Dr. Isabel Studer
Founding Director
Global Institute for Sustainability
View from the Top

Turning Supply Chains Green Through SMEs

Wed, 02/24/2016 - 09:26

Q: How can the renewable energy industries and sustainability markets foment innovation in the country?

A: Mexico’s history and development is ingrained in hydrocarbons, so it is sometimes difficult to believe that it can fundamentally transform itself into a renewable country. However, Mexico is rich in renewable energy sources, and the potential for solar, hydro, geothermal, and wind is enormous. It is fascinating that countries that have faced scarcity such as Germany and Japan are at the forefront of innovation. Scarcity is the mother of innovation, and this is especially true when dealing with limited natural resources. It is precisely Mexico’s abundance of natural resources that has made it slow to understand the potential to innovate. In the promotion of innovation, Mexico lags behind other emerging economies such as India, China, and Brazil. Being next door to the US, and having the presence of transnational companies that develop technology, negates the need to innovate. The question is not whether renewable energies will bring innovation, the question lies in whether Mexico is willing to make the investment and develop the infrastructure required to promote innovation within this industry. There must be not one fund, as exists now, but the construction of a complete network that supports universities and provides collaboration opportunities with the private sector in a more systematic way so as to harness ideas and technological breakthroughs.

Q: In your eyes, is Mexico willing to see itself as a leader in terms of promoting this industry, not only as a source of innovation, but also as a driver of economic growth and dynamism?

A: It is not only a matter of whether the country is going to promote an energy transition and fight against climate change, but rather whether it wishes to become a leader or lag behind. Sooner or later, we will run out of fossil fuels. One of the benefits of using renewable energies is the positive effect on health and water conservation. Given that most of the population around the world is migrating to cities, using these energies will dramatically reduce health costs. Another aspect that is often disregarded is the lack of association between renewables and water. Water and fossil fuels are inherently connected, which has a tremendous effect on water availability. This is crucial given the scarcity of water in Mexico, which will be more profound with the effects of climate change. We need to be aware of how increasing the use of renewables will directly benefit water availability and reduce water contamination.

Q: What are the most emblematic projects of the Global Institute for Sustainability (GIS), and how has its project with SMEs promoted eco-efficient practices?

A: GIS’ project with SMEs is in its infancy, so it is difficult to report results. The pilot project was carried out with 3,000 small suppliers of Walmart and FEMSA. The preliminary results with a pilot project of 30 SMEs show that companies have realized that being small does not exempt them from impacting resource availability and climate change. The advisory program encourages them to become more efficient and less dependent on fossil fuels. The program has also allowed these companies to become more efficient in their use of natural resources and improve their productivity levels. When we devised the program, we wanted companies to understand that sustainability is intrinsic to the business model and not a fleeting effort. Eco-efficiency allows companies to obtain financial resources that would be otherwise unavailable from a commercial bank, by freeing up resources in their own production systems in order to make the enterprises grow.

Q: What has been your experience working alongside companies like Walmart and FEMSA?

A: These companies are beginning to understand that their influence does not stop at their own factories’ borders, and in fact they have to work with their supply chains to address major sources of emissions and environmental impacts. While FEMSA and Walmart have different sustainability strategies, they converge in the importance they place in working with small suppliers. Turning the supply chain green encourages growth and productivity, and we are considering expanding our partnerships with other companies. We are increasingly convinced that the issue of inefficient use of natural resources will become ever more evident in the development of competitive strategies for both large and small companies. For many of these small suppliers, the only way to improve their competitiveness is through resource efficiency.