So, let's talk now about another way that companies create impact, and that's,
again, through their practices, but specifically,
through their operations, or their supply chain,
I tend to differentiate them.
I think when you were actually looking into companies, you were saying, "Well,
operations and supply chain go together as a way to create impact."
So, what companies come to mind?
Any particularly good exemplars or
interesting exemplars of companies
creating impact through their operations and supply chain?
So, I think you're right. They can certainly standalone,
operations and supply chain.
But as I started looking into it,
a lot of companies that have looked at their operations are also
going outside of the company to see how they can influence their suppliers, too.
And so, it's funny you say exemplar of this.
Many people wouldn't think of a company like Walmart as
having really looked at this in a major way, but they have.
And so for instance,
Walmart has created something called the Sustainability Index Scorecard,
where they are actually ranking their suppliers on
sustainability issues across areas like raw materials,
manufacturing, distribution, consumer use,
and also the product end of use,
like end of life cycle for the whole product.
And so, they're really trying to not only influence what they do.
So for instance, they do, within the company,
are thinking about reducing their energy usage.
They actually have a a goal of procuring
seven billion or more kilowatt hours of renewable energy by the end of 2020,
not to mention that will help their bottom line,
they project a cost savings of about a billion dollars over that same time period.
So it's a win-win,
which is where we really like to see the sweet spot,
I think, for business and social impact.
But also, going back outside of the company with this Sustainability Index Scorecard,
what they saw as they were assessing companies on these issues,
the companies were meeting the challenge.
Interesting.
And so, for instance,
with Procter & Gamble,
that's another big company.
But Walmart's so big,
they get to possibly influence Procter & Gamble.
And so, what they're really focused on with Procter & Gamble is,
they've, first of all,
gotten a more efficient use of the laundry detergent.
One of the laundry detergents that they use in their products.
So that it's more condensed and they can use a smaller package for that,
which is great because
that actually leaves more room on the shelves for more of that product.
Oh, interesting.
There are lots of benefits that are wrapped into this.
Exactly. And so, it's a more concentrated product with a smaller package.
So there are so those benefits,
but also reduced landfill waste.
If we're not throwing away larger bottles,
it just takes up less room.
Right.
But actually, Procter & Gamble even went a step further in meeting this demand.
And one report actually said that they created
more recyclable material for the product packaging itself.
So it was sort of a step by step process,
but I really think it was because big,
big retailers like Walmart were putting that external demand on the market.
Interesting. So, when I think about supply chain and impact to the supply chain,
I think it's usually around environmental issues.
Do you think that's correct?
I think for the vast majority of companies,
it still lands in the environmental and sustainability areas,
carbon footprint, energy use, et cetera.
But, I am seeing more and more companies think about the employee base.
And so, I think in the UK, for instance,
there's actually been a legislation passed on sex trafficking and slave labor.
Right.
And so, if you think about sourcing from emerging markets or frontier markets,
that that's starting to play a role in
the broader value and supply chain for bigger companies.
Right. So when we think about impacts food basic needs,
and fulfilling basic human needs,
impact through empowerment and creating greater equality,
you can use the supply chain or companies can be
influencing those outcomes through the supply chain as well.
That's right.
I think you had another example of Patagonia,
a company that we hear a lot about in the impact space.
That's right. So, Patagonia is unique because
they have focused in a lot of the areas that you're talking about in this module.
So, we've already talked about employment,
and they actually are working in employment to support activism among their employees.
Exactly. But one of the key things
around their own internal operations and then their employees,
they're also incentivizing their employees to take public transit,
to actually bike to work,
or Patagonia also skateboard to work.
Okay.
Funny, funny.
Wearing your Patagonia clothes.
Exactly. But they're incentivizing that by
paying two dollars per ride up to two rides per day,
or commutes per day,
up to like five hundred dollars a year.
Incentivizing their employees to cut down on
their own carbon footprint by reducing their own transportation emissions.
So, that's a sort of an interesting example.
But then, of course, thinking about Patagonia's own operations,
they also are looking at,
are they using energy efficiently?
But they're also going out to their supply chain and thinking about chemicals,
and fibers that they're sourcing,
so they're trying to use hemp and organic cotton on one front.
But then in these kinds of synthetics,
and nylons, and things like that,
they're trying to use recycled material.
Right.
So, they're trying to say like,
"Let's not create more bad stuff and let's reuse,
recycle for our own products."
Great example. And also,
I think a good example of how companies are some of
the most advanced companies are really trying to
build impact throughout their culture, right?
Through their supply chain,
through their production processes,
but also through their their culture,
which I think leads to just a deeper sense of this is authentic.
This is who we are as a company.
That's right. I mean, they've written books on this.
They've been really loud and proud about it.
Great.
Katherine KleinEdward H. Bowman Professor of Management
Christopher GeczyAdjunct Professor of Finance
