The Home Depot

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The Home Depot has partnered with a sustainability consulting company Intertek and participates in Intertek's Think Green Initiative (TGI). Under the TGI, Intertek helps the Home Depot's suppliers to identify and implement energy saving measures and provides onsite assessments of supplier performance.

SCI Information

Activity types Supplier forums or coalitions, Reporting and Monitoring, Capacity building and implementation support, External facilitation tools
Organisation leading the initiative The Home Depot
Region from which the initiative is led

Home Depot is based out of the United States. Other buyer companies that have participated in the TGI include Crayola, Hallmark and Fruit of the Loom.

Supplier's location China
Supply chain sectors targeted Chemicals and chemical products, Wood and wood products, Petrochemicals

The Home Depot has engaged 30 of its suppliers' factories in China. 

Program or partnership linkages Intertek Think Green Initiative

The Think Green Initiative is a program led by Intertek as a third party service provider, that is used by companies to achieve energy savings.

Policy linkages None

No legislative or governmental requirements for buyers to undertake this action.
 

Objective Buyer objectives:

Buyer companies implement the Think Green Initiative (TGI) with the objective to become market leaders in sustainability. The Think Green Initiative helps companies to assess supplier performance as part of CSR reporting, as CSR reporting is now becoming standard practice for most large retailers.  Intertek helps the Home Depot achieve its 2015 target to reduce its US supply chain greenhouse gas emissions by 20% from its 2008 levels.



Supplier's drivers:
Suppliers may be compelled to take part in the Think Green Initiative due to the leverage of large buyer companies engaged with the initiative, but also because of the cost savings that can be identified and achieved through the program. "Organizations across the globe are going green in terms of their products and processes. While retailers and brands work to demonstrate good environmental governance across their supply chains, suppliers are concurrently being asked to continuously improve their environmental performance," said Mr. Dilip Gianchandani, Regional Director at Consumer Goods, Intertek. He further adds, "Intertek's TGI enables suppliers to reduce costs, improve material efficiency, practice green manufacturing good practices and ensure the organization meets the requirements of tomorrow's employees, communities, investors and customers." [*2]
Date

The TGI was launched in 2009 with a pilot in China.

Initiative Summary

Description of the scheme

The Think Green Initiative delivers a range of capacity building and implementation support such as training, supplier self-assessment tools,  onsite capacity review, sharing of best practice, access to a database of local experts who can assist with implementing specific measures, and marketing and reporting support once improvements have been implemented.  

Interek also provides onsite supplier assessments of performance according to a range of sustainability criteria. Qualified TGI auditors are located across the world in Asia, Europe, Middle East and the Americas. Suppliers are given a performance rating that can be compared against global, country and sector performance benchmarks. Scoring works as follows:

0 - 39: Very low performance
40 - 59: Low performance
60 - 79: Medium performance
80-100: High performance

Intertek generally offers 6 - 8 days of assistance over a 6-8 month period:

  • On day 1 Intertek consultants will offer an introduction to the Initiative and an awareness workshop.
  • During days 2 and 3,  an onsite baseline assessment is conducted against 8 areas of environmental performance (including air emissions, water, energy, noise emissions and environmental management systems). Information is collected during the facility onsite assessment by TGI auditors and then entered into TGI assessment tool. The tool is linked to an IT platform which allows further data analysis, benchmarking and reporting.
  • Day 4 consists of training on developing improvement plans and improving technical knowledge of energy saving measures.
  • Day 5 is a best practice workshop to identify strengths and weaknesses and key lessons.
  • Days 6 and 7 are a second onsite assessment to measure progress from the audit undertaken in days 2 and 3 six to eight months previously.
  • Day 8 offers a performance evaluation. Suppliers can publish their score on the platform, or may issue press releases to demonstrate their good performance in the initiative.

Details of companies who have undergone an environmental assessment can be found on the TGI website, which has a search facility so that buyer companies can search the name of their supplier to see if a TGI assessment has been carried out in their facilities. If a supplier is listed on the website then a buyer company can request the supplier to send a copy of the report, by submitting a request through the TGI website.

The Home Depot is an example of a company who has implemented the Think Green Initiative, although several other companies have also taken this step such as Techtronic Industries Co. Ltd. [*3]. Interek is assessing the carbon impact of Home Depot's supplier factories in China and providing case studies and training to support companies to identify and implement carbon reduction opportunities. Intertek also undertakes the verification.

Currently 46 out of total 99 supplier factories worldwide that have gone through the TGI program (not only for Home Depot) have gained a score of 60 or higher. One of the factories supplying to Home Depot, owned by Techtronic Industries (TTI), received a TGI Achievement Award, for achieving a performance score of 85 against a global average of 54. In a TTI press release, the Home Depot stated that it was "impressed and proud of TTI's environmentally-friendly manufacturing process." [*4]

Requirements on or activities undertaken by the target group

Suppliers are required to allow on-site inspection, engage with capacity-building and follow up the recommended measures, including energy saving measures.

Verification/certification

The supplier bears the cost of verification by Intertek, which is part of the overall cost of the TGI program. The TGI program includes three phases to ensure that the data is correctly reported. TGI auditors will review suppliers’ financial and environmental documents, interview facility management and workers, then an onsite tour will be carried out to assess and verify if the submitted data is in accordance with the size and nature of the operation.  TGI assessments can be paid by facilities, vendors and retailers. Who pays for the assessment owns the assessment report and can share the report with industry stakeholders directly through the TGI website and showcase their environmental commitment.

Tools and resources (includes use of external platforms for capturing suppliers' data)

The Think Green Initiative has an electronic platform open to registered suppliers, through which they can upload reports and gain information.

Impacts, Costs & Benefits

Costs

Overall TGI assessment fee depends on the region, size of the facility and whether it has a chemical or wastewater treatment plant. The Home Depot's suppliers bear the costs of Intertek's services, but they also reaped the benefits generated from the cost savings  and productivity improvements - see benefits section below. There is no formal requirement to pass on savings to buyer companies, although participation in the program and assumed savings may influence procurement negotiations.

GHG Impact

As an example, The TGI program has facilitated the reduction of Techtonic Industries (TTI’s) carbon output by more than 4,000 tons per year, while reducing operational costs. The saving was acheived through reducing the unnceccsary of lighting, electric water heaters, chilled pump-driven air conditioning and heating molding machines. In general participating factories save 20 to 200 times the cost of the program.

Benefits

 

Intertek worked with 29 of the Home Depot's supplier factories in China, and identified cost saving measures in 12 of these. The program cost $43,500, which was paid by the suppliers, and achieved overall cost savings of over $3 million. The maximum saving by an individual factory was $774,108. 

Reported cost savings across individual installations in The Home Depot program has varied from USD$1,000 to USD$1,500,000 per year per installation. 

A Think Green Initiative pilot with 75 manufacturing companies across Asia achieved an average saving of $187,000 in energy costs for participants. The cost of participation was approx $4,000 per factory, for up to 15 factories, with a maximum representation of 2 people per factory. 

Footnotes & References