Journal of Cleaner Production 19 (2011) 1216e1223

Contents lists available at ScienceDirect

Journal of Cleaner Production

journal homepage: www.elsevier.com/locate/jclepro

Integrating carbon footprint into supply chain management: the case of Hyundai
Motor Company (HMC) in the automobile industry
Ki-Hoon Lee*
Griffith Business School, Gold Coast Campus, G01_2.13, Griffith University, Queensland 4222, Australia

a r t i c l e i n f o a b s t r a c t

Article history: The purpose of this paper is to improve our understanding of carbon footprint within the context of
Received 25 May 2010 automobile supply chain management. The case study approach is employed as a research method.
Received in revised form Primary data were collected through site visits and extensive interviews with HMC’s corporate and plant
28 February 2011
management. First, identification and measurement of direct and indirect carbon footprint is critical for
Accepted 22 March 2011
mitigating supply chain risks. Second, setting the system boundary of measurement is another important
Available online 30 March 2011
issue to integrate the issue of carbon footprint into supply chain management. Third, developing a map of
product carbon footprint facilitates identification and measurement of carbon emissions across the
Keywords:
Carbon footprint
supply chain. Companies today operate in a carbon-constrained world. In particular, the automobile
Carbon management industry is under pressure to take a close look at its product carbon footprint. Managing the downstream
Supply chain management consequences of the use of its products and inputs from upstream suppliers is critical for developing
Automobile industry carbon risk-mitigated supply chain management. This paper is of benefit to academics and managers by
providing a new way to integrate carbon emissions in supply chain management. Since climate change
and carbon footprint present challenges to many industries, increasing our understanding of how to
integrate carbon footprint in supply chain management is necessary, but has seen little research in the
automobile industry.
Ó 2011 Elsevier Ltd. All rights reserved.

1. Introduction have focused on producer and/or manufacturer-related aspects,

During the past decade, society at large has awakened to the
issue of climate change. Climate change and global warming are
higher on the minds of consumers around the world than ever
before. According to a McKinsey global survey (2008), top
management in a broad range of sectors has recognized that
climate change and carbon management are clearly a business
reality now (McKinsey, 2008). Within the context of a carbon-
constrained business future, there is great uncertainty over how
a shift to a low-carbon business market will play out. Also, given the
global trend in today’s business economy, ‘that competition is
becoming less “firm vs. firm” and more “supply chain vs. supply
chain”’ (Hult et al., 2007, p.1047), a number of companies in
different industry sectors are beginning to recognize the carbon
issue as one of the critical factors in supply chain management. For
example, car manufacturers rely heavily on suppliers of steel, glass,
rubber, and plastics, all of whom are likely to be seriously affected
by emission requirements and regulations. However, most studies
* Tel.: þ61 (0)7 5552 9181; fax: þ61 (0)7 5552 9206.
E-mail address: ki-hoon.lee@griffith.edu.au.
while supplier aspects are rarely explored (Princen, 1999; Lenzen
et al., 2007).
The term carbon footprint has come into wide use among
academics and practitioners in the last few years. A systematic
definition of carbon footprint is offered by Wiedmann and Minx
(2008), who write “carbon footprint is a measure of the total
amount of CO2 emissions that is directly and indirectly caused by an
activity or is accumulated over the life stages of a product (p.5)”.
They asserted the importance of all direct (on-site, internal) and
indirect (off-site, external, upstream, downstream) emissions for
measuring carbon footprint in business operations.
Although companies increasingly adopt a life cycle perspective of
their carbon impacts in their products and services, manufacturers
should identify and consider the indirect carbon emissions if they
wish to manage carbon footprint and performance in operations.
Rather than focusing on what takes place within the factory, a life
cycle perspective traces impacts through the entire production and
supply chain of a business. The common focus of carbon footprint
analyses is to shift reporting direct impacts from on-site processes to
reporting indirect impacts embodied in the supply chain of
a company (upstream) or caused by the use and disposal of its
products (downstream). These indirect impacts are also increasingly

0959-6526/$ e see front matter Ó 2011 Elsevier Ltd. All rights reserved.
doi:10.1016/j.jclepro.2011.03.010
 K.-H. Lee / Journal of Cleaner Production 19 (2011) 1216e1223
Fig. 1. Direct vs. indirect effects of carbon footprint in the supply chain.
important to identify and quantitatively measure carbon emissions
of a company. The Greenhouse Gas (GHG) Protocol (WRI and
WBCSD, 2004) and the indirect GHG emissions associated with
products (Carbon Trust, 2006) also internationally promote stan-
dardization of the procedures related to indirect carbon emissions in
business practice.
As Fig. 1 shows, the scope and boundary of carbon emissions is
critical to identify and measure the direct and indirect carbon
emissions across the supply chain. Without clear identification,
accurate carbon emissions and footprint measurement and
reporting cannot be made. WBCSD and WRI (2009) report that at
least 80% of carbon emissions are produced in scope 3 covering
most indirect emissions in the total supply chain. In order to
balance supply and demand of carbon emission allowance, the
European Union Emissions Trading System (EU ETS) has been
introduced and was launched in 2005 within the European Union.
