Global companies are scrambling to shift to the sustainable procurement of raw materials and energy. Material supplier for such global companies are facing the growing risk that they will fail to be selected as suppliers unless they pursue a responsible approach to the environment and human rights.
In July 2018, U.S. coffee chain Starbucks Corp. announced a plan to stop using disposable plastic straws at all of its locations across the world by 2020. In May, McDonald’s Corp. of the U.S. introduced paper straws in place of plastic ones at several locations in the United Kingdom on a trial basis. In the United Kingdom and Ireland, McDonald’s will increase the number of restaurants using paper straws and will stop using disposable plastic straws in 2019.
Discontinuing the use of plastics is just one example of the growing trend among companies to replace existing raw materials and energy with ones that are friendly to the environment and society. In January, McDonald’s announced the “Scale for Good” approach, under which the company will promote environmentally and socially responsible activities by taking advantage of the huge scale of its global operations with a total of 37,000 locations.
In line with this approach, McDonald’s will replace existing packages with ones composed of reused or recycled raw materials and paper certified by the Forest Stewardship Council (FSC) by 2025. As McDonald’s started to take steps to achieve this goal earlier at its Japanese locations, which total 2,900, than in other countries, it replaced 71% of the existing packages in this country with ones composed of FSC-certified paper by the end of 2017. Full replacement with FSC-certified paper is expected to be achieved in 2020.
McDonald’s is also pursuing the sustainability of food materials. It is using Alaska pollock from fisheries certified by the Marine Stewardship Council (MSC) as a material for the Filet-O-Fish sandwich at all of its locations across the world.
For its French fries and chicken nuggets, McDonald’s is using oil certified by the Roundtable on Sustainable Palm Oil (RSPO). In Japan as well, the company has requested edible oil suppliers to acquire a supply chain certification from the RSPO. “Certification is expected to be obtained by the end of the year,” said Masato Iwai, a manager at McDonald’s Japan’s Corporate Social Responsibility (CSR) department.
Apple Calling for A Shift to 100% Renewable Energy
A shift to sustainability is also proceeding in energy procurement. In April, Apple Inc. of the U.S. announced that it has achieved 100% use of renewable energy for all of its facilities in 43 countries. It also disclosed that it had requested suppliers to achieve 100% use of renewable energy, and 23 suppliers had already pledged to do so.
In Japan, under a partnership agreement with Daini Denryoku Co., Inc, a clean energy power producer and supplier, Apple has installed solar power generators on the roofs of buildings and warehouses in 300 locations. As a result, it achieved a full shift to renewable energy in Japan with a total power generation capacity of 18,000 MWh. Meanwhile, Apple also engaged in dialogue with suppliers to promote their shift to renewable energy. The company carefully consulted with each of its suppliers, starting with large energy consumers among the total of 865 primary suppliers in Japan, discussing their ability to internally install renewable energy facilities and arrangements for electric power contracts. Through this dialogue process, Apple and suppliers fleshed out the specifics of plans and targets for the shift to renewable energy.
In the United States, Apple has the Supplier Responsibility Team, comprised of dozens of members. This team is keeping a close watch on whether suppliers are behaving in a responsible manner in the fields of labor affairs, human rights, safety and the environment. If suppliers are found to have problems, Apple may terminate contracts with them. However, Apple maintains deep involvement with suppliers that respond to its concerns, thereby creating a robust supply chain.
In other sectors, food companies, including edible oil and fat makers, are increasingly adopting RSPO-certified palm oil in response to requests from user companies in the restaurant and retail trade industries. In the catering industry, there is a move to supply sustainable fishery products for use by employee cafeterias in response to user companies’ requests.
Initiatives like this come against the backdrop of the establishment of international rules including the Paris Agreement. The forthcoming Olympics and Paralympics in Tokyo in 2020, for which sustainability is a buzzword, are another factor driving the trend of procuring sustainable raw materials and energy.
ESG (environmental, social and governance)-oriented investors are evaluating companies’ approaches to environmental and social responsibilities and using the results as a reference for investment decisions.
As major companies in the downstream of supply chains promote sustainable procurement, small and medium-size companies also have to behave in a socially and environmentally responsible manner. We are entering a new era when companies must fulfill social and environmental responsibilities if they are to be selected as suppliers.