Framework for evaluating sustainably sourced renewable materials

ABSTRACT

To meet rising global demand of food, materials, and energy, a sustainable supply of bio-based feedstocks is needed. This paper describes a framework to assess the sustainability of bio-based feedstocks. The framework, a result of a collaboration between a consumer goods company and non-governmental organization (NGO), applies multiples methods across four principles: (1) life cycle perspective; (2) food security impact; (3) environmental and social risks; and (4) sustainability claims. The framework can be used to assess risks from production to post consumer use. A case study demonstrates the practical application of the framework within corporate procurement.

KEYWORDS:

• Environmental issues
• legal and regulatory issues
• risk management
• social responsibility
• supplier management

Introduction

Agriculture, livestock, forest products, and seafood supply chains are responsible for feeding, clothing, and helping to fuel the world. However by 2050, the global population is expected to exceed 9 billion and per capita consumption is expected to triple as people in the developing world become more affluent. The supply of these natural resources may be insufficient to meet accelerating global demand. In the past decade, commodity markets have experienced unprecedented volatility generating a range of supply chain shocks, social outcries, and policy responses. These trends, in addition to climate change, will add further market uncertainty, pose a risk to businesses and investors, and threaten both ecosystems and society at large (WWF 2050 Criteria 2012).

In response, corporate purchasing strategies are exploring how to secure access to key materials in the future, avoid or minimise any social and environmental impacts associated with the materials, and provide as many economic, social, environmental benefits as possible. A major challenge for companies is that most of the social and environmental risks for their business are beyond their direct control. Companies must know how to assess these risks in terms of their operations and brand reputation, and then identify priority focus areas where the company can have the greatest positive impact. Although pieces are available, there is no holistic published framework that can be used to efficiently guide assessments of the 70+ social, environmental, and economic risk factors in bio-based material supply chains.

This situation is the impetus for Proctor & Gamble’s (P&G) and World Wildlife Fund’s (WWF) 5-year partnership to develop and test principles, questions, and methods to assess the sustainability aspects and uncertainties associated with renewable material supply chains. By leveraging their respective expertise – P&G’s vast network of scientists and supply chain managers, and WWF’s knowledge of environmental impacts due to commodity production – these two global organisations were able to develop a comprehensive approach through collaboration and knowledge sharing. The framework presented here is separate but conceptually consistent with P&G’s Supply Chain Environmental Sustainability Scorecard and Rating System, developed with about 20 supplier representatives and initiated in 2009 to improve environmental performance and social responsibility in its supply chains (Weisbrod and Loftus 2012; P&G 2014c).

Using this framework, and data and perspective from various partners, P&G has evaluated dozens of bio-based feedstocks to support current products and its 2020 goal to increase the use of sustainably produced renewable materials. Through this process, we learned that each case varies due to ever-changing market conditions and local realities. We find that this framework of ‘principles and common methods’ is an effective model to analyse and present information on key supply chains issues that are necessary for business decision makers to develop sustainable supply chains. To demonstrate the practical application of this framework within the corporate procurement process we have provided a case study of a plastic, biopolyethylene, derived from sugarcane grown in Brazil. Ultimately, material (or fuel) decisions will be made on a case-by-case basis and will consider factors beyond supply security or sustainable sourcing like product benefits, consumer need, and affordability.

Framework development

Identification of existing methods to inform sustainable supply assessments

General assumptions about bio-based materials, such as a bio-based material is inherently better for people and/or the environment, or that the use of a food crop for non-food applications is inherently bad, should be tested. Multiple existing methods can be reapplied from environmental toxicology, fate, and related fields to examine the environmental factors of an end-to-end material supply chain. Qualitative assessment of social factors and quantitative economic measures can also be used. The methods we have found helpful include: life cycle assessment (LCA), assessment of company purchase and production data, supply risk analysis, third party sustainability certifications, the evaluation of potential impacts on local food availability and price, and the evaluation of environmental attributes, such as those used in environmental risk assessment. In Figure 1 below, the methods that are helpful for sustainable sourcing assessment are displayed to indicate how each covers various aspects across the life cycle of a material, product, or package.

Figure 1. Sustainable sourcing assessment methods.

Getting started – data gathering

The following information is usually required to assess a bio-based material: material name, composition, source feedstock(s), country(s) of origin, bio-based feedstock percentage, tonnage required, primary supplier(s), cost, business continuity requirements, material quality, data on human and environmental safety, and regulatory status in countries of sale. It is ideal to collect several years of data to account for fluctuations in sourcing volumes, locations, and suppliers, due to changing market factors and production declines due to adverse weather conditions.

Life cycle assessment

LCA is a complex computer model that relies on large data inventories to evaluate potential impacts of products or services, the significance of each, and allows for comparisons. The results can also indicate opportunities for process improvement, policy support, and provide a scientific basis for additional studies needed (e.g. ecotoxicity tests of final materials, processes to reduce energy use). LCA can be effectively used, for example, to compare multiple environmental impacts from a bio-based material and the fossil-fuel based material that it replaces. The outcome of such a study can be used to evaluate whether the sourcing and use of the renewable feedstock would result in the consumption of fewer non-renewable resources, a goal for many sustainability programmes. There are numerous publications describing LCA methods and international standards, such as the ‘Life Cycle Assessment Handbook: A Guide for Environmentally Sustainable Products’ by Curran (2012). A conceptual diagram for a life cycle is shown in Figure 2, which depicts the elements considered in cradle-to-grave, end-to-end, LCAs: raw material sourcing and production, product and package manufacture, the transportation needed for all the resources used and final outputs, product/package usage, and disposal of the product, package, and all the wastes generated throughout every phase. The diagram is helpful to structure the thinking of what to consider in a sustainable sourcing assessment. Table 1 gives an example of different complexity levels of LCA models to account for different purposes, time, and budget available to invest.

Table 1. Example of different complexity levels of LCA to account for different purposes, time and budget available to invest.

