Executive Briefings

Top 5 Benefits of Sustainable Supply Chains

The key to a sustainable supply chain is trust between customers and suppliers - and this can also create more profitable supplier relationships, according to Suhas Apte and Jagdish Sheth, the authors of The Sustainability Edge: How To Drive Top-Line Growth With Triple-Bottom-Line Thinking.

In an Industry Week column, Apte and Sheth write that many companies struggle to establish sustainable supply chains because they attempt to enforce sustainable supply chains solely through monitoring policies and compliance — a strategy that will fail "time and time again."

Partnering with suppliers to create trust-based relationships, on the other hand, offers five main benefits:

1. Protecting Against Reputational Damage. Stakeholders including investors and customers are increasingly putting pressure on businesses to extend their sustainability policies into their supply chains. This is evidenced by a record number of shareholder resolutions related to supply chain sustainability in recent years, as well as social media pressure on companies to ensure they are viewed as committed to sustainable and responsible business practices. In response to this, we’ve seen Target launch a chemical safety and transparency policy across its operations and Ralph Lauren develop sustainable sourcing guidelines for wood-based fabrics.

2. Reducing Environmental Impact and Costs. Walmart is a good example here. When the retail giant announced its goal to reduce corporate greenhouse gas emissions by 20 million tons per year by 2020, it realized that its supply chain represented about 95 percent of Walmart’s overall carbon footprint. Walmart is working with suppliers to reduce their emissions, which not only reduces environmental impact but saves money, too. A CDP report published last month found Walmart and other major companies’ supply-chain emissions reduction initiatives saved suppliers a combined $12.4bn in 2016.

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In an Industry Week column, Apte and Sheth write that many companies struggle to establish sustainable supply chains because they attempt to enforce sustainable supply chains solely through monitoring policies and compliance — a strategy that will fail "time and time again."

Partnering with suppliers to create trust-based relationships, on the other hand, offers five main benefits:

1. Protecting Against Reputational Damage. Stakeholders including investors and customers are increasingly putting pressure on businesses to extend their sustainability policies into their supply chains. This is evidenced by a record number of shareholder resolutions related to supply chain sustainability in recent years, as well as social media pressure on companies to ensure they are viewed as committed to sustainable and responsible business practices. In response to this, we’ve seen Target launch a chemical safety and transparency policy across its operations and Ralph Lauren develop sustainable sourcing guidelines for wood-based fabrics.

2. Reducing Environmental Impact and Costs. Walmart is a good example here. When the retail giant announced its goal to reduce corporate greenhouse gas emissions by 20 million tons per year by 2020, it realized that its supply chain represented about 95 percent of Walmart’s overall carbon footprint. Walmart is working with suppliers to reduce their emissions, which not only reduces environmental impact but saves money, too. A CDP report published last month found Walmart and other major companies’ supply-chain emissions reduction initiatives saved suppliers a combined $12.4bn in 2016.

Read Full Article