The EU ETS is the world’s largest CO2 trading system, and this
market-based system is primarily aimed at achieving cost-minimal
compliance with a given greenhouse gas (GHG) emission target.
With recent popular climate footprint calculators and efforts to
measure GHG emissions, there are some notable voluntary carbon
reporting schemes that are applicable to the carbon footprint
boundary within supply chains. These include the general GHG
Protocol (2004) by the World Business Council for Sustainable
Development (WBCSD) and the World Resources Institute (WRI),
and the Carbon Disclosure Project (CDP). These voluntary private
carbon emissions reporting schemes include three scopes of carbon
emissions (see Table 1).
According to the protocol, there are three scopes of carbon
emissions: direct GHG emissions (scope 1), electricity indirect GHG
emissions (scope 2), and other indirect GHG emissions (scope 3). In
this category, scope 1 and scope 2 are the main emissions cate-
gories to measure, and scope 3 is optional. Another voluntary
carbon emission reporting scheme, the Carbon Disclosure Project
(CDP),1 requests disclosure of carbon emissions from corporate
entities. Since 2003, the CDP has made inquiries regarding carbon
1
The Carbon Disclosure Project (CDP) is a nongovernmental organization
headquartered in the UK with global investors and sponsors. In August 2009, the
CDP has 475 signatory investors. For more details, http://cdproject.net.
1217
emissions information to the world’s largest companies, and in
2008 over 1550 companies responded. The CDP identified the
scopes of carbon emissions shown in Table 1, and it follows the
aforementioned protocol in requiring participants to report Scope 1
and 2, and optional to report Scope 3. Although this protocol covers
operational boundaries with certain levels of popularity, the
proposed boundary/category has been the subject of serious
critiques. Schmidt (2009) particularly expresses doubts over scope
2, stating that the national average generating conditions for the
energy mix portfolio of coal, gas, nuclear power, and hydro-power
cannot be clearly assessed. He also notes that it is not clear where
purchased electricity specifically is obtained. Are there any special
providers or renewable source providers? These issues are still not
answered explicitly in the protocol and related documents. Simi-
larly, Matthews et al. (2008) studied the scopes of carbon footprint
and emissions in US industries, and found that only 26% are
captured in Scopes 1 and 2. That is, nearly two-thirds of carbon
emissions and footprint from industrial sectors providing goods
and services are not captured under Scope 1 and 2. Without
considering Scope 3 and the supply chain, it is not realistic to
identify and calculate carbon emission and carbon footprint at the
corporate and industrial levels. Even the CDP and the Protocol
(WBCSD and WRI) have begun to focus on the importance of the
supply chain. In October 2007, the CDP and its institution supply
chain leadership collaboration (SCLC) conducted studies on
improving supply chain reporting of carbon emissions2. The
Protocol (WBCSD and WRI) has, similarly, also been applied and
tested to develop new international standards for calculating
carbon emissions in corporate and product supply chains.
In practice, companies are beginning to use the results of carbon
footprint to reduce costs associated with manufacturing, energy
use, and packaging and to inform design using a life cycle approach.
In addition, companies are publishing the results of carbon foot-
prints externally to manage risks associated with climate change,
and to increase market share and secure preferential product
2
In the period between October 2007 and February 2008, twelve companies
participated in a pilot collaboration study of the SCLC with the aim of creating
a standardized process for supply chain reporting of carbon emissions, risks,
opportunities, and strategies.
1218 K.-H. Lee / Journal of Cleaner Production 19 (2011) 1216e1223
Table 1
Carbon emissions reporting boundary.
Category Boundary
Scope 1 Direct carbon emissions from sources owned
or controlled by a company
Scope 2 Indirect carbon emissions associated with the purchase
of electricity and steam consumed by the company
Scope 3 All other indirect emissions (not included in Scope
2) including the total supply chain up to the production
gate; also known as cradle-to-gate emissions
Source: WBCSD and WRI (2004), WBCSD and WRI (2009).
placement. However, it is often observed that statistics on envi-
ronmental impacts such as energy and emissions are always pre-
sented as attributes of ‘on-site’ or ‘direct’ allocation rather than as
attributes of ‘the supply chains of products’ (Green et al., 1998;
Matthews et al., 2008).
This study aims to explore current business practices in carbon
footprint and supply chain management with the case of the
automobile industry. A case study approach is employed for
Hyundai Motor Company (HMC) in this paper. As mentioned
earlier, we generally accept that companies and industries cause
direct and indirect impacts on climate change. One fundamental
question is how to identify and measure both direct and indirect
impacts of companies on climate change. In particular, indirect
identification and measurement through supply chains have rarely
been carried out in academic spheres and business practice. This
study highlights indirect impacts of suppliers in supply chain
management within the automobile industry for better position in
competitive markets.
