The benefits of greening the supply chain

Green supply chain management
(GSCM) is a holistic approach to improving environmental
performance along the supply chain. A new study by Italian
researchers on over 4000 manufacturing facilities in seven
developed countries has indicated that GSCM increases environmental

More and more companies and retailers are adopting GSCM. It has
also been suggested that it could be used to identify environmental
‘hotspots’ in the supply chain as targets for reducing emissions.
However, many factors still hinder the adoption of GSCM, especially
by SMEs.

Much research has looked at the external factors that influence
GSCM. This study explored internal factors, such as strategic
motivations, existing environmental strategic management (ESM) and
competitive advantage.

The main motivating factor to adopt the
two GSCM practices was to enhance the firm’s reputation and improve
market image. Efficiency was not a determinant of

It analysed survey data collected by the Organisation for
Economic Co-operation and Development (OECD) of over 4000
manufacturing facilities with at least 50 employees. The facilities
were in Canada, France, Germany, Hungary, Japan, Norway and the
United States and the data covered all manufacturing sectors. It
analysed two specific GSCM practices: assessment of suppliers’
environmental performance and imposing requirements on suppliers to
meet certain environmental criteria.

The results indicated that the main motivating factor to adopt
the two GSCM practices was to enhance the firm’s reputation and
improve market image. Becoming a market-leader through innovation
was another motivation for taking up GSCM, as was the pressure to
follow others who are either partners or competitors.

Efficiency was not a determinant of GSCM. This was because it
was generally perceived that GSCM involves considerable initial
investment and any payback would only be yielded in the long-term.
Pre-existing environmental management strategies were strongly
influential in the adoption of GSCM and appeared to act as an
‘engine’ to start up and boost the development of GSCM.

As a managerial tool it appeared that GSCM was effective at
improving environmental performance. The study evaluated this in
the areas of natural resource use (energy and water), waste
generation and wastewater emission.

Examples of GSCM impacts
included buying electricity from providers with significant shares
in renewables and ensuring providers of wastewater treatment apply
environmental criteria to their use of chemicals.

The study indicated that GSCM did not have such a substantial
impact on competitive performance in terms of the profitability of
a firm. This could be because the assets of GSCM are more
intangible and do not result in short-term increases in
profitability. Impacts such as improved reputation and innovation
take time to affect profits.

In addition, profitability does not address the whole concept of
competiveness which was highlighted as a limitation of the
research. More long-term and holistic measurements of competiveness
may have yielded more positive results.

The researchers also pointed out that the analysis only
considered two GSCM practices. There are several other practices
that could contribute to GSCM, such as contribution to eco-design
initiatives and supplier development programmes.

Citation: Testa, F. & Iraldo, F. (2010). Shadows and
lights of GSCM (Green Supply Chain Management): determinants and
effects of these practices based on a multi-national study. Journal
of Cleaner Production. 18:953-962.

Science for Environment Policy”: European Commission DG
Environment News Alert Service, edited by SCU, The University of
the West of England, Bristol.


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