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The Importance of Supply Chain Sustainability: Why Every Business Needs to Prioritize It

Organizations today are under increasing internal and external pressure to become more sustainable. Investors, employees, and consumers now expect brands actively work towards reducing their ecological footprint.

As businesses adopt sustainable approaches in recent decades, the benefits that follow are more evident than ever. So, as you seek to distinguish your brand, take your sustainability efforts to the next level by working toward implementing the same across your supply chain.

According to data, 57% of consumers are committed to reducing their environmental impact so much that they're willing to change their shopping habits. Furthermore, 71% suggest they're willing to pay a 35% premium for traceability. So, as you can see, there's plenty of incentive to invest in a sustainable supply chain.

Read on to learn more about supply chain sustainability, why you should prioritize it, and how to go about it.

Understanding Supply Chain Sustainability

Supply chain sustainability refers to integrating environmental, social, and governance standards while searching for raw materials, their conversion into products, and how they're taken to the market. As such, beyond your company, you must also look into the sustainable practices of your suppliers and clients.

One key way to make your supply chain more sustainable is by using the Triple Bottom Line. This method helps you assess your supply chain's economic, social, and environmental impact. Using it will put you in a better position to improve financial performance and lessen the environmental and social impact by implementing sustainability into the supply chain.

Sustainable supply chains have several advantages. For starters, it reduces waste and optimizes resource consumption, saving money. Secondly, it improves a company's reputation, social responsibility, and connections with customers, suppliers, and stakeholders. Finally, sustainable supply chains reduce risk and boost company resilience.

Challenges to Achieving Supply Chain Sustainability

While it offers notable benefits, achieving supply chain sustainability is challenging for enterprises. You will encounter several challenges due to economic, societal, and environmental variables.

Limited Supplier Visibility and Control

Lack of supplier visibility and control hinders supply chain sustainability. You'll have limited visibility and control over your suppliers in global supply chains, hindering supply chain sustainability. Moreover, suppliers may be in countries with varying legislation and requirements.

Supplier visibility and control challenges you can expect include:

  • Supply chain sustainability challenges
  • Regulation and standard noncompliance risk
  • Little effect on supplier behavior and sustainability initiatives

Despite these challenges, supplier wrongdoing may damage brand reputation. Fortunately, there are steps you can take to mitigate such risks:

  • Conduct regular supplier audits for sustainability problems
  • Establish sustainability-based supplier norms and contracts
  • Consistently engage suppliers to improve sustainability
  • Invest in training and capacity-building suppliers to increase sustainable performance

High Costs of Sustainable Products and Services

Sustainable products are made from eco-friendly materials, which are expensive to manufacture. So, while they reduce waste, sustainable products and services are costly, making supply chain sustainability difficult.

However, remember that this will only be the case in the short term. In the long run, investing in sustainability will save you money as it reduces waste and energy usage, saving you money on materials and utilities. Moreover, sustainable enterprises attract eco-conscious clients, increasing sales.

Lack of Standardization in Sustainability Practices and Metrics

The lack of standardized sustainability measurements and practices makes supply chain sustainability difficult. At a global level, standards vary from nation to nation, and this is the same with different sectors.

As such, some firms' sustainability frameworks may not meet industry standards or customer and stakeholder expectations. Also, the lack of standards makes tracking progress and communicating sustainability gains to stakeholders difficult.

Companies may create shared sustainability policies and indicators with industry associations and stakeholders to address this. Cooperation and conversation amongst supply chain partners improve transparency and sustainable practices. Furthermore, businesses can also use GRI or SASB sustainability frameworks to guide their sustainability activities and report their success.

Short-Term Focus and Pressure for Quick Returns on Investment

The global economy is fast-paced and highly competitive, meaning companies must produce speedy returns on investment. However, a focus on short-term profits might hinder supply chain sustainability.

Sustainable initiatives like using renewable energy or eco-friendly packaging are expensive. These expenses may not be recouped for years, making it hard to justify to stakeholders that value short-term financial rewards.

Sustainability efforts may also influence company operations and disrupt supply chains. Stakeholders that are resistant to change may push firms to prioritize short-term aims above long-term sustainability.

