Reducing Carbon Along The Supply Chain

A case study of Catalyst's Cooled paper analyzed carbon emissions in the supply chain -- from forest to printer.

By: Chris Elliot And Gary Bull

In 2007, Catalyst Paper Corporation approached Wenner Media Group, publisher of Rolling Stone, with a proposal to print the magazine on paper that adds no carbon dioxide to the atmosphere through the manufacturing process.

After conducting its own research and working with WWF Canada and other parties to examine the benefits of the new product, Wenner agreed.

As researchers interested in the link between forest products and climate change, we were intrigued by the story of Catalyst Cooled paper. We decided to measure carbon emissions along its supply chain -- from harvesting the fibre to printing the magazine.

But once we started, we soon realized quantitative data was only part of the picture. There was much more to be gained from a broader look at how the companies along this particular supply chain were addressing the issue of carbon, and the potential this has to reshape business today.

The data showed basically what we had expected -- 41% of the total carbon emissions came from the actual paper manufacturing process. The rest is associated with harvesting the fibre on northern Vancouver Island and moving it to the sawmill (12%); sawmilling (10%); trucking the chips to the paper mill in Port Alberni (2%); transporting the paper to the print facility in California (28%); and printing the magazine (8%).

We then interviewed senior managers in the six companies along this supply chain and found agreement that carbon is a cost, a potential risk, and an opportunity.

Carbon is a convergence point

That's not a surprise when you consider that carbon has emerged as a convergence point in sustainability, in business operations, and in supply chain collaboration. Unlike any other measure, carbon exists in all three realms of sustainability. It is synonymous with the cost of energy so it can be economically sustainable. It has a direct impact on climate change so it can be environmentally sustainable. Its increasing value gives forest users another choice in land-use decisions so it can be socially sustainable.

There are two ways carbon efficiency may manifest along supply chains: companies that are energy efficient may become preferred suppliers, and supply chains themselves may reorient around minimizing carbon emissions. We saw both with the Catalyst case study.

Wenner chose Catalyst Cooled paper because of its environmental attributes. Catalyst was able to offer a manufactured carbon neutral paper because it has done a lot to lighten its environmental footprint; since 1990, it has reduced its greenhouse gas emissions by 70%.

The other companies along the supply chain clearly saw opportunities for their own businesses. Washington Marine Group began carbon management planning when it learned Catalyst -- its largest customer -- was exploring carbon-light products. It recognizes the potential strength of sea-based shipping, and is looking for ways to reduce its emissions, such as lowering vessel speeds to burn less fuel.

The same is true for Burlington Northern Santa Fe. This rail company has close to 50,000 kilometres of track in the United States, and sees a low-carbon economy as a prime opportunity to enhance its share of the shipping business. One tonne of freight shipped by rail uses one tenth as much fuel as a truck.

Adapting to carbon markets

As companies start to consider the carbon implications along their entire supply chain, we may start to see a change in practices. Emphasis may shift from delivery time and delivery costs to carbon-efficient delivery.

Also, location considerations differ. Here's an example: A client who wants to reduce the carbon footprint associated with printing a book can choose between a facility powered by hydroelectric power that is far from key markets or one powered by coal that is near key markets. Since the printing uses less energy than the transportation, the coal-powered facility's total carbon footprint is lighter and it represents the preferred choice.

As carbon management along the supply chain grows, third-party auditing and verification may become widespread. This additional layer of measurement and monitoring may be costly at first but it will add value both in building stronger relationships between supply chain collaborators and in identifying areas where further improvements can be made.

Carbon, given its current prevalence, could emerge as criteria in market access and consumer choice. A jurisdiction could introduce a trade policy that places a levy on products requiring carbon-intensive energy, such as coal, or requires disclosure of the carbon footprint. Consumers may show a preference for goods that have lower environmental and social impacts, as well as being cost competitive.

Finding common ground on carbon

The common cause of carbon is apparent. Less clear is how this will induce change -- in purchasing decisions, in the design of supply chains, and in the definition of sustainability. Our interviews helped to show how the sustainability agenda -- which often has conflicting environmental, economic, and social goals -- has found common ground in carbon.

Current trends in carbon management, such as reducing employee travel, offer limited returns. More sophisticated policies are needed that look at suppliers, logistics, and operations -- in other words, the supply chain. Businesses have identified carbon as a means for progress in balancing short-term costs, long-term profitability, and the maintenance of a corporate brand. Supply chains have aligned corporate strategies around it. Some prioritize operational excellence, others anticipate the need for regulatory compliance, others respond to consumer demand. All are able to use efforts to manage and reduce their carbon emissions to further these goals.

Carbon may change the structure of businesses in fundamental ways. Even today, when carbon is without a price, companies are finding that reducing their carbon footprint reduces their fuel costs, offering significant savings. As carbon gains a price, these companies will derive multiple benefits from their advances -- both fuel and emissions will cost less.

Businesses already market their products on the basis of the carbon footprint; this trend is expected to continue. New opportunities, new markets and new collaborators may emerge.

Evolving businesses inexorably lead to evolving supply chains.

To be slow on carbon is risky business these days. Its role in climate change is having a direct impact on performance, profitability, regulatory compliance, and market access. It has the potential to transform the supply chain, making it stronger and more resilient.

Dr. Gary Bull, associate professor, Forest Resources Management Department, University of British Columbia, and Dr. Chris Elliot, director of WWF's Global Forest Programme, worked with Graham Kissack, R.A. Kozak and Justin Bull. The full report, Toward a Common Cause: the Embrace of Carbon Along a Supply Chain is posted atwww.naturallywood.com.