News

Toxins in the Supply Chain

Most of us would not suspect that common products like electronics, kid’s toys, clothing, water bottles or personal care products can contain toxic substances that have the potential to cause serious health and environmental problems. Given that more than 100,000 chemicals are in commercial circulation today, and that manufacturing continues to move offshore, where producers have less control over their products, concerns over the control of potentially harmful substances in products is rising.

Toxins – The Supply Chain Risk

Eliminating toxins from the supply chain is becoming a focus for risk managers and procurement professionals, as the potential harm and cost of managing toxins becomes clear:

•    Toy giant Mattel recalled millions of products in 2007, many of which contained lead paint. In August, following its second toy recall in two weeks, the company's stock fell as much as 6%.

•    Sony experienced a seizure of Playstation game machines in 2001 when Dutch inspectors discovered Cadmium in the machine’s cables, in contravention of a Netherlands 1999 regulation banning Cadmium. Sony estimates the cost at $110 million Euros in European sale, and $52 million Euros to rework a compliant product and reassure customers across Europe. 

•    DuPont paid $300 million USD to residents near one of its chemical plants in 2004 for exposing them to PFOA, a suspected carcinogen used to produce Teflon®, the ubiquitous coating found in everything from frying pans to clothing.

Increasingly, sophisticated consumers, non-governmental organizations and other stakeholders are expecting firms to responsibly manage the health and environmental impacts of their products and operations. According to a recent article in Greenbiz.com, the number of shareholder resolutions dealing with toxic products has increased nearly five fold in the last two years. Corporations are learning that toxins within their supply chain can cause significant risks in terms of liability and brand reputation.

Aware of this growing trend, purchasers themselves are identifying toxins as an important concern. A recent survey of green purchasers in North America revealed that “human health” and “toxics” were the top two criteria purchasers considered in their sustainable  procurement programs out of 21 total attributes (ranking 5.3 and 5.0 out of 6 respectively).

Regulatory Context

In response to public concern over the harm to human and environmental health posed by many chemicals in use today, new legislation around the world is clamping down on the use of toxins in manufactured products. Manufacturers, supply chain managers and purchasers need to stay on top of legislation that will assess and restrict use of thousand of chemical substances in the near future.

As they come into force, several pieces of legislation will soon affect toxins in supply chains. In the next three years, Canada's Chemicals Management Plan will assess the potential harm of 4,000 chemicals present in consumer products, food, pharmaceuticals, personal care products, and pesticides, with a view to regulating and restricting use, requiring mandatory labelling, and ensuring good stewardship of chemical substances.

Similarly, new legislation in the European Union will affect the use of toxic substances – the Restriction on the Use of Hazardous Substances (RoHS) Directive bans the use of lead, mercury, cadmium, chromium and two flame-retardants, and the Registration, Evaluation, Authorization and Restriction (REACH) Regulation will evaluate 30,000 potentially dangerous chemicals. This legislation has the potential to impact many industries globally, including the electronics, telecommunications and automotive industries. 

Ahead of the Curve

As a result of recent product recalls, public concern and new legislation, purchasers must be proactive in investigating the flow of hazardous substances through their supply chains. To protect workers, the environment, and maintain market access, companies “...must understand current and upcoming eco-compliance regulations to effectively prepare their supply chains to assume responsibility for the environmental impact of their products.” As buyers respond to concerns about legislative compliance, they are placing greater emphasis on environment, health and safety issues in procurement agreements.

Those that stay ahead of the curve can reduce and prevent costs associated with the insurance, storage, handling and disposal of toxic chemicals or products that contain them, and can prevent damage to brand and image by avoiding costly mistakes. Further, there are significant benefits for reducing supply chain toxins, including:

•    Reduced costs

•    Vendor consolidation

•    Improved productivity

•    Product differentiation

•    Reduced potential liability

•    New market opportunities

•    Better public relations

•    Better Stakeholder relations

For example, when Delta Airlines initiated a program to reduce toxins, the company not only saved 30% of related costs, but also reduced its insurance costs, since they had less dangerous materials to store and handle at their sites.

