A recent episode of the Institute for Supply Management’s Supply Chain Unfiltered podcast discussed how businesses can align short- and long-term supply chain goals through sustainable practices. We explored the evolving role of legislation, the power of data-driven decision-making, and why supply chain sustainability is an investment rather than a net cost.

Businesses striving to build more responsible supply chains face constant pressures of balancing cost efficiency, responding to regional disruption and changing customer expectations. This year is no different — except that some of these challenges are more acute than ever. As operating landscapes become increasingly turbulent, companies in every region are reviewing their strategies for navigating uncertainty and sudden change. 

Following are three key insights from the podcast discussion that highlight the challenges businesses face right now, the opportunities supply chain sustainability presents, and how companies can take action to build resilience and flexibility in the face of constant change. 

Supply chain sustainability is a business advantage, not a cost burden. One of the biggest misconceptions is that sustainability programs add cost without commercial benefit. This is a stubbornly persistent attitude among some sourcing professionals, even as local and national laws permit product seizures where extreme exploitation is suspected deep in the supply chain. 

Sustainability, however, rests on a much broader spectrums of complex supply chain management. It shouldn’t be seen as a peripheral issue, but as a core aspect of business operations.

In reality, the integration of sustainable practices into procurement — such as multi-tier visibility and environmental, social and governance (ESG) risk assessment — delivers measurable financial and operational advantages. A total economic impact study by Forrester found that implementing sustainability-focused supply chain actions could reduce labor costs for supply chain sustainability management by 70%. Companies could also benefit from reduced audit expenses and avoid profit loss through improved risk management, with a return on initial investment in just seven months.

Beyond cost savings, sustainability strengthens long-term resilience. Companies that embed sustainability into their operations are able to manage social and environmental risks more effectively, and adapt faster to market or regional changes. The most immediate range from local strike action, extreme weather events and disruption to logistics routes. Meanwhile, failure to address sustainability challenges carries financial consequences — the World Economic Forum recently highlighted that climate-related disruptions could reduce corporate earnings by 7% annually by 2035.

Sustainability is also becoming a key factor in consumer purchasing decisions. Customers, investors and stakeholders increasingly expect businesses to maintain ethical and responsible supply chains. Consumers are shifting their spend toward products that promote sustainability and expect brands to comply. Companies that proactively integrate sustainable practices and demonstrate measurable progress on ESG issues not only strengthen brand reputation and improve stakeholder trust, but also protect themselves against greenwashing accusations.

Legislation is reshaping supply chain management. Regulations are changing the way that businesses approach supply chain sustainability, with increasing requirements for transparency and corporate accountability. The E.U.’s Deforestation Regulation and Forced Labour Regulation, and the Uyghur Forced Labor Prevention Act (UFLPA) in the U.S., set clear demands for businesses to actively root out and address exploitation and environmental damage. In response, many companies are joining platforms to gather supplier data, assess risks and manage compliance. 

Companies have no choice but to comply with current and future requirements. In the U.S., withhold release orders (WROs) are requiring greater responsibility for supplier oversight. Yet these regulations aren’t just about enforcement — they also provide structured pathways to improve supply chain sustainability.

Meeting these legal requirements isn’t easy. Importers and exporters across regions must navigate varying frameworks. While there’s some degree of harmonization between economies and reporting frameworks, differences among nations and stakeholders create complexity. 

A holistic approach is essential — one that identifies common tasks, data, and outputs across laws and other sustainability-related requirements. The goal is to define a streamlined program that minimizes duplicated efforts across departments and businesses. 

Centralized data platforms and assessment tools play a crucial role in enabling businesses to capture standardized data across diverse global supply chains. This data can then be used to generate insights to support compliance and broader supply chain goals, including identifying high-risk areas. For example, global self-assessment data suggests that up to 40% of worksites might not provide adequate rest facilities for workers. This means workers could be at risk of extreme weather events, threatening both personal safety and productivity.

Data and technology are essential to managing complexity. With supply chains spanning thousands of suppliers from around the world, businesses face an overwhelming volume of sustainability data. Without the right tools, making sense of this information and turning it into action is nearly impossible.

Technology and data are critical for conducting core tasks such as supply chain mapping, supplier compliance monitoring and remediation. Technology-driven risk assessments help businesses prioritize sustainability risks efficiently, while auditing tools can provide on-the-ground perspectives to triangulate and validate desktop or self-reported information. 

Artificial intelligence is playing a growing role in supply chain sustainability. AI can help to predict risks, identify trends and extract meaningful insights from complex data sets. But even without predictive AI, simply automating data integration and analysis at scale significantly empowers businesses to make smarter, faster decisions that strengthen long-term supply chain resilience.

Jon Hancock is chief executive officer of Sedex.