Forward thinking businesses are recognising that they are part of a larger ecosystem. With an estimated 80% of global trade passing though supply chains, they are increasingly seen as an important lever for business to create positive impact in the world. Besides competitive advantages through reduced costs, a company’s supply chain can create a significant impact in promoting human rights, fair labour practices, environmental progress and anti-corruption policies. However, participants of the UN Global Compact rank supply chain sustainability to be one of their biggest challenges due to the complexity of many supply chains and their varied economic, social and environmental impact.
So what is supply chain sustainability and why do we need it? It can be defined as the management of environmental, social and economic impacts, and the encouragement of good governance practices throughout the lifecycles of goods and services (UNGC). Through supply chain sustainability, companies protect the long-term viability of their business, enhance their reputation from both customer and employee perspective and in general secure a social license to operate.
Many of these companies are driven by corporate values and cultures to address sustainability issues, providing incentives to create internal buy-in and commitment. From an external perspective, stakeholders (i.e. investors, shareholders, customers and non-profits) increasingly call for supply chain sustainability, indicated by the record number of shareholder resolutions on supply chains.
The benefits of supply chain sustainability are more and more seen from a strategic point of view. Investors are ever more mindful of mounting environmental and social risks and are interested to know how companies are reducing them. In order to do so, many companies have pledged to work closer with their suppliers and to stay on top of labour safety issues and environmental practices, with many requiring reporting from suppliers in the chain. By focussing on social and environmental impact throughout their supply chain, companies can conserve resources, optimize processes, uncover product innovations, save costs, increase productivity and promote corporate values. Many drivers, including governance, management and the need for transparency, are putting on the agenda ideas of sustainability-related risks, sustainability-driven productivity and sustainability-advantaged growth.
Managing business risks – minimising business disruption from environmental, social and economic impacts and protect a company’s reputation and brand
Realizing efficiencies – reduce cost of material inputs, energy, transportation; increase labour productivity; create efficiency across supply chains
Creating sustainable products: meeting evolving customer and business partner requirements; innovate for a changing market
From a business perspective, there are many compelling reasons for taking action to achieve supply chain sustainability. Creating a strong business case helps companies to get further buy-in for their supply chain sustainability objectives. According to the latest research, the business case for supply chain sustainability is growing.
So how do we create the change? Well, firstly, you need a vision; an ambitious, exciting and compelling one. Secondly, innovation is our all business: Engage employees and partners throughout your supply chain to redesign products, processes and business models. For ideas to take flight it is imperative that the ideas make sense in the context of the business environment and create additional value in a sustainable manner. These efforts will help you to identify the highest priority supply chain issues for your company, evaluate opportunities and risks and build the internal support to move forward.
Increasing a company’s awareness and expertise in supply chain sustainability can be achieved through various training courses and capacity building processes. The latter provides opportunity to collaborate with non-business entities, such as NGOs or charities, which can provide not only expertise and resources that you need to succeed, but they can also strengthen the credibility of your strategy and company profile.