Do You Know the Impact of Your Supply Chain?
Why and How Seventh Generation Is Internalizing, Measuring, and Managing Its Supply Chain Impacts
When the average person envisions a supply chain, they probably picture factories pumping out pollutants packed with low-paid workers in unsanitary conditions. This characterization isn’t far off from the reality in many cases. According to McKinsey, the average consumer company’s supply chain accounts for 90% of the company’s total environmental impact. But as a brighter spotlight is being shown on businesses worldwide, those that treat the impact from their supply chain as externalities they aren’t responsible for handling are being called out for these practices that harm people and the planet.
In this highly visible environment — amplified by the prevalence of social media — many businesses are pursuing more sustainable and ethical supply chain management, Certified B Corporations among them. As people continue to look for and patronize businesses that align with their personal values, those companies that set and ensure high standards for their suppliers will benefit from increased revenue and customer loyalty. In addition, as businesses and society look for ways to build a more responsible economy that considers impact across stakeholders, the environmental and social impact of those in a company’s supply chain must be included.
One company that has been working to improve and internalize the impact of its supply chain is Seventh Generation, a B Corp since 2007. Manufacturer of a variety of sustainably created cleaning and hygiene products, Seventh Generation’s name is a nod to the long-term considerations the company has when it makes decisions not only about the producers and processes in its supply chain, but in its packaging, hiring, and more. This becomes increasingly important as companies like Seventh Generation have seen an uptick in product demand since the coronavirus outbreak, where the impact of their products’ supply chain is magnified and increased in a short period of time.
I recently interviewed Joey Bergstein, the CEO of Seventh Generation, as part of my ongoing research for Better Business, to learn more about why, and how, the company has taken this approach.
On your website, you say that you “hold all suppliers and manufacturers to the same high standards and accountability that you hold yourselves.” What are those standards and what does holding them accountable look like in practice?
Joey Bergstein: We set standards, first and foremost, in terms of the products that we create. Our development philosophy captures the combination of cost performance, which practically every company does, but we also add in the dimensions of human health and planetary health. We’re trying to formulate products that sit at the intersection of those dimensions. We apply the precautionary principle, which means that we won’t use any ingredients or materials that we don’t know to be safe for people and planet.
We set multiple goals around sustainability that guide a lot of the work that we do, such as trying to improve on the kind of plastic that we’re using and our commitments to zero waste, getting rid of greenhouse gases, ensuring that we’re working with safe chemistry, and those that we’ve made around diversity, equity, and inclusion. Then, we obviously work with partners, our suppliers, and our third-party manufacturers to ensure that they hit the standards that we’ve created.
How do you encourage your suppliers to constantly improve their sustainability?
One example is our supplier forums, where we bring our major suppliers together and spend three days talking about sustainability and how we can collectively improve our sustainability footprint. Then we ask those suppliers to build an action plan and share that action plan so we can all make progress together.
This year, we actually hired some outside support to work with each of our major manufacturers on their greenhouse gas footprint and identify how we can help them transition to clean energy. That’s a specific investment that we’ve made to really help those suppliers come along in their sustainability journey.
We have also asked our suppliers and manufacturers to take the B Impact Assessment, and about half of our suppliers have taken it. It really helps us — and them — get a baseline on where they stand.
How has the coronavirus affected your supply chains, and is it more difficult to uphold some of these standards?
I wish it were for different reasons, but demand is through the roof. Our business is growing at about two and a half times faster than it was last year and last year was growing almost twice as fast as the year before. We’ve got many product lines where we’ve had to double, triple or quadruple capacity and could sell probably double that if we’re able to build capacity.
The biggest challenge has really been how do you flex the supply chain to meet the demand? Most supply chains are built to be able to respond to about a 30% increase or decrease in demand at any given point in time and then you have safety stock that helps create a buffer as well.
Nobody builds a supply chain to respond to a double or triple of demand. That would just be incredibly inefficient, but that’s what we’re dealing with now.
Throughout increasing production, however, we’ve rigorously maintained the same standards of authenticity that I described before. In fact, our R&D team has shifted much of their work from developing new products to primarily determining what alternative materials and ingredients we can use that still meet our standards. We have kept our lab open and are allowing no more than four employees in the lab at a time, with 15 feet of physical distance, temperature checks twice a day, and masks at all times. All told it has been a huge shift in how we work to continue to stay in supply.
Seventh Generation has announced a zero waste goal. How is that going? Advice you’d offer to other companies that are looking to go to zero waste?
We frame our goal as striving to ensure that 100% of our products are recyclable and recycled, biodegradable and degraded, compostable and composted. This is about more than what we make, but impacting the whole system that surrounds our products such as ensuring that the products actually end up in the recycling stream.
One of the areas inside zero waste that we’ve in particular put a lot of attention behind is around plastics. On plastics, we’ve really framed three different steps towards zero waste: better plastic, less plastic and no plastic.
The first focuses on better plastics using as much PCR content as possible in everything we produce is our goal. Most of our bottles are 100% post-consumer recycled content. The passion at Seventh Generation runs deep; for example, we have an amazing packaging engineer who wasn’t satisfied at converting 100% of our dish bottles to recycled content, but she had to get the last 1%, which is the cap. Nobody had actually created a cap from PCR plastic. It’s a very difficult thing to do, but she cracked it. So, we now have 100% PCR caps as well, which is remarkable.
The second leg focuses on less plastic. We’ve been doing a lot of work on concentration, and the best example of that would be ultra-concentrated laundry detergent. Instead of that 100-ounce bottle of laundry that weighs about 7 pounds, about 18 months ago we launched our “easy dose” laundry bottle. It’s 23 ounces, the same 66 loads as in the 100-ounce bottle. It’s 75% lighter. Its 60% less plastic, 50% less water, so there there’s a lot less plastic per use.
The third leg focuses on no plastic. To be able to get rid of plastic altogether, you need to actually take the water out. We’re looking at how to create an effective product for laundry, for dish cleaning, for counter cleaning, and for hand washing that has no water in it. So you end up with powder forms or tablet forms, and we’re running a test with Grove Collaborative. We’re excited about the potential of this line that at the moment is being packaged in a highly recyclable tin can. We hope to be able to get it to cardboard in time — the focus is very easily recycled materials.
In the zero waste work, our focus has really been around the products that we create as opposed to ensuring that there’s zero waste in the manufacturing of the operations. We don’t have much waste at all actually coming through operations. The most waste is actually the end of life for the products that we create, which is where more companies should focus their attention.
B The Change gathers and shares the voices from within the movement of people using business as a force for good and the community of Certified B Corporations. The opinions expressed do not necessarily reflect those of the nonprofit B Lab.
