Supply chain sustainability: What's it all about?
What is supply chain sustainability?
Supply chain sustainability considers the environmental and human impacts of a product’s path through the supply chain. It’s concerned with every step of the journey with the goal of cutting energy, water use and waste.
While the term sustainability goes hand-in-hand with the environment, it’s not just about being green. It also relates to the way companies treat people and societies, and the way they do business as a whole.
Why is supply chain sustainability important?
Investor expectations
Many of today’s investors are ethically-minded. They’re keen to put their money into socially and environmentally sustainable investments, partly because they know the risks of investing in companies with unsustainable practices, and partly because they want to give back to the community that supports them.
Customer demands
Likewise, consumers are increasingly aware of how their purchasing decisions and behaviour impact the planet. They will avoid companies with unethical practices and instead choose to buy from companies that are mindful about their environmental impact. In fact, 87% of consumers are more likely to purchase products labelled as “environmentally friendly” and are even willing to pay more for them.
Attracting top talent
Sustainability plays a key role in attracting and retaining well-qualified teams. Millennials — the largest generation in the workforce — actively want to work for purpose-driven companies. Embedding sustainability practices into your culture and values will help you attract top talent and, most importantly, keep it.
Compliance
Some countries now have laws about supply chain sustainability. Sidestepping these rules or failing to do due diligence on third party suppliers could be costly for businesses.
Climate change
Supply chains can encompass energy-intensive processes. Choosing to partner with sustainable businesses can help lower emissions significantly.
What are some supply chain sustainability examples?
Circular-economy partnerships
Circular-economy partnerships see two brands working together to eliminate waste and circulate products and materials. A good example of this process in action is the Kellogg’s and Seven Bro7hers Brewery partnership in which the two brands came together to create a beer made up of byproducts from Kellogg’s production process.
Optimisation
Supply chain optimisation might mean working with local suppliers or using locally made materials to reduce your carbon footprint. It’s about making changes to the supply chain to ensure it’s as efficient as possible.
Product innovation
Livestock agriculture is an enormous drain on resources, because of the water farmers need to grow feed crops and the large amount of land animals need for grazing. Beyond Meat, a meat replacement product, uses 99% less water and 93% less land than meat-based products to create its offerings.
Environmental, social and governance (ESG) investment
Johnson & Johnson invested US$50 million to support frontline health workers in 2020 and has recently introduced its Race to Health Equity initiative that promotes healthy solutions for communities of colour in the US. The company aims to improve the health of humanity and puts this into action by investing in current issues.
Digital transformation
Digital transformation can help a business reduce inefficient energy-intensive processes and become significantly more agile. Digitised workflows are typically quicker and more accurate than manual processes and deliver better outcomes for suppliers, customers and employees alike.
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