supply chain sustainability

(Source – Shutterstock)

World Environment Day 2023: Five ways businesses can achieve supply chain sustainability 

Getting your Trinity Audio player ready...

Article by Nathan Hew 

Ensuring sustainability in the business — especially throughout the supply chain — is no easy feat. Organizations continue to struggle with supply chain disruptions due to the COVID-19 pandemic, the Russia-Ukraine war as well as the trade war between the US and China. Despite this, organizations are still striving towards achieving supply chain sustainability.

In recent years, a rising number of multinational corporations, such as BMW, IKEA and Apple have pledged to work only with suppliers that adhere to social and environmental standards. Usually, the goal is to ensure a cascade of sustainable practices that flows smoothly throughout the supply chain. 

Governments and business leaders — including leaders of some of the largest consumer companies — have called for dramatic improvements in sustainability performance. The Paris Agreement aims to reduce global greenhouse gas emissions enough to prevent the planet from warming by more than two degrees Celsius. It was reached by 196 countries at the United Nations climate-change summit in December 2015.

This World Environment Day, the United Nations calls on industries to come up with solutions to plastic pollution. Achieving supply chain sustainability is one way of solving this problem as organizations can have better visibility on their materials. 

To keep global warming below 1.5°C this century, we must halve annual greenhouse gas emissions by 2030. Without action, exposure to air pollution beyond safe guidelines will increase by 50% within the decade and plastic waste flowing into aquatic ecosystems will nearly triple by 2040,” states the United Nations.

Tech enterprises like Dell Technologies and Microsoft are already taking big steps to tackle carbon emissions across their value chains. Dell Technologies announced its ambitious 2030 emissions goals and net-zero GHG emissions targets across its facilities, supply chain and in the energy intensity of its products by 2050. Dell Technologies also aims to use recyclable or reusable materials to build every product by 2030. Meanwhile, Microsoft aspires to be carbon negative by 2030. By 2050, it will remove from the environment all the carbon the company has emitted either directly or by electrical consumption since it was founded in 1975.

Still, one survey by EY found that while many executives had long-term sustainability goals for their supply chains, few have the visibility, technology and comprehensive programs in place to measure progress. Some challenges include upfront costs and a lack of a clear business case to support the expenditures.

The survey consisted of responses from 525 large corporations across Argentina, Brazil, Canada, Mexico and the US about their sustainable supply chain approaches. The various sectors included retail, consumer packaged goods, health providers, life sciences, government, technology, energy, manufacturing, mobility, and food and agriculture.

Supply chain sustainability: How can business get closer to achieving this? 

According to Andy Ng, Vice President and Managing Director for Asia South and Pacific Region at Veritas Technologies, in today’s digital economy, sustainable supply chain management plays a critical role in reducing the environmental impact of e-waste and carbon footprint.

“With greater spending power and the emergence of new technologies, the amount of e-waste — spanning from laptops, mobile phones, TVs to electronic equipment — is set to grow.”

In conjunction with World Environment Day, Ng shares some actionable tips for businesses to promote supply chain sustainability. They include:

  • Incorporating a sustainability plan into your business strategy: This entails setting goals, setting benchmarks and aligning sustainability activities with the company’s vision and values. A sustainability plan should address the full value chain from raw material extraction through end-of-life product disposal. This would help firms to identify areas where they can make the most significant impact in collaboration with suppliers and other stakeholders.
  • Assess the supply chain for areas of improvement: It’s important to establish a baseline by evaluating the environmental, social and economic impacts of the entire supply chain and individual contributors. After identifying areas for development, create a plan and track progress. This includes setting sustainability objectives, deploying new technologies or processes and fostering collaboration with suppliers to promote sustainability.
  • Implement sustainability metrics and reporting to track sustainability goals: With new software solutions and analytics tools available, it’s now easier than ever for businesses to track key sustainability metrics, such as energy, water and greenhouse gas emissions, across the supply chain. This enables comprehensive reporting to ensure sustainable practices are implemented properly and identify areas for improvement.
  • Incorporate sustainability into product design and packaging: Take the step to make eco-friendly, waste-reducing products by designing products for durability to reduce waste and replacements. Using recyclable materials and sustainable packaging, along with the implementation of closed-loop systems, will help in reducing waste and resource use.
  • Incentivize stakeholders to practice sustainability: For example, some companies have been implementing sustainable supply chain finance practices as a means of incentivizing stakeholders to practice sustainability in a manner that minimizes negative impacts. It creates environmental, social and economic benefits for all stakeholders involved in bringing products and services to the market. 

What does the future of supply chain sustainability look like?

The fast-moving, consumer-centric world requires a different sort of supply chain. Traditional supply chains sought to achieve stability and minimize cost. Future supply chains will be more dynamic — they will be agile enough to predict, prepare and respond to rapidly evolving demands and a continually changing product and channel mix.

Capturing those improvements requires rigorous sustainability KPIs and changes from the shop floor to the boardroom, including optimized operating practices, an environmental, social and governance focus in procurement decisions as well as adopting more sustainable technologies. Ng’s suggestions do not stray too far from this. 

Let’s not forget the rat-race development we have when it comes to artificial intelligence (AI). With it, AI-powered algorithms can help companies optimize their supply chain operations and emission intensity by forecasting their demand/supply patterns and identifying potential supply chain disruptions. The possibilities are endless.