In a recent Forbes.com post entitled Climate Change: The Ball Is In Our Court, Erik Kobayashi-Solomon cited Dr. Rajat Panwar, associate professor of Sustainable Business Management at Appalachian State University, to explain why greenhouse gas emissions are steadily rising despite growing public awareness of the scientific certainty of climate change. The article points to a low level of corporate awareness of the carbon footprint associated with supply chains and a shift toward "the offshoring of manufacturing to low-income countries in the developing world." Kobayashi-Solomon uses Amazon, one of the most influential economic and cultural forces in the world, as an example.
Amazon AMZN -0.1% reported at the end of last month that its GHG emissions had risen by 15% compared to the previous year’s, despite its highly-publicized Climate Pledge.
Dr. Panwar, who serves as director for Appalachian's sustainable business collaborative, housed in the Walker College of Business, commented in a recently published a research paper on supply chain-related emissions.
"The Amazon situation is just an example of the bigger problem surrounding corporate claims of environmental responsibility. Most global corporations now make such claims, but the reality is that half of the carbon emissions since the industrial revolution have happened within the last 30 to 35 years. It seems that corporate environmental disclosures hide more than they reveal.”
According to Kobayashi-Solomon, Panwar says one problem is that corporations often outsource much of their work, which not only reduces their control over the environmental impact they have, but also their very knowledge of that impact. One study Panwar cites revealed 80 percent of 1,300 firms submitting data to the SEC could not even determine the country of origin of their products, let alone any information about their carbon footprint. Panwar’s research found that companies that build vertically integrated supply chains are measurably more socially and environmentally responsible than those who outsource to third-party vendors. In the words of the old business adage, if you want to manage it, you have to measure it. A vertically integrated supply chain forces a company to measure their production process carefully; armed with these measurements, they can decide how best to manage and reduce GHG emissions.
Kobayashi-Solomon concludes that corporations aren't better managing their supply chains due to consumer demand. Companies only do what we as consumers and investors reward them for doing. If we reward them for systematically making our planet unlivable, they'll do it...