An innovative eco-intensity based method for assessing extended supply chain environmental sustainability

Abstract

Organisations currently face increasing pressure from multiple stakeholders to improve their environmental performance. The majority of environmental impacts in a typical supply chain usually arise beyond the focal firm boundaries or even its direct suppliers. However, no method to assess the extended supply chain environmental performance that is designed to use real life data currently exists.The aim of this work is to facilitate quantitative assessment of the environmental performance of extended supply chains by introducing an innovative eco-intensity based method that relates the environmental performance of the supply chain to its economic output. The method is the first to allow assessing the environmental sustainability performance of extended supply chains based on real life data, while respecting the multiple-organisation nature and non-collaborative characteristics of the majority of real life supply chains. This is achieved through the adopted decentralised approach, materialised through a recursive mechanism to pass eco-intensity values from one tier to the next, which does not require visibility of the extended supply chain by any single member, thus enhancing the applicability of the method.The method is demonstrated through a numerical example with secondary data for four representative supply chains with different design features, to showcase its applicability. The CO2 emissions and water eco-intensities are calculated. The findings enable both benchmarking the eco-intensity performance of the extended supply chains and comparison of the eco-intensity indicators of the individual organisations, offering a basis to guide operational improvement and to support external reporting. The method has the potential to change the way organisations approach their environmental sustainability by facilitating understanding of the wider supply chain impact.