Other organizations are adopting policies to substitute chemicals with benign alternatives. In 2006, Walmart began implementing its “Preferred Chemical Principles” policy, in an effort to establish a set of preferred chemical characteristics for its products. In other efforts to reduce the use of toxic cleaning products, the B.C. Buildings Corporation, and many other organizations and government agencies, are starting to establish standards of acceptable cleaning products for use in buildings. Similarly, the State of New York only allows environmentally-preferable cleaning products in its state agencies and schools.

Identifying Toxins in the Supply Chain

Toxins can be found in everything from cosmetics to computers; identifying them all would be a formidable task.  Research is continuing to identify and categorize toxins based on whether they are known to, or are suspected to, cause health problems in humans. The health effects of toxins include:

•    Carcinogenic or cancer causing;

•    Interference with human hormonal systems;

•    Contribution to allergies or asthma.

These substances also often pose risks to environmental health. There are a number of resource and advocacy organizations working to help purchasers and consumers make toxin-free purchasing decisions. For example, the BC-based non-profit Labour and Environmental Alliance Society initiates campaigns, develops resource materials and conducts workshops to spread awareness to both consumers and workers about products containing known and potentially harmful ingredients. It offers a range of materials to help organizations identify and substitute harmful chemicals in a variety of commodity areas.

Hospitals for a Healthy Environment (H2E), an organization committed to bringing environmental sustainability to the health care system, works with health authorities and hospitals to reduce toxins in these settings. They suggest that companies or organizations wishing to initiate a toxin reduction program should start with “a short list of products that are known health and environmental hazards by multiple agencies”.  The following is a list of some agencies that provide lists of such chemicals:
•    IARC List; identifies known and suspected carcinogens

•    California Prop 65 List; identifies reproductive toxins and carcinogens

•    EPA Priority Chemicals; identifies persistent bioaccumulative toxins

•    Environment Canada CEPAR Registry; identifies toxins that are prohibited

Reducing Toxins Through Purchasing

Once a list of pre-identified chemicals is established, purchasers can either incorporate custom specifications that prohibit those chemicals into bid documents or work with suppliers on phasing them out. Typically, the latter begins with suppliers disclosing products they carry that contain the specific chemicals. As an example, to implement its “Preferred Chemical Principles”, Walmart has set up the following process:

•    Awareness: suppliers are asked to disclose which products contain pre-identified chemicals;

•    Action: Walmart works with suppliers to develop and action plan to phase out or substitute ingredients with those that are less harmful;

•    Recognition and Reward: Walmart will acknowledge those suppliers that participate in the initiative.

Addressing toxicity is an inevitability for supply chain managers - organizations will ignore it at their peril. Companies failing to address the implications associated with exposing these chemicals to humans and the environment may suffer losses to both brand reputation and revenues. Furthermore, financial losses may be suffered by many organizations as lawsuits are waged by the public, and as governments demand that products containing specific chemicals be banned or restricted. On the flip side, organizations that do address these issues will reap the benefits by positioning themselves as leaders committed to sustainability in the eyes of the public and other stakeholders. 

Where to Find Out More

For more information on removing toxins in the supply chain, join our November 8th learning circle to share best practices with other purchasers. See our events listing (top right) or our website events page for more details.

Sources:
Supply Chain Network. 2007. Non-Toxic: Greening Your Supply Chain. Accessed October 26, 2007 from.
Canada.com. 2007. Mattel recalls toys, urges parents to check toys for lead, dangerous parts. Accessed October 26, 2007 from.
ROHS Welll.com. 2004. Sony’s Cadmium Heartburn: The Cost of Non-Compliance. Accessed October 22, 2007 from.
EcoMarkets Summary Report. 2007. Accessed October 29, 2007 from. 
Government of Canada.  2007. Chemical Substance: Categorization. Accessed August 22, 2007 from.
Katz , A.  2007. Green Supply Chain. Going green gets easier with help from IC suppliers. Accessed July 12, 2007 from.  
Greener Computing. Navigating the World of High Tech Regulations.  Accessed July 17, 2007 from.
Luskin, Phipps, March, p. 8.

The mandate of the Sustainability Purchasing Network is to support organizations in their efforts to develop and improve their sustainability purchasing practices and to ultimately influence positive environmental, social, ethical, and economic impacts in BC and beyond.