2. Green supply chain management, carbon footprint and
supply chain management
Integrating environmental criteria into supply management has
become an important strategic issue for many companies. While
some scholars use different terms within different contexts such as
green supply (Bowen et al., 2001), green supply chain (Sarkis, 2003),
green supply chain management (Zhu and Sarkis, 2006), environ-
mental supply chain management (Zsidisin and Siferd, 2001;
Handfield et al., 2005), and green supply chain practices (Vachon
and Klassen, 2006) regarding ‘how and why’ green issues should be
integrated into supply management, the core meaning of the terms
above can be understood as a focal company (a buying firm) exer-
cising supply management practices that integrate green issues into
supply chain management in order to improve their business part-
ners’ environmental performance, thereby enhancing corporate
sustainability competitiveness (Handfield et al., 2005; Lee, 2009; Lee
and Kim, 2009).
In automobile industry, there are previous studies concerning
green supply chain issues. Rothenberg et al. (2005) provide four
categories of environmental benchmarking approaches including
regulatory compliance, gross emissions, efficiency and life cycle
analysis. Hervani et al. (2005) discuss the challenges of green
Specific Examples
 Direct emissions from stationary combustion
 Direct emission from mobile combustion
 Direct emissions from process sources
 Direct emissions from fugitive sources
 Indirect emissions from purchased/acquired electricity
 Indirect emissions from purchased/acquired steam
 Indirect emissions from purchased/acquired heating
 Indirect emissions from purchased/acquired cooling
(1) Indirect emissions from purchased products (upstream)
 Purchased goods & services
 Energy-related emissions (not included in scope 2)
 Transportation & distribution
 Waste generated in operations
(2) Indirect emissions from sold products (downstream)
 Franchises (not included in scope 1 or 2)
 Leased assets (not included in scope 1 or 2)
 Distribution of sold products
 Use of sold products
 Disposal of sold products at the end of life
supply chain performance measurement, and a number of tools are
presented including an environmental balanced scorecard. More
recently, Zhu and Sarkis (2006) investigate the pressures, practices
and performance of green supply chains in the Chinese automotive
industry. They applied a comprehensive list of performance
measurement including economic and environmental indicators.
With the Volkswagen case, Koplin et al. (2007) studied sustain-
ability criteria in supply chain management to demonstrate how
sustainability policy can be flooded into strategic and operational
measurements. Further development of green supply chain
management has led to its recognition as a key area for companies
wanting to be competitive in the global economy. While green
supply chain management has become popular, fewer studies have
been published on carbon footprint in supply chain management.
Seuring and Müller (2008) also showed that few consider energy
and emissions impact of supply chains.
The carbon emissions and consumption of a firm depend on the
industry it operates in, its position in the value chain, and firm-
specific factors, such as product portfolio and technological
advancements. For example, automobile has some unique charac-
teristics of supply chain management: a module and platform-based
assembly production; very high level of better understanding and
identification of a firm’s carbon emissions and consumption, a life
cycle perspective is important, and the distinction between direct
and indirect carbon emissions is also critical. In particular, when the
issue of carbon management is considered as a key strategic issue in
supply chain management, it is important to understand the scope
and boundary of carbon emissions in the entire supply chain. When
a car manufacturer wishes to inform consumers about the carbon
footprint of a certain car type or model, a firm should take both direct
and indirect emissions into account. That is, the firm should identify
and analyze the concrete product carbon reference. This indicates
that the firm should analyze the indirect emissions in the supply
chain that contribute to the specific product.
3. Integrating carbon footprint in the automobile supply
chain
Over the past ten years, there has been pressure on automobile
manufacturers to take action to improve engine efficiency and to
reduce greenhouse gas emissions. For example, in Japan, new
legislation requires a 23% improvement in the fuel economy of cars
 K.-H. Lee / Journal of Cleaner Production 19 (2011) 1216e1223
by 2010 as compared to 1995 levels. The automobile industry has
responded by taking action to improve the efficiency of and emis-
sions from the vehicles it produces while also proposing voluntary
measures to reduce greenhouse gas emissions. For example, in the
EU, the automobile industry association ACEA3 signed a voluntary
agreement with the government in 1998 to have manufacturers
reduce CO2 emissions on new passenger cars by 25% by 2008, with
a possible further 10% reduction by 2012. This agreement sought to
achieve an average of 140 g km1 of CO2 by 2008 and a 25%
reduction from the 1995 level of 186 g km1. In anticipation of the
tougher standards of post Kyoto protocol and regulatory carbon
requirements globally for the automobile industry, companies
should evaluate the carbon impacts of their suppliers. This could
lead to higher component and energy costs as suppliers pass along
increasing carbon-related costs to their customers. The automobile
industry in particular is a case that heavily relies on suppliers in the
value chain, and they are likely to be enormously impacted by
emissions regulations.
Manufacturers and suppliers are facing increasing regulatory
pressures to embrace sustainable operations and achieve better
environmental and economic performance. More importantly,
integrating sustainable operations requires companies to engage in
supply chain management practices, wherein focal companies
evaluate risks and performances of suppliers based upon environ-
mental criteria (Seuring and Müller, 2008; Sarkis, 2003). In
particular, competitive advantages of car manufacturers are very
much dependent upon successful supply chain management. If
a focal company wants to improve the level of carbon emissions,
the company should pay attention to not only on-site production
facilities but also the suppliers’ production processes. Although it is
quite valid to assess the current environmental performance of
production, it does not encapsulate the environmental perfor-
mance of a car manufacturer in a sustainable way based on the
practices they are adopting and their intentions toward a green and
sustainable supply chain.
