In a 2022 Fortune CEO survey, 58% of Fortune 500 companies set goals to combat the climate crisis and achieve net-zero greenhouse gas emissions by 2050. However, companies were divided (47% each) when asked if their sustainability plans address scope three emissions of suppliers and users. So while many companies are heading toward achieving their commitments to implement sustainable solutions, they are also grappling with how to tackle complex supply chains.  

Even after setting science-based targets and implementing sustainability initiatives, having sustainable supply chains will play a significant role in achieving a net-zero future, but also future-proofing your business. That is why I encourage corporate leaders starting out on their sustainability journey to lean into their supplier relationships. 

When your supply chain is established and reliable, it can be difficult, if not impossible, to change to a different supplier for the sake of sustainability. This is where a flexible approach and focus on the symbiosis of your relationship come into play. Your supplier benefits from you as much as you benefit from them — this also applies to sustainability.  

If we are to meet our net-zero goals, global supply chains have to better manage sustainability, new technology, inventory levels, resiliency, and improve forecasting to proactively plan for disruptions and uncertainty. Working with your suppliers to address your ESG priorities and execution plans communicates to them the steps they need to take to keep a relationship with you. Procurement processes and requirements are just the beginning. You’re not the only customer they have, and as more companies become increasingly transparent about their supply chain, your suppliers are going to need to improve their own practices. 

Laying Your Foundation 

Structure and governance are the building blocks of a strong supply chain foundation. 

Developing a comprehensive structure means that sustainability must be embedded within your operations — especially your supply chain function. Doing so allows companies to work more concertedly on meeting goals and identifying sustainability challenges early, giving them a bird’s eye view on the internalities and externalities of the business. This guidance allows their teams to adapt quickly and work together, whether on a supply chain issue that impacts sustainability, or a sustainability issue that impacts supply chain. 

Robust governance is essential to responding to the consequences organizations face when they commit to sustainability. In order to make sure that decisions are made in the best interests of the company as a whole, senior management should serve on several cross-functional governance councils that are overseen by a board or CEO, and review and approve sustainability matters that cut across the organization, including supply chain. While you may have cross-functionality embedded in your leadership, that may not be the case for your suppliers. Helping them understand the importance of this, particularly when related to sustainability, increases the value you have to them. 

Giving your suppliers insight into your governance requirements is a transparent and manageable way of pressuring them to change their practices while also encouraging them to learn about the procurement sourcing habits global companies prioritize. This initial step in communication shows that you not only value their partnership, but that you want them to grow as well. 

Weathering the Storm Together 

We see key partners forced to deal with component constraints, demand increases, labor shortages and transportation challenges. A McKinsey report found that supply chain disruption outweighed COVID-19 as the greatest threat to business growth in October of last year.  

An Ernst & Young report found that in 2023, 60% of supply chain executives say since the pandemic, the strategic important of their supply chain has increased due to the ongoing threat the issue has caused.  

Small businesses are feeling it too — more than half of small business owners say their business has experienced operational issues sourcing materials due to supply chain disruptions in the past few years, according to Verizon Business’ 3rd Annual State of Small Business Survey. 

As businesses are being forced to rethink their supplier strategy, it is critical to keep sustainability as a high priority. These moments create opportunities to rethink sustainability frameworks while building resilient supply chains. The two do not need to be mutually exclusive — in fact, it’s critical they work in tandem. 

Flexibility is key to the conversation around sustainability. We might be looking to achieve goals for 2035 and beyond, but none of us has the perfect solution just yet. What we do have is the ability to remain flexible and open to helping suppliers improve their responsibility and sustainability performance. There’s an opportunity to use sustainability as a factor to make quicker decisions and narrow focus on suppliers that align best. Plus, there’s an opportunity to look at suppliers and see how their operations can help us achieve our climate goals in ways we haven’t thought of before. 

Getting Ready for the Next Wave 

A previous study found that only 6% of companies admit to having full visibility into their supply chains. Without visibility, your ability to proactively and reactively respond to major shifts will lag, and your stakeholders will feel left in the dark. Putting the pieces together to create a sustainable supply chain that protects against climate change while also solving major disruptions is not easy, but is essential. 

Knowing this, companies need to develop a symbiotic relationship with suppliers to include proper contingency planning. Renewable energy, energy storage, diversified manufacturing facilities, and properly trained staff are but a few options to ensure that you are able to pivot. 

We won’t know what the next disruption will be, but with a strong foundation and ability to remain flexible, we’ll be able to keep attention focused on our sustainability goals and build a resilient and diverse supply chain. 

James Gowen is senior vice president, global supply chain operations and chief sustainability officer for Verizon.