Not LEEDership: Supply Chain Optimization Guidance Neutralized Under Chemical Industry Pressure

Tom Lent | November 12, 2015

When is a Supply Chain Optimization credit not a Supply Chain Optimization credit? Apparently when the American Chemistry Council (ACC) has a hand in writing the rules. The USGBC announced yesterday the results of its sprawling 11 month Supply Chain Optimization Working Group's efforts to provide guidance for LEED v4's product disclosure and optimization credit Option 3. In it one can clearly see the markings of a bitterly divided group. The outcome, however, is a clear win for the ACC, at least in the short term. Put simply, this "supply chain optimization" option doesn't require a manufacturer to report on the health and safety of their supply chain nor to demonstrate that they have done anything meaningful to improve it. It only requires a plan that promises a little bit better in the future and no accountability on that promise. 

The intent of the LEED credit is to encourage selection of products whose composition is inventoried (the "disclosure" in the title) and verified to minimize the use of harmful substances ("optimization"). Option 3 was intended to bring suppliers into the mix, and encourage and publicly communicate chemical hazard and improvements.

The guidance undermines the intent of the Supply Chain Optimization credit, and the overall credit, by making it possible for manufacturers to get credit without either disclosing or optimizing much of anything.  The minimum requirements demand only a basic environmental health & safety (EH&S) management system - no product or manufacturing process improvements or engagement beyond Tier 1 suppliers (those who supply direct to the manufacturer. [2] in place, the proposed rules provide an easy escape hatch alternative to the Reporting and Optimization requirements of the LEED credit. This may be a step up for global products in poorly regulated countries, but conveniently maintains the status quo for major US and European chemical companies.

Option 1 requires full inventory of the product to 1000 ppm (0.1%) and disclosure of a rigorous set of hazards and Option 2 pushes the bar to 100 ppm (0.01%) for demonstrating reduced hazards. The new Option 3 guidance, however, requires only limited disclosure of the worst hazards. It picks from GHS [4], much less the levels required in the other Options of the LEED credit. That 99%  limit may have been ambitious when the USGBC staff wrote what they thought was a comprehensive credit that covers many tiers of the supply chain, but becomes a laughable loophole when the manufacturer need not go beyond Tier 1.

The guidance has some strong elements in it which, if required, could bring real scrutiny to the supply chain and reward leadership in green chemistry improvements. It espouses important principles, including manufacturer commitments to continuous improvement, greater communication, green chemistry and elimination of hazardous ingredients ahead of controls and risk management.  "Enhanced Achievement Options" provide extra credit for manufacturers who provide actual disclosure and product and production improvements. 

Those principles and enhanced additions are neutralized for now. In the language released yesterday, it is possible for a product to contribute double the product cost toward the 25% goal just by ensuring that EH&S systems cover 99.9% of the product ingredients, regardless of whether the manufacturer is even meeting their self-determined goals.

In fact, the credit does nothing to ensure that the manufacturer sets meaningful goals in their EH&S program, nor to reward manufacturers who make progress against their goals, nor to penalize those that fail their EH&S audits, nor to inform customers of any of this. All that the customer will get is a warning about some of the worst chemicals in the product and a certificate verifying that the manufacturer has an Option 3 conforming program. 

Is there hope for this credit? The next step is a one year pilot to test the credit. Our expectation based on this assessment is that this will prove in practice to be a "gimme" credit with many manufacturers taking the easy route through it, gaining extra credit while easily avoiding the most meaningful enhanced achievements options. Manufacturers who do wish to demonstrate leadership will be frustrated that the competition can get the same credit for no substantive work. Thoughtful design teams will be frustrated by learning nothing about the products and seeing no improvement. Programs like C2C which do enforce meaningful improvement up the supply chain are left out in the cold. That's not LEEDership.

As it is, this credit will become an endorsement of the status quo. This credit can only become a meaningful credit worthy of a leadership program like LEED if the USGBC takes a strong stand, turns the more meaningful enhanced options into minimum requirements and adds strong requirements for actual supply chain and product improvements and reporting.


[1] A Tier 2 manufacturer is one who supplies to a Tier 1 manufacturer.

[2] EMS stands for Environmental Management System. ISO 14001 is an international standard developed by the International Organization for Standardization to guide the design and implementation of EMS systems. . It does not state requirements for environmental performance, but maps out a framework that a company or organization can follow to set up an EMS. Typically it includes a process for setting goals, setting up systems for measuring performance against those goals, monitoring and reporting progress internally within the company and identifying corrections to improve performance toward the goals. The intention is to set up a continuous improvement process. There are, however, no clear rules for how meaningful the improvement must be.  

[3] GHS is the Globally Harmonized System of Classification and Labelling of Chemicals, an international accord for communication of hazards on safety data sheets (SDS) for the workplace. In the US OSHA has mandated a versin of the GHS SDS to replace the MSDS (Material Safety Data Sheet).

[4] GHS SDS requires reporting at 1,000 ppm (0.1%) for reproductive toxicants, carcinogens, and category 1 mutagens, and at 10,000 ppm (1%) for all other hazard categories.