In current business practices of car manufacturers, most actions
in response to regulatory and market pressures have targeted
reducing costs by reaching greater economies of scale in car
production and sales. Platform consolidation, modular assembly,
and supply chain management constitute the most widely pursued
management initiatives in this direction. However, little attention
has been paid to managing CO2 emissions in the supply chain from
a strategic actions perspective thus far. Integrating carbon footprint
into supply chain management can help companies identify the
sources of serious carbon impacts in supply chains. Awareness of
carbon footprint in the supply chain becomes a driver to create
carbon-mitigated sustainable operations.
In a recent study, Wittneben and Liyar (2009) list some impor-
tant aspects that can be specified in carbon footprint and auto-
mobile supply chain management:
(1) Quantify direct greenhouse gas (GHG) emissions from
operations
(2) Report GHG emissions
(3) Assess GHG emissions from the value chain, including
suppliers and usage of products
They also point out that identification and measurement of CO2
emissions should be given the priority to examine site-operations.
To reduce business impacts on climate change, companies should
integrate carbon footprint and mitigation considerations into
3 Supplier
ACEA (Association des Constructeurs Européens d’Automobiles) includes BMW,
Daimler, Fiat, Ford, GM, Porsche, PSA Peugeot Citroen, Renault, and VW Group.
1219
operations and supply chains. As strategic steps to take for auto-
mobile manufacturers, the first is to identify and track their carbon
footprint from its own production and from suppliers. Since the
company can manage what it measures, companies should be
aware of and understand the sources and levels of their own carbon
emissions. In practical terms, tracking carbon emissions in a quan-
tifiable manner can lead to heightened consciousness of carbon
emissions and carbon footprint within a company and the entire
supply chain. For quantifying corporate carbon footprint, a carbon
inventory is necessary to measure direct and indirect emissions. By
practicing this, the company can identify and prioritize carbon
emission reduction opportunities and mitigate carbon risks within
the company and the supply chain.
4. Research methods
A review of literature reveals that there is little empirical
knowledge on why and how companies integrate carbon footprint
into supply chain management. The business environment is
undergoing rapid change in terms of environmental expectations
from multiple stakeholders. A case study approach is employed in
this study to achieve the research aims of gaining deeper insights
on corporate practices in carbon footprint and supply chain
management through interviews, internal reports, company
records, and published data sources (Eisenhardt and Graebner,
2007; Yin, 2003). A case study method allows for multiple sour-
ces of evidence, and the depth and richness of case studies offer
new insights on ‘little known’ or ‘new research topics’. In particular,
an inductive case study approach is employed to cover contextual
dimensions of carbon management in supply chain in this study.
The automobile industry also has a diversity of supply chain char-
acteristics, as plants draw from a wide range of equipment and
materials suppliers. Legislative requirements and customers’
concerns were actively pushing a number of plants to investigate
and implement a range of new environmental solutions.
Primary data were collected through site visits and extensive
interviews with corporate and plant management. Company names
were anonymized to encourage openness of response. 10 partici-
pating companies are from the Hyundai Motor’s 1st-tier supplier
groups in Korean automobile industry and are small to medium size
industrial manufacturing companies. All participating suppliers
have less than 250 employees, and SMEs constitute over 99 percent
of industries in Korea (Lee, 2009). Table 2 shows the general
information on participating suppliers including number of
employees and main products. Multiple on-site interviews were
conducted with executives and senior managers in 10 companies,
and the interviews ranged in length from one to one and a half
hours, and clarifications are sought through e-mails and telephone
calls. Taped interviews were transcribed and non-taped interviews
were typed up immediately and reviewed with interviewees to
ensure accuracy. Further, the richness of data was enhanced with an
Table 2
Participating companies’ size and main products.
Category No. of Employees Main Products
Supplier 1 120 Power steering handle
Supplier 2 230 Junction box
Supplier 3 160 Front bumper
Supplier 4 145 Throttle body
Supplier 5 187 Engine cylinder head
Supplier 6 201 Cross car beam
Supplier 7 135 Side door latch
Supplier 8 110 Door trim
9 185 Muffler
Supplier 10 220 Head lamp
1220 K.-H. Lee / Journal of Cleaner Production 19 (2011) 1216e1223

extensive review of secondary source material including internal
documents, environmental performance, and internal recorded
documents of meeting with suppliers.
For identification and measurement of carbon emissions, there
are two notable methodologies internationally. These are the
greenhouse gas (GHG) protocol (WBCSD and WRI, 2004) and the EU
ETS. The GHG protocol categorized three scopes of GHG emissions
(scope 1, scope 2, and scope 3), which have become widely accepted
and utilized in a number of regulations and standards including the
EU ETS. In particular, EU ETS provides monitoring and disclosure
standards under the proposed international standard. In terms of
CO2 measurement methodology, the EU ETS allows a calculation-
based methodology and a direct measurement-based methodology.