	Purpose	Data used/needed	Time and cost
Exploratory LCA	Feasibility study; identifies critical data and primary drivers for impacts	Surrogates Available life cycle inventories (LCIs)	2–4 weeks $3000–10,000
Screening LCA (consistent with ISO 14040/14044)	Most common; evaluate options, sensitivity analyses, impact trends used to guide product choices	Available LCIs Online data Easy ‘in house’ data	1–3 months $10,000–30,000
Full LCA (compliant with ISO 14040/14044)	Most accurate and thorough; required level for external use of results; includes expert review panel of results	Available LCIs Online data All ‘in house’ data Supplier data secured under confidentiality agreements	9–12 months $35,000–85,000

Figure 2. Life cycle assessment diagram.

LCA is typically used by companies and trade organisations to understand impacts for a product category (e.g. laundry detergents (Van Hoof, Schowanek, and Feijtel 2003)), and to guide sustainable innovation by identifying the steps in a product life cycle that could be changed to use fewer resources or reduce the risk of negative impact on the environment (e.g. reducing consumer use of hot water (Sabaliunas et al. 2006; Weisbrod and Loftus 2012)). Finally, LCA results can provide technical justification for environmental marketing claims.

Although LCA is useful to support sustainable sourcing assessments, it is not enough due to the complexity of supply chains and their impacts as it: (a) estimates a limited number of potential environmental impacts, and (b) is a generalised assessment. To adequately inform sustainable sourcing strategies it is important to have additional assessments beyond LCA.

Supply risk analysis

Supply risk analysis uses a systems approach to assess various risks associated with producing a feedstock within a given country across four thematic categories: Supply Security & Governance, Environmental Risk, Social & Political Risk, and Economic & Financial Risk. The four themes are divided into 30 criteria and 55 indicators (Table 2). Research is conducted to answer the indicator questions using publicly available data from credible sources, such as academic journals, government reports, multilateral reports, industry white papers, media and civil society reports. Risk is evaluated for each indicator based on probability of occurrence and severity of impact for the commodity and the geography of sourcing. The risk matrix provides a method to compare and quantify risks (Table 3). Within the matrix, the risk score increases as the severity of impact and probability of occurrence increase. The results are used to identify hotspots for risk mitigation strategies and can be shared with suppliers as a means to raise awareness of key risks within the commodity sector of a country and identify opportunities to improve supply chain sustainability. The results of the analysis serve to inform the next stage of supply chain and stakeholder engagement.

Table 2. Supply risk analysis: criteria and indicators.

Theme	Criteria	Indicator
Supply Security & Governance	Supply concentration	1.01.1. In-country concentration of production
		1.01.2. Global concentration
	Market	1.02.1. Supply, demand, and stocks
	Environmental threats	1.03.1. Pests & Disease
		1.03.2. Severe weather
		1.03.3. Climate change
	Transportation	1.04.1. Transportation infrastructure
	Food safety	1.05.1. Production-related food safety issues
	Traceability	1.06.1. Supply chain traceability
		1.08.1. Extent of genetically modified production
	Legality	1.09.1. Illegal production, procurement, and/or trade
	Reputation	1.10.1. Negative media coverage
		1.10.2. Advocacy group activity
		1.12.1. Level of institutional corruption
	Political stability	1.13.1. Political instability
Environmental	Natural habitat conversion	2.01.1. Conversion of natural habitat
	Impact on biodiversity	2.01.2. Impact on high or unique biodiversity
		2.02.1. Impact on protected areas
		2.02.3. Ecosystem health
		2.02.4. Introduction of alien/invasive species
	Greenhouse gases	2.03.1. GHG emissions from fertilisers
		2.03.2. GHG emissions from land-use change and forestry (LUCF)
		2.03.3. GHG emissions from other agricultural management practices
	Water	2.04.1. Water consumption
		2.04.2. Water pollution
	Chemical toxicity	2.05.1. Toxicity to humans
		2.05.2. Toxicity to non-human species
	Soil	2.06.1. Soil degradation
	Air pollution	2.07.1. Localised air pollution
Social	Labour	3.01.1. Use of forced labour
		3.01.2. Use of harmful child labour
		3.01.3. Freedom of association and collective bargaining
		3.01.4. Presence of occupational health and safety hazards
		3.01.5. Extent of discrimination
		3.01.6. Wages
		3.01.7. Use of temporary labour
	Land tenure	3.02.1. Land tenure insecurity
		3.02.2. Land grabbing and community displacement
		3.02.3. Community displacement
	Indigenous populations	3.03.1. Impact on indigenous populations
	Food security	3.04.1. Food insecurity
	Social & Community Welfare	3.05.1. Availability of health services
		3.05.2. Availability of education services
		3.05.3. Access to improved drinking water sources
		3.05.4. Access to improved sanitation facilities
		3.05.5. Poverty
	Human rights	3.06.1. Human rights abuses
Economic & Financial	Price volatility	4.01.1. Price volatility
	Currency volatility	4.02.1. Currency volatility
	Insurance	4.03.1. Crop insurance
	Trade policy	4.04.1. Trade restrictions

Table 3. Supply risk analysis: risk matrix.

	Probability
Severity	A	B	C	D	E	Severity of threat	Probability of occurrence
1	25	24	22	19	15	1. Severe impact	A. Common occurrence
2	23	21	18	14	10	2. Major impact	B. Known to occur
3	20	17	13	9	6	3. Moderate impact	C. Could occur
4	16	12	8	5	3	4. Minor impact	D. Not expected to occur
5	11	7	4	2	1	5. Insignificant impact	E. Extremely unlikely

The significant of shading is to show the risk thresholds based on severity of threat and probability of occurrence. Dark grey = high risk, light grey = moderate risk, medium grey = low risk.

