More companies are pledging net zero commitments, but a pledge alone is not enough; it must be backed by action that involves educating, motivating, and supporting their suppliers to build a sustainable supply chain. Carbon emissions from supply chains account for 60 percent of global emissions; supply chains can play a decisive role in driving change to benefit society and the planet. Beyond going green, a sustainable supply chain decreases costs and improves productivity; companies need to step up their game to make this happen.
Nike is an example of how to take disruptive steps to build a sustainable supply chain, reduce costs and increase profits.
Every industry can increase manufacturing efficiency and deliver sustainable products with sustainable techniques and resources.
The goal of sustainable supply chain management
A supply chain involves different stakeholders from sourcing raw materials, manufacturing and production, storage, transportation, and delivery of finished goods. A sustainable supply chain minimizes environmental harm from energy usage, water consumption, and waste management and protects people and communities from impending climate change.
Why is building a sustainable supply chain urgent?
Companies have been under constant pressure from governments to commit to net zero. And now, consumers, shareholders, employees, and other stakeholders are also tied to that commitment.
Whether buying electric cars or deodorant, a medical device or nappies, water heaters or rechargeable batteries, customers are increasingly judging the value of goods and services from a sustainability perspective.
If a partner company in the supply chain makes a mistake, the consumers will hold the manufacturer accountable. It may be a costly error that dents its image and reliability, eroding consumer trust, so companies must be doubly sure that nothing in their workflow and operations creates such a possibility. Compounding this responsibility for companies is the procurement aspect that makes it challenging for them to get natural resources critical to their business operations due to climatic conditions like floods, water stress, fires, pestilence, heat stress, ocean acidification, and drought.
Current scenario of sustainability in the supply chain
According to new research from the UNGC — Accenture CEO Study, 49 percent of CEOs are struggling with supply chain interruptions and are worried about access to natural resources crucial to their business operations due to extreme climate events.
Are companies taking steps to solve the problem?
A handful of companies are working to integrate sustainability with supply chain management with innovative and workable models, and suppliers are welcoming it. But there is a long way to go. However, many companies are still stuck in the traditional operations model, slowing down the industry-wide momentum for change.
Let’s see some figures:
- Fifty-four percent of CEOs say their companies haven’t started scenario analyses to build climate resilience — or are doing so at a basic level.
- Fifty-two percent of CEOs say their early warning systems for climate risk events are rudimentary or non-existent.
Building a sustainable supply chain is a significant challenge for C-Suite executives. Unless done immediately and effectively, it will jeopardize the work put in over the years. Building net zero value chains are crucial not just for the customer and the environment but also for businesses to be future-ready.
Supplier inclusion in sustainability programs
A crucial element of sustainability models is to go beyond launching programs and offering tools and technology to suppliers. Companies must educate, motivate, and support suppliers through the process of change, an easy task in today’s age of the internet and online resources. It will help companies leverage and transform their target groups.
Leaders like Accenture, McKinsey & Company, Siemens, Microsoft, and others are relentlessly educating people and raising awareness about the impact of climate change and why their suppliers need to shift to sustainability.
For example, Accenture has created plenty of thoughtful and relevant content in the form of research and survey reports, blogs, case studies, news, and other media to educate, motivate, and build strong relationships with its suppliers and other stakeholders.
Unilever has created a climate transition action plan with a net zero target by 2039, including their upstream emissions. It launched two programs, namely, Unilever Climate Promise and Unilever Climate Programme, asking suppliers to commit to cutting their GHG emissions. The company has around 55,000 partners in its ecosystem, making it hard to engage all simultaneously. So, it segmented and prioritized suppliers based on emission levels and offered support and help should they need it. The messages and information are communicated transparently through blogs, news, and other media.
According to Shara Holliday, Senior Director of Procurement Compliance, Microsoft, they invested in understanding their suppliers’ position in the sustainability journey. It helped them develop targeted education resources and webinars to support their suppliers through emission disclosures and reduction planning. Microsoft published the information on the resources section of its webpage, and there is plenty of other information in the form of blogs on the website.
Whenever possible, Microsoft makes the resources and learnings freely available to all. Its white paper on carbon removal requests is another valuable public resource.
These examples, unfortunately, are few and far between. More companies must accelerate sustainability processes for supply chain management and make their efforts visible through educational and motivating content.
Companies must start listening to their suppliers to understand where they are and launch awareness, support, and partnership campaigns to educate, motivate, and lead them on the road to sustainability. Companies can use storytelling to create more impact as people remember engaging narratives more than cold facts and figures.
Company campaigns must reach the target suppliers with relevant content through newsletters, blogs, case studies, white papers, and emails.
The industry leaders such as Accenture, Unilever, Microsoft, and others have already shown the way. It is now simply a matter of using the road map to chart their successful journeys to sustainability.