A calculation-based methodology is “determining emissions from
source streams based on activity data obtained by means of
measurement systems and additional parameters from laboratory
analyses or standard factors” (EC 2008, Section 4.2 of Annex 1). This
methodology has some scopes for error because of inherent uncer-
tainty in quantifying emissions factors. A direct measurement-based
methodology is “determining emissions from an emission source by
means of continuous measurement of the concentration of the
relevant greenhouse gas in the flue gas and of the flue gas flow” (EC
2008, Section 4.2 of Annex 1). This methodology mostly provides
a greater level of accuracy of actual GHG emissions than calculation
methodologies. In this case study, we adopted this direct measure-
ment-based methodology to identify and measure actual GHG
emissions in HMC’s Avante passenger car model manufacturing with
10 participating 1st-tier suppliers in Korea. This study was carried
out between October 2009 and March 2010.
5. A case study: Hyundai Motor Company (HMC)
5.1. Background
manuals, suppliers conducted Scope 1 and Scope 2 carbon emission
measurement and reporting. For carbon measurement, a direct
measurement methodology is employed. Fully developed energy
and carbon inventory is addressed to provide data for HMC’s
requirement. Table 3 shows the outcomes of identification and
measurement under Scope 1 and Scope 2 of the carbon footprint
boundary. Each supplier has different products and components
range for HMC’s car models.
The scope of the guidelines prepared by HMC includes raw
material suppliers, manufacturers and distributors. In this process,
a simplified supply chain has been set up (raw materials from
suppliers, in-house manufacturing, and distribution to customers)
for analysis purposes. The main reason for covering these three
stages of the supply chain is that it allows HMC to work together
with their suppliers to improve the environmental performance of
the products and the manufacturing processes of suppliers.
5.1.2. Step 2: development of a carbon process map
At this stage, simplified supply chain stages (raw materi-
aldmanufacturingddistribution) are set to develop a carbon
process map. The carbon process map is designed to identify each
component and part at each stage of the supply chain. As a result,
the supplier and HMC can calculate each carbon footprint for each
component and part. Based upon this information, the supplier and
HMC can calculate product carbon footprints and costs. By estab-
lishing a carbon process map, the supplier and HMC can identify
and measure product carbon footprints as well as carbon risks
across the supply chain. More importantly, the supplier can identify
high carbon burdens of components and parts from this carbon
process map. Once suppliers identify and measure the carbon
burdens, they report the results of carbon process map application
to HMC and work together to reduce energy consumption as well as
costs.

Established in 1967, Hyundai Motors Co. is a multinational car
manufacturing company headquartered in the Republic of Korea. In
2008, it produced 4.18 million cars and ranked 6th globally in terms
of production volume, after Toyota, GM, VW, Renault-Nissan, and
Ford.
In addressing carbon issues and supply chain management, one
of the most difficult challenges HMC has faced is determining the
boundary within which carbon emissions can be identified,
measured, and finally managed by the corporation.
Thus, HMC adopted the GHG protocol, developed by WBCSD and
WRI (2004), as a guideline for carbon emissions scopes and
boundaries. Direct (in-house) and limited indirect carbon emissions
boundaries are set for a pilot test while downstream stages of
distribution, consumers, disposal, and recycling are excluded.
Carbon footprint and emissions vary depending upon how they are
calculated and the degree of responsibility the company is willing to
take. There is an inherent conflict between inclusiveness (total
carbon emissions in a system) and participation (the level of busi-
nesses or consumers taking part in the system). Although consumers
can influence the carbon footprints of goods and services through
5.1.3. Step 3: calculation of product carbon footprint
Based on the data from stage 2, the supplier and HMC calculate
and examine the product carbon footprint in a simplified supply
chain. Selected measurement indicators include stack air emis-
sions, on-site and off-site energy recovery, total energy use, total
electricity use, total fuel use, source reduction activities, and raw
material modification. Table 4 shows an example of the calculation
output of the front bumper product carbon footprint. The front
bumper product is selected for the example because it can be easily
adopted by many other automobile manufacturers for considering
product carbon footprint measurement and related reductions in
the supply chain.
The total CO2 emission of the front bumper carbon footprint is
calculated by adding each scope of the carbon measurement (i.e.
raw materials, manufacturing, and distribution).
Table 3
Selected Suppliers’ Carbon Footprint in Scope 1 and Scope 2.

their purchasing practices, selected stages downstream in the Category Scope 1 Scope 2 Total (Unit: ton CO2)e
supply chain are not included in this pilot study due to the limited Supplier 1 3238 4619 7857
extent to which final consumers can affect carbon emissions Supplier 2 472 530 1002
occurring in the supply chain. HMC and 10 key 1st-tier suppliers took Supplier 3 8795 9834 18,629
Supplier 4 2937 24,638 27,575
three steps to identify and measure carbon emissions in each
Supplier 5 1212 6438 7695
production site. The details are summarized as follows. Supplier 6 205 5987 6192
Supplier 7 101 720 821
5.1.1. Step 1: identification of selected key suppliers’ carbon Supplier 8 135 8486 8621
footprint Supplier 9 4093 14,926 19,019
Supplier 10 425 4469 4894
At this stage, HMC sets up guidelines and provides measure- Total 21,613 80,692 102,305
ment manuals to key suppliers. Based on the guidelines and
 K.-H. Lee / Journal of Cleaner Production 19 (2011) 1216e1223
Table 4
An example of calculation of carbon footprint (front bumper).