Another widely used methodology to identify potential risks in supply is by reading an organisation’s sustainability report. The Global Reporting Initiative (GRI) Sustainability Reporting Guidelines provides reporting principles, standard disclosures, and an implementation manual for the preparation of sustainability reports. This generates thorough, standardised information to assess opportunities and risk, and enable more informed decision-making for organisations (GRI 2013).

Direct supply chain and stakeholder engagement

This approach to supply chain due diligence can be either a formal (e.g. audit) or informal exploration of how a company and its supply chains operate.

Common approaches for formal supplier engagement include third party audits, public reporting, and customer scorecards. An example of an auditing system is SEDEX, the Supplier Ethical Data Exchange, which provides an online database allowing members to store, share, and report on information on four key areas: Labor Standards, Health & Safety, The Environment, and Business Ethics (SEDEX 2014). Increasingly, companies are reporting metrics defined by the GRI in different forms of annual reports, and the reports can be useful for understanding which metrics are tracked and if sustainable sourcing systems and/or policies are in place (Global Reporting Initiative 2013). There are also corporate supplier scorecards, in which a customer asks the same questions of all its major suppliers, ranks the responses, and improvements are tied to incentives for future contracts. Examples include Walmart and P&G scorecard systems (Walmart 2014; P&G 2014c).

Informal approaches to explore how a company and its supply chains operate include personal interactions, local interviews, review of supplier code of practices, and site visits. Important information is obtained about feedstock and material production systems, labour practices, community concerns, etc., and whether relevant sustainability programmes have been implemented to address key issues and risks. When requested, suppliers can respond with statistics from their data management systems to assist in understanding whether sustainable sourcing practices are in place and if continuous improvement of key metrics is being tracked.

The success of this kind of direct engagement relies on having built trusting relationships, transparency, and reliable data systems so that information can be shared openly and efficiently. It is critical in developing such trust that information is managed appropriately by the requestor, that is, that business sensitive information will not be disclosed or misused.

The importance of supply chain data management systems is critical as the transactional nature of most commodity supply chains makes traceability extremely difficult. Supply chain data management systems can help improve ‘visibility’ in supply chains and assist with internal alignment on key priorities and track continuous improvement. For example, the issue of palm oil traceability is increasingly important to companies and governments in order to be certain the palm oil is coming from reputable and legal sources (McLaughlin 2011).

Food security assessment

This assessment evaluates whether the rate of a feedstock’s consumption is in balance with its rate of replenishment. The Food and Agriculture Organization of the United Nations (FAO) publishes statistics on the annual crop production volume across multiple countries and its importance for human and animal feed (FAO 2014). The use of a particular crop for food, biodiesel, industrial material, soil amendment, etc., can be compared to recent annual yields to determine whether such a use could result in depletion. The indirect effects on land availability or displacement of agricultural land and other resources for the purpose of food production can also be assessed using the United Nations data in this assessment (Food and Agriculture Organization of the United Nations 2014).

Many bio-based materials under development today rely on Generation 1 feedstocks, such as sugars and vegetable oils. It is estimated that within a decade, Generation 2 crops from lignocellulosic biomass or agricultural residues will be available on large scale for conversion to biofuels and chemical uses. Generation 2 feedstocks have higher yields per acre and might eventually compete for the same land as Generation 1 food crops. Due to large population growth, countries such as China, Brazil, and India are debating legislation to ensure food crops are restricted for use as human and animal feed while non-food applications utilise Generation 2 feedstocks (China Green News 2014).

Environmental attributes assessment

A literature review or testing of specific environmental attributes of the materials can help ensure that environmental safety and quality are protected. Key environmental attributes may include: recyclability, biodegradation or persistence, bioaccumulation potential, ecotoxicity, or atmospheric transport. This type of assessment is especially important to understand the repercussions of a product disposed into waste management systems, or the release of air emissions. Considerable work has been done to develop techniques to assess the fate and effects of substances in the environment over the past three decades. The Society of Environmental Toxicology and Chemistry (SETAC) is an example of one large professional society contributing to this field, involving many government agencies, universities, and industry associations (SETAC 2014; Nabholz 1991).

Third party sustainability programmes

Certifications, continuous improvement programmes, direct investment in specific sources, and other third party verifications programmes may be used to assure that sustainable agricultural practices are used for producing a renewable feedstock and that chain of custody systems are in place to track relevant information through the supply chain.

Table 4 lists examples of established certification schemes for specific materials. In most cases, the certified material is physically the same as an uncertified material, but should have tangible and intangible benefits related to sustainable supply. In some cases, a single certification may not be sufficient to ensure all relevant social and environmental aspects are covered.

Table 4. Examples of established certification schemes.

Feedstock	Certification name	Description	References
Palm oil and derivatives	Roundtable for Sustainable Palm Oil (RSPO)	A certification started in 2008 to address palm oil production and trade with four chain of custody schemes: identity preserved, segregated, mass balance, and book and claim.	http://www.rspo.org/http://www.rspo.org/en/current_list_of_supply_chain_certification
Sugarcane	Bonsucro	A certification started in 2010 to address sugarcane production and trade.	http://www.bonsucro.com/
Soy	Roundtable on Responsible Soy (RTRS)	A certification started in 2010 to address soy production and trade.	http://www.responsiblesoy.org/
Forestry products (pulp, lumber)	Forest Stewardship Council (FSC)	A certification started in 1993 to address unsustainable forest management. FSC can be applied for paper, wood, and other forest products.	https://us.fsc.org/
Wild caught seafood	Marine Stewardship Council (MSC)	A certification started in 1999 to address unsustainable fishing	http://www.msc.org/
Aquaculture seafood	Aquaculture Stewardship Council (ASC)	A certification started in 2011, covering 11 species including salmon, tilapia, pangasius, and shrimp.	http://www.asc-aqua.org/
Tropical agriculture	Rainforest Alliance /Sustainable Agriculture Net Work	A certification for sustainable agriculture that can be applied to most tropical crops as well as cattle ranching.	http://www.rainforest-alliance.org/certification-verification

