(Image by Freepik)
Every year, the topic of sustainability in the supply chains becomes more visible: Earth Day, World Economic Forum conferences, and, of course, at the beginning of every year when pledges for the next 30 years are being made. And the intention is real, while the struggles are as real as they can get.
There are a few notable difficulties that make sustainable supply chains hard to be implemented in practice:
1. Standardization of sustainability requirements and of the measuring methodologies of the progress on the path to net-zero.
“One of the major trends is really about increased transparency means increased accountability. If you are reporting and your peers are reporting, it allows you to benchmark how you’re doing against each other. And what a great way to create a ‘Race to the Top’ to incentivize competition to improve sustainability performance.“ – Sonal Pandya Dalal, FSA Director – Enterprise Climate, Target
“The impact that you have by modeling sustainability, social impact, social value, building resilient communities, changing behavior, and all of those things aren’t being measured at scale. And I think if we did that, we’d be painting a different story in terms of ROI for sustainability.” – Sheri R. Hinish, Global Lead, Sustainability Services, Alliances and Strategy, IBM
2. High cost of sustainable practices. Many of the efforts can be better focused to ensure cost and profitability are also looked into, and there are clear examples on the market that prove sustainability is also a business case.
“Sustainability is not just nice to have. It’s a must to have because it’s just the way good business is done. Sustainability means so many things to so many people. But at its core and the way we think about it is building solutions that make sense for that triple bottom line: for people, for the planet, but also for a business’s profit. And I think for so long, and this is that so many businesses have been trying to start to do good work and to really focus on sustainability, they’ve been very focused on the people and planet side, but perhaps not as focused on the profit side and the economics of it, and how much money can be saved and made by adopting sustainable solutions. ” – Stephanie Benedetto, CEO & Co-Founder, Queen of Raw
3. Cascading down the sustainability standards to the low-tier suppliers that do not always consider them a priority. Some of the MNCs use the same suppliers and this opens up the opportunity for collaboration. Fighting alone against problematic labor or environmental practices of global suppliers would be not only very expensive but also unfair to be shouldered by one organization, while, in most sectors, the major corporations use many of the same suppliers.
“What we need to do is go beyond our own supply chain and go to our suppliers. I think the supply chain plays a huge role, but no company can do it alone. We are in an era where companies are taking action and working together to tackle some of these big issues. You can’t do sustainability without innovation, and in the future, you can’t do innovation without making things sustainable. So they have to work together. The sustainability world has many stakeholders, I think the employees are some of the most important stakeholders. You start with your employees and then go outside, and then go beyond that, but engage all your employees. And I think you’ll find it’s not hard to do because everybody feels they have a role to play in this space.” – Ann Tracy, Chief Sustainability Officer, Colgate-Palmolive
Collaborative initiatives have many benefits. As per a detailed analysis by Verónica H. Villena and Dennis A. Gioia, in an HBR article from 2020, collaborative initiatives “can increase efficiencies for suppliers, who can use a standardized self-assessment or audit to satisfy many customers and thus avoid duplication. These initiatives can also draw in more suppliers because suppliers that have many customers with the same sustainability requirements tend to be more willing to participate. And collaboration can make sustainability initiatives more feasible because industrywide training is subsidized by members.”
We are exploring other important responses around sustainability with various guests, in a 20-episodes series of OneQuestion short podcast. Do you have any burning questions we could clarify, around sustainability?