Therefore, you must prioritize sustainability and integrate sustainability goals into the company plan. This will involve illustrating the long-term benefits of sustainability, such as decreased expenses, enhanced efficiency, and brand recognition, which can lead to financial rewards.

Limited Stakeholder Engagement and Collaboration

To achieve supply chain sustainability, all stakeholders, including suppliers, manufacturers, distributors, consumers, and regulators, must collaborate. Any disengagement will hinder sustainability goals. Some of the factors that contribute to this include:

  • Lack of awareness: Some stakeholders may not understand sustainability or how they may help. Lack of participation and teamwork might slow growth.
  • Conflicting objectives: Stakeholders may have diverse goals and priorities, making it hard to fulfill sustainability goals. Suppliers may choose cost savings above sustainability, while customers value convenience over eco-friendliness.
  • Poor communication: Stakeholder collaboration requires good communication. Limited communication can lead to misunderstandings, distrust, and decreased teamwork.
  • Inadequate incentives: Sustainability efforts may require incentives for some stakeholders. Yet, poor incentives reduce involvement and collaboration.

Encouraging stakeholder participation and cooperation can help companies solve these issues. First, however, you'll need to define goals, communicate clearly, and offer incentives to encourage involvement and collaboration.

Complexity of Global Supply Chains and Varying Regulations

Global supply chains and varied rules make sustainability difficult. As a result, businesses must manage a web of suppliers, manufacturers, distributors, and retailers in many nations and areas with differing environmental and social standards. Hence, institutions that do not have the means and skills to manage supply chain sustainability may find this particularly difficult.

Companies also struggle to implement uniform sustainability practices throughout their worldwide supply chains due to differing sustainability legislation and requirements. In addition, this makes it challenging to identify and manage sustainability obstacles due to supply chain transparency and traceability issues.

Limited Resources for Implementing Sustainable Practices

Sustainable practices have long-term advantages, yet many firms lack financial and non-financial resources to undertake them. Common resource issues include:

  • Limited budget: Sustainable supply chain strategies like renewable energy and waste reduction programs demand significant investments. Yet, many firms have limited financial resources for these activities.
  • Inadequate expertise: Sustainable methods may involve expertise in renewable energy, green logistics, or sustainable packaging. Nonetheless, many firms may need to train or hire experts.
  • Limited time: Researching, planning, and implementing sustainable methods takes time. Due to competing goals or short-term performance expectations, many firms have limited time.
  • Insufficient technology: Sustainable practices may require new technologies like automated supply chain monitoring or digital collaborative platforms. Unfortunately, many firms may not have such technology or funding.

As a business, you must prioritize and prepare to overcome these constraints to embrace sustainable supply chain processes.

Lack of Awareness and Education on Sustainable Practices

Lack of sustainability awareness and education is another supply chain sustainability concern. As a result, sustainability in the supply chain is undervalued by many, reducing the support and investment in sustainable activities.

Also, if supply chain workers lack sustainability training, it’ll hinder implementation. Therefore, organizations should educate staff and stakeholders on supply chain sustainability. You can achieve this through workshops, training, and instructional materials.

Resistance to Change and Perceived Risk in Adopting New Practices

For many organizations, supply chain sustainability involves a lot of change with regard to technology and processes. However, many firms are unwilling to adopt new sustainable practices due to worries about cost, disruption, and efficacy.

To overcome this issue, organizations must promote sustainability and demonstrate its benefits. They should also include all stakeholders and offer them training and tools to make the transition as easy as possible.

More importantly, start small by introducing sustainable practices in one supply chain area and scale up as stakeholders get more comfortable.

Best Practices for Achieving Supply Chain Sustainability

While it comes with challenges, achieving and maintaining sustainability across your supply chain is possible. Here are some of the best practices you should adopt:

Incorporate a Sustainability Strategy into the Company Strategy

For you to achieve your sustainability goals, they must be embedded in the overall company strategy. This entails setting goals, setting benchmarks, and aligning sustainability activities with the company's vision and values.