Finishing up – good governance review of risks and strategic planning

Once the sustainable sourcing assessment process has been completed, it is recommended that risk mitigation strategies be developed, which include robust internal governance processes to monitor and evaluate results. The objectives of a risk mitigation plan should be to: ensure impacts are minimal and not permanent, reputational and operational risks are reduced, and activities are compliant with internal policies and legal requirements. Input and alignment across functions, such as legal, communications, procurement, and sustainability can improve the effectiveness of mitigation strategies. External stakeholders also play an important role in of the development of sustainable sourcing strategies by counselling on key issues where the company may not have expertise, as well as providing an external view as to whether the strategy sufficiently addresses the issues. For development of this framework and its test cases, WWF has been a strategic partner for P&G conducting the supply risk analyses used it this framework, advising on sustainable sourcing strategies, and supporting supplier engagements with an external viewpoint to P&G’s observations.

Proposing principles

After conducting assessments for more than 80 materials, four principles were identified to provide guidance in the development of the sustainable sourcing of bio-based feedstocks.

The first principle is the consideration of the bio-based feedstock from a life cycle perspective

This approach helps to structure thinking about where significant environmental impacts could occur along the product supply chain. Adherence to this principle can help ensure the production, manufacturing, use, and disposal of the material delivers an improvement, or no change to the environmental profile of the product. Table 5 lists questions to consider about the life cycle of the material. An example of how this conceptual approach could be used is published in early biofuels production research (Armstrong and Harmin 1999).

Table 5. Life cycle perspective considerations.

Origin of production (i.e. growing the plant)	What are the feedstock crop(s) and location of production? What are the performance outcomes of the farming practices – is there opportunity for innovation, investment, and improvement? Such as: soil and soil quality is retained or improved, surface and ground water quality maintained or improved, air quality maintained or improved? Does the sourcing result in destruction of critical ecosystems or the loss of natural habitat? Would protected or vulnerable biodiversity be negatively affected, or could sourcing strengthen biodiversity? Is the rate of the crop’s consumption in balance with its rate of replenishment? Does the production of the crop result in air pollution, soil contamination, habitat destruction, and/or other land degradation? What is the feedstock’s reliance on freshwater, its impacts on water quality and water availability in the watershed? Does production require inputs such as fertiliser or pesticides that have negative downstream impacts on water quality, soil, and human health? Does the biomass production impact important carbon sinks in the vegetation and/or soil?
Production (i.e. converting the plant into another material or product)	Does the conversion of the bio-based feedstock require the use of more non-renewable resources than the material it is replacing? Does the conversion of the bio-based feedstock result in negative environmental impacts (e.g. increased greenhouse gas emissions) than the material it is replacing? Does the effluent from the processing negatively impact the watershed? Are the materials being processed derived from by-products? Does the renewable material supply chain consume fewer non-renewable resources than the alternatives?
Use	What is the maximum amount that may potentially be sourced from a given specific feedstock by the company and industry? Does the use of the renewable feedstock for this application result in less consumption of non-renewable resources than the material it is replacing? Does the use of the bio-based feedstock negatively affect product attributes such that more product is needed per task?
Disposal	Does the use of the renewable feedstock negatively affect disposal options such as recyclability or compostability? Does the use of the renewable feedstock negatively affect key environmental fate attributes of the end material such as biodegradability, ecotoxicity, and bioaccumulation potential?

The second principle is to ensure that a food crop used for a non-food application has minimal impact on food or medicine supply, cost, and availability

All kinds of biomass can have industrial uses; the choice to use them should depend on how sustainably and efficiently these biomass resources can be produced. The critical issues to assess when using a food crop for non-food purposes include: availability of arable land, resource- and land-use efficiency, valorisation of by-products, and impact on emergency food reserves, as cultivation of non-food crops on arable land can reduce availability of food crops grown in the area. That said, industrial use of food crops enables flexibility of crop allocation in times of crisis; it is then possible to reallocate food crops originally cultivated for industry as food, which is not possible with non-food crops. Identifying the maximum amount that could be sourced from a given feedstock location without negatively impacting food security is important to frame the risk for the company and the industry as well as to the broader community of stakeholders. Understanding yields and the flexibility of that crop’s allocation in times of crises are also important (Carus and Dammer 2013).

The third principle is to ensure that strategies are in place to manage key social risks associated with producing and sourcing renewable materials

It is important to consider potential externalities of renewable material production that have negative social consequences such as impact on indigenous populations, community welfare, land tenure, and workers’ rights and safety while producing the renewable materials. Questions that should be considered include: Does production and sourcing of the renewable material contribute to local prosperity? Does it contribute towards the social well-being of the employees, workers, and local population? Are there any risks of population displacement? Is the production of the commodity associated with forced labour, child labour, or other human rights violations? Identification of key social risks is critical as it threatens a company’s social license to operate.

The fourth principle is to communicate appropriately and accurately about the sustainably sourced renewable material – both internally and externally

To ensure appropriate resources are deployed and efficient processes developed, effective communication and alignment on the sustainable sourcing risks and mitigation requirements is needed across a company’s product development, sustainability, procurement, and senior management teams. Internal alignment will help with effective articulation of the company’s objectives and goals to material suppliers, whose support is critical to achieve sustainable sourcing strategies.

When making public claims, it is important to comply with national and regional guidelines issued for environmental marketing, such as those from the U.S., Canada, and Europe (US Federal Trade Commission 2012; Canada Competition Bureau 2008; EU Commission 2014). Ensuring there is technical and legal alignment with the claim wording is also wise. In some cases, it is also helpful to conduct a survey of whether the claim will be understood or misinterpreted by consumers (U.K. DEFRA 2013).