Fall 2007 Event Calendar

To register for SPN  Events, visit our website, or This email address is being protected from spam bots, you need Javascript enabled to view it us.

SPN Learning Circle: Removing Toxins from Your Supply Chain, November 8th, 10–11:30 am

Join other purchasers in a small group setting to exchange best practice, and discuss challenges and opportunities related to removing toxins from the supply chain.

2008 Event Calendar

Coming soon. Check our website for details.

Events

Runningreen: Eco Printing Infoforum, Nov. 19, 2007

Runningreen is a day-long seminar focused on the best environmental practices of today's print industry leaders.

Review the latest environmental technologies and processes in print, the differences between recycled and certified stocks, and learn the questions you can ask to make sure you're getting the best printing for your client and the planet.

Speakers include:

Alan MacDougal, CEO, Raincoast Books

Tony Marcil, President, Forest Stewardship Council of Canada (FSC)

Gary Jones, Director, Environmental, Health and Safety Affairs, Graphic Arts Technical Foundation, USA

Nicole Rycroft, Executive Director, Markets Initiative

Peter ter Weeme, Principal, Junxion Strategies

Dr. Chris Elliott, Vice President - Pacific Region, World Wildlife Fund Canada

See www.runningreen.ca, or click here to register.

Green Purchasing Summit, Nov. 29-30, 2007 (Miami Beach, FL)

Eyeforprocurement presents a Green Purchasing Summit to introduce purchasers to:

* Benefits of Green Purchasing
* Applying green criteria in the  procurement process to improve environmental performance, while addressing ethics, social regeneration and economic concerns
* Updated information on which ‘green' products work as well or better than traditional products
Click here for more information.

Of Interest

2010 Commerce Centre Supplier Directory for 2010 Purchasers

The Vancouver Organizing Committee for the 2010 Olympic and Paralympic Winter Games (VANOC) is committed to making sustainability a part of all of its planning, decision-making, performance monitoring and reporting. Among the goals of VANOC's sustainability purchasing program are increased social, ethical and environmental performance within VANOC and supplier business operations, and growth of the sustainable enterprise sector.

To help advance VANOC’s sustainable purchasing goals, the 2010 Business Network has been launched by the 2010 Commerce Centre. The Network is an online supplier directory created to help 2010 buyers establish relationships with BC businesses to quickly and easily find the goods and services they need.

If you are interested in the opportunity of becoming a supplier or sub-contractor to the 2010 Olympics, post your business profile on the publicly accessible database.   Profiles include company information, and a distinct section highlights sustainable characteristics and activities of individual companies. VANOC will be seeking to contract with firms that demonstrate strong sustainability features, offering a competitive advantage to “sustainability” oriented firms.  Your listing in this Network could be a strategic opportunity to help grow your firm in the BC marketplace.

The 2010 Business Network will be marketed to VANOC, sponsors, media, National Olympic Committees, relevant agencies and international companies doing 2010 business.  These buyers will all require extensive local relationships, and will be able to search the database for goods and service suppliers, business partners, and BC business contacts.

If you have questions or comments about this process, please contact This email address is being protected from spam bots, you need Javascript enabled to view it , VANOC Sustainability Advisor.   If you are interested in this opportunity, please register with 2010 Business Network.

Resource Corner

Resources to Reduce Toxins in the Supply Chain

LEAS

LEAS is an environmental organization that brings together “workers and environmentalists, unions and environmental groups to find solutions to environmental problems based on social justice”. Among its many initiatives and resources, it is currently working on a project to spread awareness about the potential dangers associated with commercial cleaning products.

H2E

H2E’s website site offers tips and resources on initiating toxin reduction programs.

Lists of Priority Chemicals:

• IARC List;

• California Prop 65 List;

• EPA Priority Chemicals;

• Environment Canada CEPAR Registry;

Canadian Labour Congress (CLC) Prevent Cancer Campaign

The CLC Prevent Cancer Campaign provides resources on worker health and safety as well as information on suspected and known carcinogenic chemicals.

Funding Update

Thanks to our new sponsors:

* Wastech

* Grand & Toy