There is ever-growing pressure on organisations from across the globe from not only customers but also from investors and shareholders, to build sustainability into their supply chains. Businesses are therefore increasingly faced with the challenge of integrating sustainable solutions into their own organisations, and at the same time meeting new demands from the wider supply network.
In this new article for International Workplace, Anthony Day, a specialist in environmental and sustainability issues for businesses, explains how organisations must effectively manage their own supply chains to ensure that they maintain their competitive position and satisfy the demands of all their stakeholders, and he cites core examples of how specific companies have faced up to this sustainability challenge.
More and more organisations are recognising the importance of sustainability than ever before, and it’s now a firm fixture in many businesses’ strategic plans. Whilst many still believe it’s all about reputation, marketing or sales, there’s actually a whole host of additional benefits sustainable practices can bring – from increased productivity, reduced costs, and investment opportunities, through to competitor advantage and employee retention and recruitment.
Achieving sustainability on a wider scale however, requires the involvement and backing of the entire supply chain, and essentially, even if an organisation has the best green policies and sustainable procedures in places, they’re only as good as their worst supplier. As a result, there’s been greater pressure from investors, shareholders, and customers alike who are calling for more transparent operations, and urging companies to ensure their suppliers are behaving in an ethically and socially responsible way.
Naturally for some organisations, measuring the sustainable performance of their suppliers is not an easy task. The globalisation of supplier markets, and the rise of organisations based in the UK sourcing from the Far East, means the amount of information and inevitable data gaps makes monitoring extremely difficult and complicated. Measuring supplier performance though is vital. It really is something that organisations need to ‘make their business’ though and they really can’t stick their head in the sand when it comes to how their suppliers operate.
One of the biggest barriers to encouraging sustainable practices throughout the supply chain is the idea of short-termism. For the larger organisations that rely on global suppliers, promoting and encouraging sustainable operations can often be seen by some suppliers as detrimental, particularly for those who are only focused on short-term profits. This is all very well, but being environmentally-conscious isn’t just about the top-line benefits. It’s actually paramount in resource efficiency and the future success of the organisation, and managing suppliers and conveying this message across the wider team is critical.
There are ways to introduce sustainable business practices across the supply chain, and rather than just requesting suppliers to adhere to certain standards as some organisations do, ensuring specific and detailed guidelines are met is a vital step in maintaining a consistent approach by all parties involved. Some organisations, for example, are asking suppliers to adhere to these guidelines as part of their contract, whilst others have produced a ‘suppliers code of conduct’ to communicate their expectations. Some leading manufacturers have even used incentives, training and progress monitoring to improve their suppliers’ performance.
We’re all aware of the brands that have based their strategy on being sustainable and been successful from it, such as Lush. Lush has gone from strength-to-strength since its launch 20 years ago because of its commitment to environmental values. Its creative buying approach in its supply chain helps maintain these values, with the organisation only sourcing the safest and most suitable product in accordance with their ethics. Pal oil for instance which is typically used in cosmetics has been completely eliminated from its supply chain because of its impact on biodiversity and ecosystems.
Although this undoubtedly requires time and money, with more than 800 stores across the world and reported sales of £454m last year, it goes to show sustainability can go hand-in-hand with success. But what about organisations that are actively trying to make a difference? Unilever is an outstanding example of an organisation that is leading the way in sustainable supply chains, so much so it has been voted the best supply chain in Europe by Gartner. Unilever recognises itself as a leader in sustainability and has previously acknowledged that if no other organisations follow its best practice, it has failed in its mission to make sustainability commonplace.
The organisation launched its Sustainable Living Plan in 2010, which is dedicated to halving the environmental footprint of its products and ensuring it sources 100% of its agricultural raw materials sustainability. It is not just dedicated to encouraging sustainability across its supply chain, but to obtain the support of external organisations and encourage them to implement it too. Through this pledge, the organisation has already improved the lives of over 150,000 workers in India, Mexico and Colombia, and helped educate, engaged, and support suppliers in not only ensuring ethical best practice for their own suppliers, but turning sustainable production from niche to the norm for all.
There have been pressures from external groups too, with organisations being urged to do more to achieve total sustainability in their supply chains. The Carbon Disclosure Project (CDP.net), represents global investors with some £95trn assets under management, and calls thousands of companies across the world to account for their actions to minimise climate risk. For instance, Dell and Pepsi are using the group’s global data sharing system to mitigate risk in their own supply chains.
Achieving total sustainability across the supply chain may seem like an impossible task, but organisations such as Unilever – that has thousands of suppliers – prove it can be done. The key is collaboration across the entire supply chain from internal stakeholders, and suppliers right through to the end consumer. By working together, organisations can find ways to be environmentally-conscious in a way that not only improves their bottom line, but delivers a wider range of rewards including community benefits, enhanced reputation and greater employee satisfaction.