Category Raw material
Carbon emission per unit 0.453 kg CO2e/unit
Total 2.532 kg CO2e/unit
5.2. Summary
In this pilot study, HMC initiated carbon footprint identification
and measurement in the supply chain. In particular, Scopes 1, 2, and
3 of the carbon footprint boundary are applied at selected key
suppliers and HMC. In this study, only ten 1st-tier suppliers
participated in HMC’s pilot study of integrated carbon footprint in
supply chain management. Following Steps 1e3 enabled partici-
pating suppliers to identify and measure carbon footprint for both
direct (in-house) and indirect (simplified supply chain) carbon
emissions. With the in-depth case study of the front bumper
product, the raw material stage accounts for 18% of carbon foot-
prints, the in-house manufacturing stage 70% of carbon footprints,
and the distribution stage about 12% of carbon footprints within the
simplified supply chain. Based on the pilot study outcomes, HMC
can draw a bigger picture of the carbon process map in the auto-
mobile supply chain management. As a result, HMC also can
calculate a final car model’s total carbon footprint as well as the
total supply chain footprint. In this process, HMC passes on prac-
tices and technologies to the participating suppliers, influencing
carbon footprint along the supply chains.
5.3. Lessons learned
5.3.1. The supplier perspective
With the manual, the participating suppliers adopted the 3 steps
of carbon measurement processes (i.e. step 1estep 3). For analysis
purposes, it is revealed that the simplified measurement scopes of
the supply chain are technically very useful to identify, measure,
and report. In particular, SMEs having less than 250 employees have
limited resources (finance, technology, human resources). With
complicated or overly broad scopes, it would not be realistic for
SMEs to adopt carbon footprint measurement practices. With the
HMC case, raw materials and in-house manufacturing phases
account for more than 80% of carbon emissions. Initially, the
suppliers had little knowledge or measurement tools of carbon
footprint. The outcomes of this 2-year pilot project will include the
following:
- General utility efficiency outputs
- Energy and CO2 flow map for products, parts, and components
- Cost savings by delivering more energy efficient operations
management.
One of the senior managers stated that “we didn’t realize how
much electricity we wasted during the production stage and the
importance of efficient energy management from raw materials to
distribution. We learned that carbon footprint identification and
measurement practice brought cost savings, and we also began to
reexamine our products design to minimize carbon footprint in our
products and their supply chain”.
In addition, the developed manual guides the suppliers to adopt
carbon management practice relatively easily. In particular,
a carbon footprint flow map of products and a carbon footprint total
management map of production processes are provided, serving as
very useful tools for suppliers. One of the mangers from the case
study noted that “now we know where the energy hole is in the
manufacturing process, and we can fix it or at least we can improve
1221
Manufacturing (in plant) Distribution
1.763 kg CO2e/unit 0.316 kg CO2e/unit
the situation because of carbon footprint measurement and the CO2
flow mapping process”.
5.3.2. A focal company (HMC) perspective
HMC has extensive supply chain networks and realizes the
urgent importance of product-level carbon footprint measurement
within the entire supply chain due to global regulatory and market
pressures.
With the slogan “No measurement, no improvement or innova-
tion”, HMC took a rigorous approach to identify and measure its carbon
footprint over the supply chain. In this process, HMC developed
a carbon footprint manual and measurement tools. From green and
sustainable supply chain management practice, HMC carried out
a carbon footprint project to develop carbon auditing at product levels,
at company levels, and supply chain levels. The Carbon Trust (2006)
also reported the current carbon management and supply chain busi-
ness practices by stating “if they are willing to broaden their horizons to
work collaboratively with other companies in their supply chain, then
there are additional opportunities to build influence, create knowledge,
reduce carbon emissions and generate financial returns (p.3)”.
The main outcomes from the case study include:
- A systematic carbon footprint management system for supply
chain management
- Product carbon footprint measurement tools and methodolo-
gies with manuals
- A carbon footprint calculator at products, parts, and compo-
nent levels
- Monetary calculation of carbon footprint for car models (in this
project, a passenger model Avante)
- Carbon auditing tools for supply chain carbon management.
One of the senior managers from HMC confirmed that the
company has established a 2012 year plan to complete carbon
footprint measurement within the entire supply chain. According
to the manager, the 2nd phase of the EU ETS will be completed by
2012, and the company anticipates that stringent monitoring
standards and requirements for automobile companies, including
HMC, will be implemented. At the same time, another senior
manger stated that “we had some difficulties in terms of scopes and
measurement of carbon footprint. In our case, scope 1 and 2 carbon
footprint measurements are completed with over 95% confidence.
But scope 3 CO2 measurement is still limited with regard to the
supply chain network. We should explore further feasible methods
and practices to track CO2 emissions from the supply chain”.
6. Discussion and conclusions
In response to increased climate change challenges, managers
should consider the impact of their decisions on the environment,
in the name of green supply chain management (GSCM). This label
of GSCM broadly describes a variety of approaches through which
companies work with their suppliers to improve the environmental
performance of the products or manufacturing processes of
suppliers and customers. It requires successful coordination, inte-
gration, and management across members in the supply chain,
including raw material suppliers, manufacturers, distributors, and
users (Geoffrey et al., 2002).
