Will organisations become motivated to improve their supply chain sustainability?
What is supply chain sustainability?
Supply chain sustainability is an organisation’s effort to consider the environmental and human impact of a product’s journey through the supply chain. Whether this is for raw material sourcing, production, storage, delivery or the transportation links between. Businesses have a responsibility to minimise environmental harm.
Organisational responsibility on sustainability
Whilst organisations around the globe have taken steps to lower their carbon emissions by cutting back on waste production and improving labour conditions in their supply chain, many are still unaware of their impact on the environment in full. Most businesses don’t track sustainability metrics, which would be key to showing how to prioritise renewable energy or the percentage of recyclable products and materials.
Research has shown that the supply chain is responsible for the majority of an organisation’s environmental impact. The supply chain often involve energy-intensive production and transportation as goods are made and moved around the world. Therefore, the supply chain is the biggest difference a business can make to their environmental impact for the better.
The complexity of supplier relations, and cross border activities however can make supply chain sustainability challenging. The complexity often hinders visibility into important business operations such as labour conditions.
Organisational motivators for improving sustainability
With so much complexity to ensuring a more sustainable supply chain, it’s important to understand the motivations businesses currently have for improving supply chain sustainability.
In a recent survey by EY, research revealed that 33% of organisations lack a business case for sustainable supply chains and nearly half of respondents said their companies are struggling to measure the return on sustainable supply chain activities. And, when asked what the top motivators for improving sustainability was, 61% said cost savings. A sense of ethical responsibility was the lowest ranked outcome at 21% however, pressure from partners and suppliers was ranked 41% showing the impact businesses can have on one another.
COP27 on supply chain sustainability
In the survey mentioned above, 51% of the organisations surveyed said compliance with regulatory requirements was one of their top motivators for improving supply chain sustainability. Which highlights the impact the COP27 summit could have when it comes to the actions businesses take on sustainability within their supply chain.
This however doesn’t highlight great news, as COP27 was branded a ‘disappointment’ in setting new policy changes to tackle environmental challenges in supply chain sustainability.
Many businesses are taking a wait and see approach, to see what enforcement they will be made to take rather than committing to improving sustainability behaviours, often assuming any improvement will impact the bottom line. While the Paris Agreement of 2015 grew confidence and visibility into the current issues, COP27 was unfortunately deemed to have little impact in the issues caused by the supply chain, unless businesses choose to take action themselves.
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Read more about the full COP27 outcomes, including the loss and damage fund and find out how supply chain automation can help create a more sustainable supply chain, and added business benefits.
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