In late 2011, EEx was the lead sponsor for this research project to examine U.S. retailers' sustainable supply chain projects being implemented at the factory level in China. The report was published in 2012, with the main conclusion that suppliers in China lacked the capacity and capabilities to meet the sustainability goals set by their U.S. retail customers.
The stakeholders on the ground in China who are responsible for implementing sustainability initiatives face many challenges.
The relationships between these stakeholders are extremely complex, and this report aims to bring insight from each perspective to deepen mutual understand for each other’s challenges. We found that many of the stakeholders have weak relationships with one another and thus lack insight into the realities and challenges that the others face. Many of the solutions offered such as coalitions, knowledge sharing and leveraging third parties will help these important players increase communication and trust in order to strengthen relationships.
Retailers are actively working to make their supply chains in China more sustainable (some playing a more prominent role than others), but despite the vast resources that are being spent on this activity, the improvements are limited, and have not yet created a tipping point. While innovative solutions are currently being tested in China, it is clear that there is not one simple solution to the sustainability challenges, but further collaboration is needed in order to make greater progress.
Much of the difficulty in implementing sustainability initiatives is the lack of available, quantifiable results. Therefore, there are no benchmarks, and both retailers and suppliers are unable to figure out how well they are doing. The only way to encourage retailers and suppliers to continue down the path of sustainability is to show quantifiable results. A lot of the greening and sustainability activity has not yet been aligned with business strategy – for example, some retailers still feel the business risks associated with longer contracts outweighs the benefits that they may bring to sustainability activities. So, perhaps longer contracts are not the solution, but perhaps gaining a deeper understanding (with data) of the energy related risks of buying from less sustainable factories (i.e. factories that don’t properly manage their energy) would drive more sustainable purchasing decisions.
Additionally, although some of retailers business goals are aligned, not all of them are. Some of the conflicting goals often result in a lack of knowledge sharing and collaboration. For example consultants and the public would like more data from suppliers, but the suppliers do not have incentives or the tools to supply such data. The central government would like to increase transparency, but this is challenging at the local level. Because sustainability initiatives are most effective when they are based on partnership and collaboration, the relationships between stakeholders is important to consider improving if we expect progress.
EEx's response was to build EEx Charge, a very simple, focused app that starts with one area (electricity) that could help factories save money, and compile data their customers were asking for in the process.