The importance of purchasing/procurement

The implementation of a sustainable sourcing programme is company specific, and involves alignment between Brand, Sustainability/Product Stewardship, and senior management with the objective to make it an integral part of purchasing strategies. Successful implementation of sustainable sourcing programmes therefore relies strongly on the involvement of the procurement function. Until recently, many purchasing managers focused their sourcing strategies primarily around price, quality, and assured supply. Management of environmental and social risk has increased in importance as supply chains have become more vulnerable to market volatility and expectations of businesses and the public have changed (Schneider and Wallenburg 2012).

Building the internal business case for sustainable sourcing can be a challenge, but there are value drivers such as cost reduction, reduced brand or reputational risk, supply security, and even potential revenue growth. Risk reduction represents a major benefit for companies given the financial consequences of a negative supply chain incident that disrupts business continuity or tarnishes the brand reputation. Revenue growth can represent a value driver in organisations with where the purchasing function works closely with upstream R&D, external parties (e.g. suppliers, universities, and national laboratories) and the brand to drive innovation and identify new market potential. To achieve the greatest value from a sustainable sourcing programme it must be aligned with the company’s core values and integrated into its core business practices (Schneider and Wallenburg 2012).

Application of the principles and methods for a bioplastic

In 2011, P&G introduced a shampoo bottle constructed with biopolyethylene, a plastic resin derived from Brazilian sugarcane. Prior to selection of the material, each of the principles and methods described above were used to evaluate its sustainable sourcing. Applying the four principles, the investigation focused on several basic questions:

1. From principle 1 – Does this bioplastic have the same environmental attributes as the petro-based resin it replaces? Would use of this bioplastic result in less consumption of non-renewable resources than a chemically identical resin produced from a fossil-based feedstock? Is the rate at which the sugarcane feedstock was consumed for the resin in balance with its rate of replenishment? Would the sugarcane production and processing result in minimised adverse impacts on the environment (e.g. destruction of critical ecosystems, loss of habitat for endangered species, impact to water quality, etc.)?

2. From principle 2 – Could use of the sugarcane for a bioplastic adversely impact food cost or availability?

3. From principle 3 – Was the sugarcane produced and sourced in a socially responsible manner that protected the rights and safety of workers and supported local communities?

4. From principle 4 – What wording and documentation is needed to support statements about the sustainability profile of the bioplastic?

Results

Getting started

The bioplastic is consistent with the definition of European Bioplastics (www.european-bioplastics.org), and is produced with ethylene obtained from ethanol sugarcane, a 100% renewable source. The material’s mechanical properties and process-ability are the same as the petrochemical resin (Braskem 2014b). The producer’s focus is to create bio-based polymers that are used as drop-in replacements for petro-based polymers, maintaining the ability to be recycled, and capture CO₂ rather than emit CO₂ due to its renewable source and efficient production processes (Cappra 2013).

Life cycle assessment of the bioplastic

A cradle to gate LCA was conducted according to the International Organization of Standardization (ISO)14040/44 guidelines, which included a critical review by a panel of external experts and publication of the study in 2014 (Braskem 2014). The LCA evaluated the energy balance and consumption of non-renewable resources comparing the polyethylene resins derived from sugarcane bioethanol to current fossil-based resins. Additional studies on land-use change and water footprints were also conducted but are not presented here; those methods are consistent with the EU Renewable Energy Directive and Water Footprint Network methodologies (Cappra 2013).

Key findings are related to total energy used and sequestration of CO₂ from the atmosphere. The total energy (energy embedded in the bioplastic and that used to manufacture it) was approximately twice the total energy used for its petroleum-based counterpart. However, over 80% of this energy was derived from renewable bagasse (a waste product from the production of sugarcane to ethanol), resulting in approximately 75% less use of non-renewable energy and materials relative to the fossil fuel counterpart. This level of reduction in non-renewable energy and materials resulted in a negative carbon footprint (global warming potential, GWP), indicating less CO₂ emissions are released during the manufacture of the bioplastic than the CO₂ that becomes sequestered in landfills and the pool of recycled (petroleum based) plastic. The LCA estimated that 2.15 kg of CO₂ were captured and fixed per kg of the bioplastic. The LCA also indicated some potential trade-offs to the reductions in fossil fuel use and GWP, including more land occupied for agricultural purposes as well as higher loadings of nutrients to surface waters (eutrophication), acid to soils, and particulates released to the atmosphere. The first three potential trade-offs are inherent to any material involving agriculture, while the last is related to the higher level of process energy needed to convert sugarcane to plastic. While the impact of fossil depletion and GWP occurs at a global level, the effects associated with agricultural land occupation, eutrophication, soil acidification, and air particulates are felt at more local and regional levels, indicating a need for due diligence to assess the magnitude of the actual impacts from the specific supply chain.

Supply risk analysis of Brazil sugarcane

The supply risk analysis conducted by WWF indicated that key potential risks associated with Brazilian sugarcane included: conversion of high conservation areas to sugarcane production, adverse effects on biodiversity, effects of field run-off to surface waters, air pollution from field burning, and social issues related to land rights and tenure, labour rights, corruption, protection of indigenous populations, and commodity price volatility.

A legality risk for sugarcane cultivation is lack of compliance with Brazil’s Forest Code, which requires a percentage of privately held land to be set aside for conservation that varies by biome and to maintain buffer zones near waterways (Brazil Forest Code 2012). Enforcement of the Forest Code has been inconsistent, and many farms are not yet compliant with its requirements. In 2009, the Brazilian Sugarcane Agroecological Zoning (ZAE Cana) policy was developed to mitigate adverse environmental impacts of sugarcane expansion, including deforestation, GHG emissions, and biodiversity loss. This policy includes land-use planning, access to financing, and specific guides for the sustainable expansion of sugarcane production such as the exclusion of areas with native vegetation, prohibition of production in the Amazon and Pantanal biomes, and identifying areas with sugarcane potential without the need of full irrigation (UNICA 2016).

