Although sustainability has become a core element of corporate social responsibility (CSR) programs, a lot of work still remains to be done for many organizations. One of the key challenges is that sustainability can quickly become a broad and overwhelming topic. To remedy this and help drive results, it’s important to start with a focus on four key areas: greenhouse gas emissions, energy, waste and water. To varying degrees, every organization uses (or generates) these inputs (or outputs), and having an initial focus in these areas can lead to significant positive and measurable outcomes — thereby building a strong foundation on which to build your sustainability program.
Sustainability has often been seen as being in conflict with profits, but due to increasing pressure from key stakeholders, sustainability is steadily making its way to the top of the corporate agenda. And this increased collective focus is urgently needed — the World Economic Forum’s (WEF’s) latest Net-Zero Challenge report makes it clear that organizations must step up their sustainability efforts in order to move towards a zero-carbon world. A recent report from Aflac noted that 77% of consumers (and 73% of investors) are more willing to purchase goods and services from a company with a CSR commitment, and according to Boston Consulting Group (BCG), 70% of consumers say they are willing to pay a 5% price premium for products produced by more sustainable means. But where do the biggest impacts lie?
According to CDP, an international nonprofit that promotes environmental transparency, supply chains’ impact on emissions is more than five times that of companies’ direct operations. Organizations seeking to become more environmentally responsible should examine ways to inject sustainability across their supply chains. In fact, the WEF noted in its report that “supply-chain decarbonization will be a ‘game changer’ for the impact of corporate climate action.”
While organizations can become a part of the solution to the wide-ranging environmental issues facing the planet by focusing on the supply chain, how can they take meaningful steps to embed sustainable practices across their networks? And how can technology help in building more sustainable supply chains?
It all breaks down to the four key focus areas: greenhouse gas emissions, energy, waste and water. By using technology to launch practical initiatives across each area, organizations can make a marked impact on creating a cleaner, more sustainable world.
Greenhouse Gas Emissions
The reduction of carbon dioxide (CO2) emissions is often the centerpiece of organizations’ sustainability programs. And considering that CO2 emissions are one of the primary measurements used to quantify the impact of global warming, this is one of the most logical areas for organizations to start taking action.
CO2 is emitted as a byproduct of a wide variety of industrial processes, including the production of ammonia for cleaning supplies and cement for construction. Transportation and shipping also contribute heavily to organizations’ CO2 emissions, especially if the company operates vehicle fleets for the shipment of goods. According to recent research from GlobalData, the average return rate for online purchases is 20-30%, and retail returns services provider Optoro estimates that the reverse logistics supply chain requires up to 20% more space and labor capacity than forward logistics. Next-day delivery is also a big contributor, since many of those shipments are last-minute and often require separate deliveries for just one item.
Organizations can aim to reduce their CO2 emissions by using advanced transportation technologies like route optimization, mode optimization, load balancing and asset utilization. By recommending the most efficient routes and the most economical use of capacity, these technologies make organizations’ shipping operations more sustainable, and help in reducing obsolescence and avoiding last-minute rushed shipments. And since you can’t manage what you can’t measure, organizations are increasingly leaning on technologies such as advanced analytics to constantly monitor their CO2 emissions.
Closely related to emissions, energy efficiency is another area where organizations can make big strides towards more sustainable operations. Tapping renewable energy sources across the supply chain, such as solar power, can help further reduce CO2 emissions while lowering organizations’ energy costs.
Organizations should also examine their physical assets, such as an automotive manufacturer ensuring that its factories’ assembly machines are as energy efficient as possible — which can be done through maintenance technologies that monitor and report on physical assets’ energy consumption. Material efficiency also plays a major role in manufacturers’ energy output, and these organizations should look to design products that don’t require unnecessary mining or plastic production. In addition to supporting sustainability by producing less waste on the backend, these are best practices that any manufacturer should follow.
Speaking of waste, it is a massive contributor to environmental damage: 63 million tons of food waste is sent to landfill in the United States annually, and the cost of growing, processing, transporting and disposing of that food is approximately $218 billion — equivalent to the annual GDP of Greece. In addition, BCG reports that the metals sector alone expels an estimated 300 million tons of toxic waste in rivers and streams each year.
There are many ways technology can help reduce waste — for example, innovation is skyrocketing in the areas of sustainable design and packaging. Notable food packaging initiatives include switching to fully compostable materials, and offering recyclable products that can also withstand heat and hold liquids. And new approaches to packaging are continually emerging, such as USDA researchers developing an edible, biodegradable packaging film composed of the milk protein casein, which can be wrapped around food to prevent spoilage.
Beyond sustainable packaging, there are several other avenues organizations are taking to make a meaningful impact on reducing waste, including farmers using autonomous scouting technology for more sustainable pesticide management, and restaurants leveraging point-of-sale technology to help distribute excess food to charities.
The World Health Organization predicts that by 2025, half of the world’s population will be living in water-stressed areas. With water scarcity impacting so many people across the globe — combined with the massive amount of water required by processes such as the production of beef (2,400 gallons to produce just 1 pound of meat) — businesses should build water conservation goals into their CSR programs.
To address this issue, organizations should explore water alternatives such as retailers using carbon dioxide to dye clothing, or manufacturers decontaminating industrial water through a closed-loop operation. There is also a wealth of opportunity for the agricultural sector to support water conservation efforts, including using purified wastewater for irrigation, and examining water-conserving alternatives to common crops like wheat. And wherever possible, organizations of all types and sizes should recycle and reuse water consumed in operations.
The Role of Advanced Technologies
Advanced technologies play a key role in helping organizations make tangible gains in their sustainability efforts. Analytics can help retailers understand why certain products were returned; blockchain can deliver transparency for the movement of goods across supply chains; IoT can help organizations make more sustainable decisions through near real-time data; and A.I. can help minimize environmental impacts by enabling more informed and precise decision making.
Committing to corporate sustainability is a challenge for any organization, so it’s imperative that companies focus their efforts on the areas of highest impact. By starting with initiatives to address these four key areas, organizations can make major strides in not just their own corporate sustainability efforts, but also the systemic environmental issues our planet faces.
Rich Kroes is vice president of global sustainability at Oracle.
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