A sustainability plan should address the full value chain from raw material extraction through end-of-life product disposal. This can help firms find areas where they can make the most significant impact and collaborate with suppliers and other stakeholders.

Furthermore, incorporating sustainability into the company plan may help with stakeholder buy-in and make sustainability a vital component of the firm.

Promote Sustainability and Educate Staff

Supply chain sustainability requires company-wide education and supporting culture. Ensure each worker knows the company's sustainability goals and how they can contribute.

Developing a sustainability culture involves:

  • Integrating sustainability knowledge into staff onboarding and ongoing training
  • Encouraging and enabling workers to contribute to the company's sustainability efforts
  • Rewarding staff who accomplish sustainability goals
  • Forming a sustainability committee or task force to coordinate efforts and engage employees
  • Informing employees on the company's sustainability progress and goals and asking for their input and suggestions

As you incorporate sustainability in different aspects of your operations, you'll create a culture that supports your goals. As a result, employees will embrace and support sustainability initiatives.

Assess the Supply Chain to Identify Areas for Improving Sustainability

Before you can enhance supply chain sustainability, you'll need to have a baseline of where the entire supply chain and individual contributors are. So, begin by assessing your supply chain’s environmental, social, and economic impacts.

When performing the assessment, focus on the following:

  • Raw material procurement
  • Logistics and transport
  • Energy-efficient manufacturing
  • Packaging/waste management
  • Labor and human rights
  • Adherence to rules

After identifying areas for development, create a plan and track progress. Part of this involves setting sustainability objectives, deploying new technologies or processes, and collaborating with suppliers to increase sustainability.

Collaborate with Suppliers and Other Stakeholders to Develop and Implement Sustainable Practices

As mentioned, supply chain sustainability is impossible to achieve without the cooperation of all stakeholders. So, to achieve your goals without issues, you should:

  • Identify key suppliers and work with them to incorporate sustainable practices into operations
  • Create a code of conduct: Businesses should establish a supplier sustainability code of conduct with compliance monitoring and reporting.
  • Organize Supplier training and assistance may help suppliers understand sustainability and how to apply it
  • Collaborate with industrial associations and NGOs to help develop sustainable supply chain strategies
  • Promote supplier innovation by encouraging suppliers to create innovative sustainable practices, technology, and products

Monitor and Measure Performance Using Sustainability Metrics and Reporting

Monitoring and assessing performance is essential to ensure sustainable practices are implemented properly and identify areas for improvement. Sustainability indicators help you track your sustainability goals. Some of the things you may want to track include carbon emissions, water utilization, trash reduction, and supplier sustainability performance.

After tracking the key metrics, report to stakeholders to show them your efforts and progress. Moreover, reporting increase openness, trust, and success.

Use Technology to Track and Manage Sustainability Data

Without the right technology and data analytics to track and manage sustainability data, you’ll be setting yourself up for failure. There are software solutions that can monitor energy, water, and greenhouse gas emissions across the supply chain.

They allow you to trace the origin and sustainability of their products and resources to achieve supply chain transparency. Another technology you can leverage for such initiatives is blockchain, as it can provide an irreversible database of transactions, allowing you to trace products and verify they are sustainably produced.

Implement Circular Economy Principles

A circular economy eliminates waste and promotes resource reuse. Supply chain sustainability requires it to maximize resource usage and decrease waste. Consider adopting circular economy principles such as:

  • Developing goods that reduce waste, reuse, and recycle
  • Creating recycled-material-focused closed-loop supply networks
  • Promoting goods rental rather than ownership
  • Using recyclable, sustainable packaging materials and designs.
  • Encouraging product repair and refurbishment to extend the lifespan

Incorporate Sustainability into Product Design and Packaging

Product design and packaging can support your sustainable supply chain goals. Take the step to make eco-friendly, waste-reducing products by:

  • Designing for Durability: Durable products reduce waste and replacements.
  • Using recyclable materials: Product design and packaging should employ recyclable materials as these products have a lesser environmental effect.
  • Minimizing packaging waste: Sustainable packaging and smaller packaging sizes reduce packaging waste.
  • Implementing closed-loop systems: Such systems recycle used products and resources. This reduces waste and resource use.