The supply risk analysis also noted that forced and child labour are known to exist in Brazilian agriculture, including the sugarcane sector. In addition, there was evidence in the sector of workers paid at or below minimum wage with a wage gap existing between male and female workers. These findings suggest that further investigation into labour practices and conditions in Brazilian sugarcane operations is needed to ensure these risks are avoided or eliminated if they are found to be present in a company’s supply chain.

Direct supply chain and stakeholder engagement

P&G has internal policies and practices which are intended to address various sustainability issues in its supply chain. Policies pertaining to labour and human rights are based on the International Labour Organization (ILO) Declaration on Fundamental Principles and Rights at Work, and the U.N. Guiding Principles for Business and Human Rights. Additionally, commercial contracts with suppliers include requirements to follow P&G’s Business Partner Guidelines, which establish clear expectations for direct business partners, including an expectation to respect internationally recognised human rights, comply with all applicable laws and conduct their business ethically and responsibly (P&G 2014a). Furthermore, P&G collaborated with 20 suppliers in 2009 to develop and launch their sustainability scorecard and rating process, which measures and incentivises P&G’s key global suppliers’ environmental performance. P&G also collaborates with the Supplier Ethical Data Exchange (SEDEX), a not for profit membership organisation and repository for reported information on a company’s: Labor Standards, Health & Safety, The Environment, and Business Ethics. SEDEX’s database audit reports can be shared among suppliers and customers to increase transparency and raise standards in global supply chains (SEDEX 2014). P&G strongly encourages its business partners to share the same expectations with their suppliers.

As part of P&G’s due diligence, the bioplastic manufacturer was asked for their policies and control systems related to sustainable sourcing of the sugarcane, particularly around the key risks identified in the supply risk analysis. P&G also sent a small, multifunctional team to Brazil to assess the supplier’s sugarcane supply chain. This assessment included visits to one of the sugarcane plantations, mill, and the bio-ethanol plant. Discussions were held with each company’s sustainability managers and other employees knowledgeable of sustainable agricultural best practices. The types of observations explored are listed in Table 6.

Table 6. Environmental issues investigated as part of due diligence.

Land use
History of the land currently under cultivation Efforts taken to prevent erosion and protect streams and rivers from run-off National parks or protected conservation areas in the region Local environmental protection regulations and enforcement	Proximity of the population to mills and its exposure to air emissions Factors considered when selecting new land for cultivating sugarcane Preparation of new land for sugarcane cultivation Existence of manufacturer policies or best practices relating to land use and management
Soil conditions
Typical characteristics of the soil used to grow sugarcane in the local area and region? Types of soil (i.e. sand, loam, clay, etc.) Typical organic content and source of the organic matter Clay mineralogy Cation exchange capacity Typical characteristics of the soil used to grow sugarcane in the local area and region? Types of soil (i.e. sand, loam, clay, etc.)	Typical organic content and source of the organic matter Clay mineralogy Cation exchange capacity pH of the soil Limiting nutrients Factors affecting their fertility (e.g. acidity, metal content, etc.) Aquifers in the area and measures taken to protect them
Cultivation of sugarcane
How soil is prepared for a new stand of sugarcane Use of fertilisers and pesticides	How soil is prepared when replanting an existing field of sugarcane
Harvesting
Prevalence of manual and mechanical harvesting Prevalence of field burning prior to harvest Treatment of fields following harvesting (i.e. fertilisation, pesticide application, etc)	Harvests per planting and how change over time Resting of fields and rotation of crops Long-term productivity of fields
The Mill
Distance sugarcane travels from the field to mill How the mill sources its water and handles its wastewater	Use of scrubbers to reduce air emissions Disposal of the ash and other by-products

The bioplastic supplier had issued a code of conduct for its suppliers, which provides assurance that the sugarcane was sourced in a way that protects high conservation value areas and utilises good agricultural and environmental practices. The code also covers issues such as: burning, biodiversity protection, surface water protection, land conversion, avoidance of irrigation, adherence to national and local regulations, pesticide use, soil conservation, and protection of human and labour rights.

In addition, it was found that most of the sugarcane was sourced from the state of Sao Paulo, which has state policies that promote sustainable production such as: a phase-out of crop burning practices; water conservation and protection of water bodies; protection of remaining forests, and recovery of riparian areas and biodiversity corridors; minimisation of emissions to air, water, and soil; prevention of soil erosion; adequate management of agrochemical use; enforcement of fair labour practices; and encouragement of environmental education and public awareness.

Observations and information provided from the sugarcane plantation were consistent with the Braskem Code of Conduct (Braskem 2014) for using sustainable agricultural practices. The sugarcane lifecycle is about 5 years; it is cut annually and replanted every 5 years. After several harvests, a crop of soybean is grown on the same field to improve the nitrogen content of the soil reducing need for chemical fertilisers. Waste materials from the mills and ethanol plants are collected and re-used to minimise separate fertilisers. Filter cake from the ethanol plant furnace (rich in phosphorous) is recycled back to the sugarcane plantation; it is mixed with ash and clay and sprayed onto the soil of degraded pasture land during its conversion to sugarcane. Vinasse, waste material from the ethanol plant and a very nutritious liquid containing water, potassium, and other minerals/salts, was also applied in the fields. Soil management activities included annual testing by government labs to ensure soil salt content is stable and at healthy levels. Pesticide use occurred primarily during the establishment of a new field, and focused on reduction of termites and nematodes present from previous use of the land. Pesticide use in established fields was avoided by leaving sugarcane straw (e.g. ‘crop residue’) on the fields, which also prevents erosion and run-off. Planting and harvesting is highly mechanised and provides an alternative to open air burning with negative health impact from smoke inhalation and is also less labour intensive.