1222 K.-H. Lee / Journal of Cleaner Production 19 (2011) 1216e1223
In order to identify and analyze impacts of companies on climate
change, the author undertook an inductive case approach to inves-
tigate emerging and new topics of carbon footprint within supply
chain management. Every organization will be affected by climate
change in different ways, thus it is critical to assess the particular
situation a company finds itself in (Porter and Reinhardt, 2007).
Businesses pass on practices and technologies to their suppliers and
customers, influencing carbon emissions along their supply chains. A
number of carbon-related issues such as carbon emission trading
exert pressure on companies to track and report their emissions over
their supply chains. In response, carbon identification and measure-
ment provides a mechanism for managing and assessing climate-
related business risks and opportunities (Lash and Wellington, 2007).
Identifying and measuring carbon footprint can be a useful
source of carbon competitiveness. In particular, developing indi-
cators for identification and measurement of carbon footprint can
be critical for integrating carbon footprint into supply chain
management. For example, the Japanese car manufacturer, Toyota
used emissions volume per sales unit as an indicator to measure
direct CO2 emissions. In other words, Toyota introduced monetary
measurement metrics for direct CO2 emissions in their supply
chain. In the post Kyoto Protocol, flexibility and cost effectiveness
are very important with respect to carbon mitigation efforts.
Reducing supply chain carbon emissions (Scope 3) may be more
cost effective for companies than reducing direct or purchased
electricity-related emissions (Scopes 1 and 2). Better under-
standing on the total life cycle emissions of a company’s goods and
services will be helpful to the company for integrating carbon
footprint in supply chain management. In order to assess carbon
footprint in the supply chain, companies should develop
measurement metrics or indicators. A detailed supply chain carbon
footprint analysis can point to the products and services that are
major contributors to the total emissions. Due to the high values for
the carbon footprint, energy usage and consumption is a major area
of the firm as well as an area where there is room for improvement.
Managing the carbon footprint of a product across the supply
chain is another strategically important next step for businesses to
reduce carbon emissions and mitigate climate risks. As corpora-
tions operate in a carbon-constrained world, they will be expected
to meet customers’ and other stakeholders’ needs in a manner that
generates fewer carbon emissions. Successful reductions of carbon
emissions require an assessment of a company’s direct/in-house
emissions and indirect emissions from suppliers. Companies need
a clear picture of traceable direct and indirect carbon emissions in
order to make strategic decisions regarding carbon footprint in
supply chain risk management. A company should draw a picture of
the carbon footprint of a product by identifying and measuring
emissions across the supply chain.
By building a carbon footprint map of a product based on
measurement of emissions across the supply chain, a company can
identify carbon risks and mitigate carbon challenges across the
supply chain. More importantly, corporate decisions will reflect the
total carbon footprint of their operations, and increase suppliers’
awareness of their carbon footprint. By practicing this, companies
will identify carbon risks as well as new business opportunities,
and ultimately corporate competitiveness, through sustainable
supply chain management practice.
This study sheds some light on the issue of carbon footprint in
supply chain management. This is an emerging discipline in supply
chain management. The empirical case study of HMC and its key
supplier’s front bumper product provides some evidence regarding
how to practice carbon footprint measurement and improve envi-
ronmental performance of CO2 emissions. By identifying and
measuring the carbon footprint of main parts and products from
key suppliers, a focal company can identify and measure the total
value of the carbon footprint for each car unit. By utilizing this
activity, a final car manufacturer like HMC can measure the total
burden of CO2 emissions, and set up a strategic target to improve
carbon footprint performance with successfully “proved” and
“certified” carbon management participating key suppliers.
Some research limitations also should be addressed. First, an
inductive case study can be useful approach to explore “new topic”
or allow greater specificity in describing the steps of carbon emis-
sions identification and measurement, but potentially limits
generalizability. Future research is likely to benefit from a meth-
odology that is based more theoretically-driven multiple studies,
possibly using a quantitative research methodology. Second, the
design of this study used only HMC and ten key suppliers, which
might potentially have created grounds for bias. Any potential bias
introduced by limited number of cases cannot be explicitly ruled
out. Further studies are also likely to benefit from studies that are
conducted in different countries and industries to gain research
validity. Third, this study relies heavily on self-reported measure-
ments (e.g. quantity of CO2 emissions in each stage of supply chain,
total value of CO2 emissions) provided by firm managers, further
studies could offer additional evidence that can be placed on the
results reported here by employing a multi-case study approach for
research reliability and validity.
References
Bowen, F., Cousins, P., Lamming, R., Faruk, A., 2001. The role of supply management
capabilities in green supply. Production and Operations Management 10,174e189.
Carbon Trust, 2006. Carbon Footprint in the Supply Chain: The Next Step for
Business. Report No. CTC616. Carbon Trust, London.
European Commission (EC), 2008. Commission Decision of July 18, 2008 Estab-
lishing Guidelines for the Monitoring and Reporting of Greenhouse Gas Emis-
sions Pursuant to Directive 2003/87/EC of the European Parliament and of the
Council Available from. http://www.epa.ie/downloads/advice/air/climate%
20change/mrg2/epa_mrg_2007_589_ec31.pdf accessed 05/03/10.
