The Importance of Sustainable Supply Chains

Chief sustainability officers and environmental managers are looking to their supply chains more and more to preserve natural resources and minimise carbon emissions.

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Big Business Embraces Sustainability

Major corporations like Apple have been pushing for stricter environmental standards as well as renewable energy usage through their supply chains, while Nike has created a brand new apparel company that puts sustainability and transparency at the heart of its business.

Risk Management

Having to meet climate-related rules, the availability and cost of materials plus human resources all constitute supply chain risks. Improving sustainability by working directly with suppliers can help to lessen risks, including reputational risks.

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Public Awareness

Because today investors, consumers and shareholders increasingly rate accountability and transparency, sustainable supply chain failings can hurt a corporation’s credibility. Veli Ivanova, EY’s US partner, told Environmental Leader that in business and society there is growing awareness of the sustainability opportunities and risks associated with supply chains.

Contributing factors to public knowledge of sustainability include work health and safety accidents, environmental incidents, product recalls, labour disputes and recent legislation, including the UK Modern Slavery Act. Consequently, companies are recognising that they have to invest in sustainability and make responsible and resilient supply chains.

Suppliers of contract management software include

The Harvard Business Review discusses sustainable supply chains further here:

Creating Sustainable Supply Chains

The UN Global Compact and EY have produced a report, ‘The State of Sustainable Supply Chains’, which looks into how companies are putting sustainability into the heart of their supply chains. The authors placed participants into five groups – basic, improving, established, mature and leading – when categorising the ways that companies form sustainable supply chains.

Most of the firms interviewed were in the first two categories, according to the report.

The Business Advantages

Leading companies are realising several benefits from making sustainability a priority in their supply chains. While financial, operational, reputational and regulatory risks continue to exist, there is growth in creating responsible and resilient supply chains. These preserve resources, enhance reputations, cut costs and create shared benefits with stakeholders, according to Ivanova. ‘Mature’ firms acknowledge that products with sustainability features can lead to increased sales, benefits in new markets and better long-term customer relationships.

Sustainable supply chains offer advantages over the competition such as innovation, improved efficiency and market differentiation.

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