessment levels and are encouraged to further improve their performance towards meeting the next level within a period of two years

Growing BEPI in China: stay tuned

In order to introduce producers in China to BEPI and its work, in December 2014, the BEPI team hosted a series of workshops in Shanghai, Xiamen, Shenzhen and Hong Kong. This was an invaluable opportunity for factories in different industries to get a good understanding of how BEPI can support them in their environmental management system and ultimately to become more efficient. The sessions were introduced by the FTA Director General, Mr Christian Ewert who explained how BEPI fits into the sustainability offer at the FTA. Environmental consultants helped moderate the sessions, focusing on specific environmental issues linked to different geographies across the country. 120 producing factories linked to FTA members participated to the seminars and took part to an interactive discussion where they shared their environmental priorities and the main impact legislations were having for their business.
Follow our work on http://www.bepi-intl.org where you can find out about upcoming producers ’workshops we will be hosting in China next October and keep updated on the progress our members make to weave sustainability into their supply chains.


Further Reading

  • 2015 World Water Week: Key Takeaways – What’s water’s role in sustainable development? How can we ensure water for all? China Water Risk’s McGregor on this, how Asia is fairing, the Sustainable Development Goals & more from World Water Week 2015
  • Trade-offs Could Help China Manage Water – Tough trade-offs may be on the horizon for China as it balances water, food & energy security. HSBC’s Wai-Shin Chan warns how cotton & coal maybe headed for a clash in the long term as they compete for limited water resources provincially & nationally
  • China Water-nomics – Will China’s economic development be hampered by limited water resources?  The very existence of the Three Red Lines signals that China can’t keep developing the way it has. Read on for why GDP will be capped at 5.7% given China’s water-nomics
  • Still Exposed! Fashion Materials in China – With 32% to 75% of global hides, wool, cotton, chemical fibre and silk either produced in or passing through China via imports, exposure is sky high. Should brands move out of China or should they stay and help factories meet the Water Ten Plan? China Water Risk’s Tan expands on the future of the industry

 

  • Brand Rankings Through A Chinese Lens – See how global and local brands rank across 8 sectors in terms of their supply chain’s environmental impact in this review of the new Corporate Information Transparency Index (CITI) report by IPE & NRDC
  • Corporate Water Reporting in China – CDP’s report shows potentially inadequate water risk assessment by Chinese companies & those with HQ’s in China. CDP’s Gillespy on their latest report and why it’s time to report on water risks
  • Made in China 2025: Are You On The List? – How does the new Made in China 2025 Action Plan fit with other ‘Future China’ plans? Are the ten industries in Made in China 2025 the same as the Circular Economy Ten? Find out why which list matters
  • Business & Society: Building Trust – Given pressing societal issues, companies are now expected to lead the change across their business value chain. Edelman’s Ashley Hegland on why businesses need to reprioritize value to include such societal benefits to build & maintain trust or face reputational brand damage

Flavia Micilotta
Author: Flavia Micilotta
Flavia currently works as BEPI Coordinator at the Foreign Trade Association in Brussels and assists companies to build responsible supply chains. Before that she worked on different sustainability projects as an external consultant for EY and Deloitte, ranging from climate change and adaptation,to carbon management and ethical Investments. A qualified environmental auditor, Flavia helped clients in different industries develop their business models, share with stakeholders and go Beyond compliance. A founding member of the UN Global Compact in Belgium, Flavia has developed much of her career working with companies to improve their transparency and accountability through meaningful sustainability reporting.
Read more from Flavia Micilotta →