Optimize Transportation and Logistics to Reduce Emissions and Energy Use

Transportation is a key element of every supply chain, which emits greenhouse gases. Therefore, without optimizing transportation and logistics to reduce carbon emissions, you'll remain a long way off maximum sustainability across your supply chain.

Some of the steps you can take to address this issue include the following:

  • Employing eco-friendly transportation: Low-emission or electric cars and alternative fuels may greatly cut greenhouse gas emissions.
  • Combining shipments: Reducing vehicle traffic cuts emissions and expenses.
  • Optimizing routing: Reducing distance, empty backhauls, and idling time may drastically cut fuel usage and emissions.
  • Leveraging technology: Transportation management systems (TMS) and route optimization tools help organizations optimize transportation and logistics operations, cutting emissions and costs.

Work with Regulatory Bodies and Industry Associations to Advocate for Policies that Promote Sustainability

In an ideal world, every company will actively work towards achieving maximum sustainability. However, that's not the case. As such, for supply chain sustainability to become a reality for most businesses, there need to be regulations that govern it and consequences for not following rules.

For this to happen, you'll need to engage with regulatory bodies and industry associations to encourage the development of appropriate regulations and penalties. Doing so can also help lobby for tax incentives to encourage companies to invest in sustainability.

Continuously Review and Improve Sustainability Practices and Performance

Supply chain sustainability requires ongoing work. Once you achieve initial targets, you must continually evaluate and improve your sustainability processes and performance. Set goals, measure performance, analyze data, and find areas for improvement.

The Business Case for Supply Chain Sustainability and How Veritas is Doing It

Sustainability is becoming a commercial strategy, not just a moral responsibility. Achieving and maintaining it improves supply chain efficiency, cost, risk, and reputation.

According to the MIT Sloan School of Management, sustainable supply networks beat their rivals financially. So, it goes beyond doing good and will give you an edge over competitors. As you become more sustainable, you’ll exceed client expectations and improve your position in the market.

This is why Veritas focuses on sustainability in its business approach. We promote sustainable business practices across our supply chain with numerous initiatives, including:

  • Science Based Targets (SBTs): Veritas aims to achieve its interim SBTs by 2025
  • Sustainable packaging: We use sustainable packaging to decrease waste and environmental effects. The company's packaging evaluation tool examines its packaging materials' sustainability and suggests improvements.
  • Supplier engagement: Veritas collaborates with suppliers to enhance sustainability throughout the supply chain. Its Supplier Code of Conduct covers human rights, labor standards, and environmental management.
  • Circular economy: Veritas operates using circular economy principles. Our product end-of-life management approach reduces waste and maximizes material value.

Through these efforts, Veritas is an excellent example of how sustainability can be integrated into business processes to benefit stakeholders and the organization. Veritas has reduced costs and risks and enhanced reputation by addressing sustainability.

In conclusion, supply chain sustainability is essential to modern business strategy, and sustainable enterprises may reap several benefits.


Frequently Asked Questions

Adopting a sustainable approach comes with benefits like cost reduction, efficiency, better reputation, enhanced brand image, and increased compliance.

There are numerous ways of embracing sustainability, including using renewable energy, reducing waste and emissions, optimizing transportation and logistics, sustainably sourcing resources, and engaging with suppliers and other stakeholders to promote sustainability.

Reporting is a key part of achieving and maintaining sustainability. You can achieve this by leveraging the GRI, SASB, and Task Force on Climate-related Financial Disclosures (TCFD) indicators and reporting systems.

Businesses may create a sustainability strategy, work with suppliers and stakeholders, utilize technology to analyze and manage sustainability data, and constantly improve sustainability practices and performance.

Companies with third-party certifications like Fair Trade or organic can sell sustainable products to consumers. Recycling and buying items with minimum packaging also minimize waste. Consumers can also have a direct contribution by supporting sustainable policies.

While it’s challenging, small enterprises can use supply chain assessments, sustainable objectives, and stakeholder collaboration to get started with sustainability. They can also leverage industry groups and government bodies for support.