I interviewed Jeremy Newman who discussed the challenges and opportunities of greening operations and supply chains. Jeremy is currently a General Partner and Co-Founder of Living Space Labs, an integrated energy strategy consultancy focusing on the built environment. The built environment can include buildings, factories, and more. When they do work with factories it often involves green operations and supply chains.
Prior to this Jeremy was Director of Energy Operations and Finance at Redhorse Constructors, one of the preeminent green builders of custom homes in the Bay Area. Jeremy also led a consulting team for a solar start up while at Redhorse, working on bringing their operations and their insulation process.
Before this Jeremy co-founded a renewable energy company for Virgin Group. They focused on micro-grids, hybrid renewable energy systems, bringing multiple types of renewables into one grid to lower the levelized cost of energy as much as possible.
Jeremy also worked at TFS Energy while in graduate school. He has an MPE in Environmental Science & Policy from Columbia. He is LEED® AP in specialty building design and construction. Before graduate school he spent 3 years in the 3rd Armored Cavalry Regiment in the US Army.
Challenges and Opportunities of Greening Operations and Supply Chains
The biggest challenge is that when you first get in there to figure out what low hanging fruit can be accomplished immediately. It will be different for different industries. You want to be able to provide immediate results while tackling the bigger issues identified.
If you are building green operations for someone who has a lot of plastic products you might want to tackle some energy efficiency issues while looking for alternate plastics or ways to remove chemicals from the items you are making. You want to be able dual track those issues to provide the client the quickest possible response.
A lot of time they are looking to green something after a negative article or press release and tremendous pressure from environmental groups. A lot of it is just knowing what is wrong. Recently in the music industry they have been hit for illegal hardwoods. This is a newer concept to them. A lot of the players in this industry had long term contracts with suppliers for years and had been sourcing all of their wood through them.
There is not a thought process there that they need to identify every little source. In the past it had been the supplier's responsibility. More recently, there has been the Lacey Act, originally a law passed around 1907. It was originally intended to stop illegal commercial hunting. It has been expanded a few times. There are plants that also fall into this now. Illegal logging and deforestation is a major focus of it now.
It is very similar to CITES: Convention on International Trade and Endangered Species of Wild Flora and Fauna. The Lacey Act is similar to this but it has a U.S. focus. It takes all of the international laws and makes US companies follow them. It gives teeth to a lot of international treaties.
Unfortunately, Gibson Guitars recently was hit pretty heavily for some of the wood they had. There was a pretty heavy handed raid on their production facility. Jeremy does not believe it was their intention to break the law. It involved a very small amount of wood they were using. However, a lot of times most companies don't know a particular item from a long term supplier now falls under a new regulation. A lot of times the suppliers don't even know
What should executives be doing to green their supply chains, considering they have to sell their management on the idea?
Executives need to be proactive. If you are being more reactive on the issue and are waiting until either environmental groups, a negative press release or for someone to come after you, you are losing the message about your product. You really want your product to stand alone as the great item you are selling. It is better to get ahead of the issue. Look for long term cost savings when possible.
A lot times executives will find there is a higher upfront cost to doing activities which green supply chains, but a lower long term cost. It is much better to get up front of the issue, rather than having to dig in a get a more defensive posture.
The biggest issue Jeremy stresses is that executives need to be proactive. It is not a matter of green washing your company or looking for a fluffy environmental benefit. Unfortunately, a lot of people view the greening of their operations in this way.
It is more of a long term regulatory and policy risk which you are mitigating. It is also, mitigating any potential negatives from a marketing standpoint.
When you start eliminating those risks it gives you a much clearer path to follow. It lets you avoid some headaches, rather than having to deal with them down the road.
About Jeremy Newman
Jeremy Newman, MPA, LEED-AP BD+C
General Partner at Living Space Labs