Dive Brief:

• Target is taking aim at its healthcare, beauty and household cleaning good supply chains with a new commitment to root out hazardous chemicals from its products by 2020, the company announced last week.
• The company will ramp up its chemical management strategy to eliminate five chemicals, including Nonylphenol Ethoxylates (NPEs) by 2020, and discontinuing textile products with perfluorinated chemicals or flame retardants by 2022.
• In addition, the company plans to invest $5 million dollars in green chemistry between 2017 and 2022, with the intention of expanding responsible sourcing, and increase the transparency of its chemically-made products by identifying all ingredients in the products by 2020.

Dive Insight:

Having already endured one supply chain disaster within the past year, Target is taking definitive action to offer greater transparency, particularly in its health and wellness products.

As the fourth-ranked big box retailer in the nation (after Wal-Mart, Costco, and Home Depot), Target has sufficient buying power to influence the suppliers from which it makes its purchases. Demanding ingredient compliance will put more pressure on its supply chain, but the financial payoff of selling to Target will likely be enough to bring many into line. 

However, verifying anything beyond Tier-1 sources is a challenge, one that both Target and suppliers will likely struggle to meet. Manufacturers around the world have been known to resort to extraordinary measures to deceive auditors, including disguising terrible factory conditions by removing equipment, hiding child laborers, and adding mandatory safety signage that was previously omitted. Such deceptions can easily include misinforming buyers about the ingredients used to make a product, in order to retain sales.

To address this issue, the company developed a Sustainable Product Index that scores suppliers on their ingredients, transparency, packaging and stewardship practices. Within its ingredients sector, the company notes manufacturers often avoid listing full ingredients by including generic notations such as "fragrances" or "parfum," or limiting the active ingredients placed in the label.

"To create an incentive for manufacturers to adopt labeling practices that meet consumer demand for complete ingredient disclosure, Target allocates a significant percentage of the points available in its Sustainable Product Index (SPI) to evaluations of ingredient disclosure practices," Target writes. If a company includes a generic term, the product's score is capped at 25 of 50 total points for its ingredient practices, "because the presence of such terms precluded screening all ingredients against Target’s lists of chemicals of concern." 

Encouraging suppliers to be transparent in their production processes is the first step to be able to root out hazardous ingredients from healthcare, beauty and household product supply chains. Compliance is the second step, and while Target will likely make every available effort to succeed, strategies like advanced chemical testing as proof of purity could affect cost, which consumers could reject. The company is reportedly working with NGOs and other partners on a strategy to ensure success.