Based upon observations during the tour through the central section of Sao Paulo state where the majority of the sugarcane is sourced, there was ample evidence that management practices were being used to minimise the primary environmental impacts of sugarcane production and milling in the region. There was no evidence of burning or burnt fields; there was consistent terracing and contour ploughing and planting of fields to prevent erosion, and riparian zones adjacent to surface waters. In addition, power for the ethanol plant was augmented from bagasse (waste leaves from the sugarcane plant). The presence of electrical transmission lines leaving the mills indicated that the cogeneration of electricity from the excess bagasse was providing renewable energy to Brazil’s electrical grid. The mill appeared to provide good working conditions to the employees, providing a restaurant, protective equipment, and training. The site visit observations were consistent with the Braskem Code of Conduct social policies, which do not tolerate nor support the use of forced and/or child labour, or human trafficking of any kind in the process related to the activities of the plantation (Braskem 2014).

Observations of the planting, harvesting, milling, and ethanol production process confirmed that the processes used in the LCA were correct. The LCA identified several potential risk areas for sugarcane production: terrestrial acidification, aquatic eutrophication, and air pollution and human health impacts resulting from the burning of fields and bagasse. Follow-up discussions with two local agronomists revealed that increased terrestrial acidification is not significant to be a matter of concern as there were no current indications or past instances of sugarcane cultivation reducing soil pH or fertility in the region. In the case of eutrophication, sugarcane does not require large amounts of fertiliser relative to other crops, and best agricultural practices appeared to be widely used to prevent run-off from the fields. Riparian zones were also retained as a buffer that can reduce loading of nutrients to surface waters. In the case of air pollution (atmospheric particulates), besides the mandated elimination of field burning in the region where the sugarcane is sourced, all the mills that were observed were located away from populated areas limiting human exposure to higher particulate loading. Furthermore, the state requires control measures to limit emissions.

Food security assessment

Potential effects on food availability, both direct and indirect, at a country and global level were evaluated. Direct effects relate to diverting sugarcane, sugar, and associated calories from food for human consumption to bioplastic. Indirect effects relate to displacement of agricultural land and other resources for purposes other than food production.

For direct effects, Food and Agriculture Organization of the United Nations Statistics Division (FAOSTAT) Food Balance Sheets were used to estimate the annual supply of whole cane, cane sugar, the average dietary calories consumed per person per day, and the fraction of the calories in the diet provided by sugarcane in a region (Food and Agriculture Organization of the United Nations 2014). An extreme local scenario was calculated, in which the entire plastics volume used by P&G would come from Brazilian sugarcane and result in corresponding decreases in cane and sugar in the food supply. In this scenario, less than 3% of the available cane would be diverted from the local food supply, which would represent less than 0.2% of the calories in the average Brazilian diet. The effect of sugarcane diversion to bioplastic was also modelled in a second global scenario. It assumed that the diversion of sugarcane to plastics results in a proportional decrease in exported sugar, and all sugar imported throughout the world comes from Brazil. In this scenario, <0.06% of calories in a typical global diet and <0.03% from the diets in low-income countries with food deficits (where hunger risks are greatest) would be diverted to plastic.

The first local scenario was used to evaluate the potential indirect effects on food availability and costs, the effects on land conversion, water use, and fertiliser supply at the country level. Data available from FAOSTAT regarding land availability and use as well as fertiliser (P, K, N) supply were used for this analysis. In the case of land use, less than 3% of the currently used agricultural land, which is <0.08% of the available agricultural land in Brazil would be needed to grow sugarcane for plastic in this scenario. For perspective, data from the supplier show that to produce their full plant capacity would take 0.02% of Brazilian arable land (Cappra 2013). Brazil has an abundance of unused agricultural land and degraded land, which could be used to meet future demand. In the case of water, less than 5% of Brazilian cropland is irrigated. In the case of fertiliser, the scenario would require <0.35% of nitrogen, <0.25% of phosphorus, and <0.5% of potash fertilisers currently produced and imported into Brazil. In summary, these analyses indicate that an instantaneous conversion of all plastics used by P&G to a Brazilian sugarcane-based version would have a negligible effect on food availability and costs. Furthermore from a practical perspective, such a conversion would not be sudden and would occur gradually.

Environmental attributes assessment

The primary consideration of this assessment was how the bioplastic would be used. As a bottle, it interacts with the environment following disposal through municipal solid waste treatment systems in the countries of sale. Therefore, physical–chemical properties of the bottles and solid waste handling practices that affect the environmental fate of the bioplastic were assessed.

The bioplastic has the same chemical make-up and physical properties as its petroleum-based counterpart. The bioplastic underwent typical physical and processing tests, which confirmed the expectation that it had the same performance attributes as conventional petroleum-based plastics. The only way to discriminate the two materials is through carbon dating. Both the bioplastic and petroleum-based plastic bottles underwent carbon dating to verify their bio-based content. The bioplastic profile showed carbon recently fixed from the atmosphere during photosynthesis. Both the bioplastic and petroleum-based bottles have identical composition and chemical–physical properties, so their fate in solid waste treatment systems is the same. The bottles’ are compatible with current landfilling, incineration, and recycling methods. Compatibility with recycling systems is particularly important because petroleum-based polyethylene bottles have been extensively recycled for years and is a subject for recycling programmes in most communities.

Third party sustainability programme(s)

Bonsucro, a multi-stakeholder organisation that sets standards for sustainable sugarcane production globally, certified Braskem’s Sao Paulo, Brazil facility to be in compliance with their measures for ‘Bonsucro mass balance chain of custody’. P&G and WWF view Bonsucro as a credible third party verification of sustainable supply and mitigation of key risks identified in the supply risk analysis as well as the observations from its supply chain tour.

Bonsucro certification covers environmental, social, and economic concerns of production and processing (Bonsucro 2011). Bonsucro’s internationally respected standards include a core principle that addresses the respect of human rights and labour standards. One of the criteria under this principle is to comply with the ILO’s labour conventions governing forced labour, child labour, discrimination and freedom of association, and the right to collective bargaining as well as provide a safe and healthy working environment for workers. Bonsucro’s third principle addresses the production and management of operations to enhance sustainability in operations. This includes minimising impacts that contribute to climate change, monitoring production efficiency to make improvements, and assessing impacts of sugarcane enterprise on biodiversity and ecosystem services. All Bonsucro certified operations must undergo a third party audit to ensure compliance with the standards.

