We are committed to conducting business with the highest ethical standards, and we expect the same of our suppliers. At the same time, we see opportunities to generate shared value through sustainability. As we advance on our sustainability journey, we believe partnering with our suppliers will play an important role in our ability to generate significant positive impacts beyond our own operations.
2018 marked an important year for our supplier sustainability program. With an increased focus on sustainability in our supply chain, we have turned our attention to developing a new approach to engage suppliers, which we hope will expand the potential for our sustainability impact. A key first step was to deploy a pilot auditing program as an extension of the existing quality audit practices. The audit criteria included elements that are fundamental to general risks associated with supply chain management as well as to our core sustainability interests such as health, safety, environmental protection, human rights, ethics, business continuity and quality. In light of our extensive global network of suppliers, it is necessary to prioritize the suppliers we audit, as determined by supplier criticality and exposure to risks, which takes into account the following:
- Category of goods and services provided, as it relates directly or indirectly to risks associated with the type of labor performed and with its environmental impact
- Risks related to country-level (including regional) regulations applied to supplier activities performed or products provided
- Review of historical performance and concerns raised by internal key users and purchasing category managers whose assessment includes deep industry and market knowledge
Of the suppliers prioritized for audits in 2018, we were pleased to evaluate 91% of this subgroup on sustainability criteria, which represented 6% of the total number of our critical suppliers. The results of this pilot program have proved to be a reliable process for us to identify risks and opportunities with our critical suppliers while enhancingour ability to collaborate with them. The sustainability audit findings reported by our internal auditors were acknowledged and fully addressed by suppliers. We also had the opportunity to uncover several best practices, which enabled us to identify and recognize some of our top-performing suppliers.
We look forward to integrating sustainability evaluations into our auditing practices after this successful pilot. This will support our ability to collaborate with our suppliers to identify new opportunities for improved social and environmental practices across our supply chain. To this end, we have established the goal of evaluating at least 50% of all our critical suppliers on their sustainability performance by 2025.
Evaluating our emissions from distribution in Europe
As part of our strengthened focus on sustainability in our supply chain, we have begun to assess where we can work with our suppliers to have the greatest impact.
One of these projects involved evaluating the emissions associated with the transportation of products from our manufacturing facilities to our customers. Our transportation and logistics team started with assessing modes of transport and distribution routes from our European facilities. We were especially interested in determining both the longest distribution routes from our facilities to customers and the emissions associated with the different modes of transportation we use. Based on this information, we were able to calculate which routes were most emission-intensive, allowing us to collaborate with our customers, our suppliers and our business segments to discuss alternative transportation modes and routes so that we may potentially ship our products from other manufacturing sites in closer proximity to the customers. We look forward to expanding this work with the objective of setting a global baseline so we may track performance and develop related emission reduction targets.
Refurbishing Wooden Pallets
We found new ways to repair, reuse, or recycle wooden pallets used for transportation of materials at our Sarnia, Canada, facility.
Many of the shipments made from our facilities utilize wooden pallets to transport products. At our Sarnia facility, we worked with a local supplier who now collects used pallets from our customers and performs inspections to determine if and how they might be repaired, reused or recycled. Repairable pallets are reintroduced to the supply chain, while unrepairable pallets are recycled through a secondary market for wood-based products. This effort has led to a 25% reduction in the need for new wooden pallets, which translates to significant cost savings, decreased waste and more responsible management of a natural resource. This proof of concept has been compelling and has inspired us to partner with a key regional supplier that would allow an expansion of the program across North America in the near future.
Reducing Packaging Waste
A partnership with our suppliers and customers in Maua, Brazil, allowed us to reuse non-damaged containers at a rate of 91%, with most bags getting reused approximately six times before they are disposed.
A flexible intermediate bulk container (FIBC) is a large bag made of durable woven plastic commonly used to package products before shipping to a customer. The standard industry practice is to use new bags for each order, and the bags are then discarded after the product is used. However, the integrity of these bags is typically not compromised during shipment, so there is a possibility of reusing them. Recognizing this, our Maua, Brazil, facility explored opportunities to partner with suppliers and customers to implement a take-back program for these bags, helping reduce landfill waste. This project involved introducing a new FIBC contractor responsible for performing inspection and refurbishing of the bags. To ensure the process was implemented smoothly, we coordinated with our customers to not only reclaim a significant number of used bags, but to also encourage careful handling of the bags to avoid tears. This effort successfully led to an average 91% reuse rate of FIBC bags, with most bags getting reused approximately six times before they are disposed. This is one example of a program we hope to replicate more broadly across our operations, as it delivers a positive environmental benefit and can also be more cost-effective.