Eisenhardt, K., Graebner, M., 2007. Theory building from cases: opportunities and
challenges. Academy of Management Journal 50, 25e32.
Geoffrey, J., Hagelaar, J., van der Vost, A., 2002. Environmental supply chain
management: using life cycle assessment to structure supply chains. Interna-
tional Food & Agribusiness Management Review 4, 399e412.
Green, K., Morten, B., New, S., 1998. Green purchasing and supply policies: do they
improve companies’ environmental performance? Supply Chain Management:
An International Journal 3, 89e95.
Handfield, R., Sroufe, R., Walton, S., 2005. Integrating environmental management
and supply chain strategies. Business Strategy and the Environment 14, 1e19.
Hervani, A., Helms, M., Sarkis, J., 2005. Performance measurement for green supply
chain management. Benchmarking: An International Journal 12, 330e353.
Hult, G., Ketchen, D., Arrfelt, M., 2007. Strategic supply chain management:
improving performance through a culture of competitiveness and knowledge
development. Strategic Management Journal 28, 1035e1052.
Lash, J., Wellington, F., 2007. Competitive Advantage on a Warming Planet. Harvard
Business Review 85, 94e102.
Koplin, J., Seuring, S., Mesterharm, M., 2007. Incorporating sustainability into supply
management in automotive industry - the case of the Volkswagen AG. Journal
of Cleaner Production 15, 1053e1062.
Lee, K.-H., 2009. Why and how to adopt green management into business organi-
zations? The case study of Korean SMEs in manufacturing industry. Manage-
ment Decision 47, 1101e1121.
Lee, K.-H., Kim, J.-W., 2009. Current status of CSR in the realm of supply manage-
ment: the case of the Korean electronics industry. Supply Chain Management:
An International Journal 14, 138e148.
Lenzen, M., Murray, J., Sack, F., Wiedmann, T., 2007. Shared producer and consumer
responsibilitydtheory and practice. Ecological Economics 61, 27e42.
Matthews, S., Hendrickson, C., Weber, C., 2008. The importance of carbon footprint
estimation boundaries. Environmental Science & Technology 42, 5839e5842.
McKinsey, 2008. How companies think about climate change: a McKinsey global
survey. McKinsey Quarterly February.
Porter, M., Reinhardt, F., 2007. A strategic approach to climate. Harvard Business
Review, 104. October.
Princen, T., 1999. Consumption and environment: some conceptual issues. Ecolog-
ical Economics 31, 347e363.
Rothenberg, S., Pil, F., Maxwell, J., 2001. Lean, Green, and the Quest for superior
environmental performance. Production and Operations Management 10,
228e243.
Sarkis, J., 2003. A strategic decision framework for green supply chain management.
Journal of Cleaner Production 11, 397e409.
 K.-H. Lee / Journal of Cleaner Production 19 (2011) 1216e1223
Schmidt, M., 2009. Carbon accounting and carbon footprintdmore than just diced
results? International Journal of Climate Change Strategies and Management 1,
19e30.
Seuring, S., Müller, M., 2008. From a literature review to a conceptual framework for
sustainable supply chain management. Journal of Cleaner Production 16,1699e1710.
Vachon, S., Klassen, R., 2006. Extending green practices across the supply chain: the
impact of upstream and downstream integration. International Journal of
Operations & Production Management 26, 795e821.
Wiedmann, T., Minx, J., 2008. A definition of carbon footprint. In: Pertsova, C. (Ed.),
Ecological Economics Research Trends. Nova Science, Hauppauge, NY, pp. 1e11.
Wittneben, B., Liyar, D., 2009. Climate change basics for managers. Management
Decision 47, 1122e1132.
World Business Council for Sustainable Development (WBCSD) and World
Resources Institute (WRI), 2004. The Greenhouse Gas Protocol: A Corporate
Accounting and Reporting Standard. revised version. Switzerland, Geneva.
World Business Council for Sustainable Development (WBCSD) and World
Resources Institute (WRI), 2009. The Greenhouse Gas Protocol Initiative: Scope
3 Accounting and Reporting Standard. review draft. Switzerland, Geneva.
1223
Yin, R., 2003. Case Study Research: Design and Methods, 3rd edition. Sage, London.
Zhu, Q., Sarkis, J., 2006. An inter-sectoral comparison of green supply chain
management in China: drivers and practices. Journal of Cleaner Production 14,
472e486.
Zsidisin, G., Siferd, S., 2001. Environmental purchasing: a framework for theory
development. European Journal of Purchasing & Supply Management 7,
61e73.
Ki-Hoon Lee is currently based at Griffith Business School, Griffith University, in
Australia and he has interests in all areas of Corporate Sustainability Management, but
particularly in, sustainable supply chain management, strategic sustainable manage-
ment, corporate social responsibility and stakeholder management, climate change
and emission trading scheme, sustainability accounting and reporting, and higher
education. His works have been appeared in international journals including
Management Decision, Supply Chain Management: An International Journal, Corporate
Social Responsibility and Environmental Management, Public Relations Review, and
Greener Management International among others.