Conclusions

Many consumer products and packages are made with bio-based materials, and their sourcing can have implications on environmental, social, and economic health. Sustainable sourcing begins with building knowledge and awareness of the feedstock and its supply chain. WWF and P&G environmental experts are working with material purchasers and suppliers to conduct sustainability assessments that inform strategic plans for procurement of priority ingredients and future innovations. The assessment approach is guided by four principles and various methods for obtaining information about the material’s supply chain and its interactions.

The case study on polyethylene derived from sugarcane for a shampoo bottle provides an example of how each of the principles and methods are applied, giving insight into the sustainable sourcing decision-making process. The LCA and supply risk assessment identified key areas of risk to guide the supply chain discovery process. The on-site visits and interviews with sugarcane growers, mill operators, local agronomists, and material producers were necessary for building trust, transparency, and assurance of sustainable practices from cradle to gate. The bioplastic supplier also had commitments in place to ensure the sugarcane used to make the material was certified according to the Bonsucro standard for sustainable sugarcane.

Insights from sugarcane growers and material producer provided a more practical understanding of local realities and challenges for environmental and social responsibility as well as economic viability. The food security assessment found that use of this volume of sugarcane for a bioplastic would have no detectable impact on local food supplies. Because the bioplastic is identical in composition and properties to the petroleum-based plastic it replaces, there is no impact on its fate; both bottles are compatible and can be handled identically in recycling and landfilling systems.

It is intended that this framework – the principles for the evaluation, the various assessment methods, and the case study of its practical application – provide guidance to fellow supply chain managers seeking to develop and implement sustainable sourcing programmes.

Acknowledgements

This research received funding from The Procter & Gamble Company and the World Wildlife Fund.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by the Procter & Gamble Company; World Wildlife Fund.

Notes on contributors

A. Weisbrod

A. Weisbrod works in Environmental Stewardship & Sustainability at Procter & Gamble. She leads cross-functional teams to develop new methods and communicate results related to environmental protection and sustainability. Recent collaborations include the Bioplastic Feedstock Alliance to guide responsible selection and harvesting of feedstocks for bio-based plastics, a Collaborative Research & Development Agreement with the U.S. EPA to create and test novel integrated sustainability metrics, and Environmental Canada’s screening of existing substances for persistence, bioaccumulation potential, and toxicity in the environment. Annie has a Ph.D. in Toxicology and Marine Sciences, and has authored 29 scientific papers.

A. Bjork

A. Bjork is a member of the World Wildlife Fund’s (WWF) Sustainable Food Program. His work focuses on engaging the private sector to develop more sustainable food supply chains in support of WWF’s conservation goals. Since joining WWF in 2009 he has helped launch the Global Roundtable for Sustainable Beef, co-developed an environmental and social risk assessment for use in international agro-commodity finance, and worked with multinational companies to develop sustainable sourcing goals and strategies. Alex completed an International MBA and Master’s degree in Global Economics from the University of Denver.

D. McLaughlin

D. McLaughlin is the Senior Vice President of the World Wildlife Fund’s (WWF) Sustainable Food Program. David’s work includes an evaluation of planting practices to establish palm oil on degraded lands in Indonesia, an evaluation tool to access the establishment of biofuel crops, multi-commodity risks assessments for major food companies, and field review of social and environmental programmes, and establishing a due diligence process in commodity trading. In addition, David is the Sector Lead for Agriculture for WWF’s Market Transformation Initiative, which includes coordinating the various global commodity roundtables.

T. Federle

T. Federle recently retired after 30 years from Procter and Gamble’s Environmental Stewardship & Sustainability department, where his research focused on the fate of consumer chemicals in the environment as well as environmental exposure and safety assessments. He helped develop technical standards and approaches for evaluating the environmental sustainability of renewable materials while interacting with retailers and suppliers and guiding upstream technology development efforts. He is a Fellow of the American Academy of Microbiology, has authored over 70 scientific papers and has received awards from AOCS and INDA for his scientific contributions.

K. McDonough

K. McDonough works in Environmental Stewardship & Sustainability at Procter & Gamble, specialising in the fate of chemicals in the environment. Kathleen has a PhD. in Environmental Engineering from Carnegie Mellon University where she researched the fate of hydrophobic compounds in sediment. Kathleen has authored 11 peer reviewed publications and also worked as a project manager at several consulting firms where she investigated new methods to quantify the bioavailable fraction of organic chemicals in sediment.

J. Malcolm

J. Malcolm, the Director for Private Sector Engagement, works with companies to advance sustainable operations and sourcing in support of WWF’s mission. Jeff oversees WWF’s technical engagement work with companies, internal operations for business engagement and manages relationships with McDonald’s, Cargill, General Mills, Procter & Gamble, and Sealed Air. Jeff began at WWF in 2008 and has been the global lead for certification and standards, developed the supply risk analysis tool and was part of the global team that developed the Water Risk Filter. Jeff completed an International MBA and a Master’s degree in Global Economics from the University of Denver.

R. Cina

R. Cina has over 13 years of international purchasing experience in the agricultural, chemical, and packaging sectors. Rainer holds a Master of Science degree in Microengineering from the Swiss Federal Institute of Technology (EPFL), Lausanne, Switzerland. In 2002 Rainer started his career at Procter & Gamble in Geneva, Switzerland, where he has held various purchasing positions. In early 2011 Rainer transferred to P&G, Cincinnati, Ohio joining the Sustainable Materials team where he served as Global Purchasing Group Manager Sustainable Materials. He had responsibility to lead commercialisation of sustainably sourced renewable materials, a key pillar of P&G’s sustainability programme.