Get sustainable or bust

All competent CEOs should know that failure to meet the social expectations of their customers will leave their company in the red.

The sustainable supply chain is one of this decade’s biggest business necessities. Today’s consumer is socially conscious. They maintain compost bins, carry their re-usable bags to the shops and are much more aware of how and where the goods they are purchasing come from. Government regulations have been put in place to reflect this demand. Businesses, therefore, have an expectation to ensure every aspect of their supply chain, from where they source their raw materials, to who’s working to produce them, to the trucks they use to move goods, is environmentally sustainable.

According to a study by Sustainable Brands, nearly nine out of 10 consumers will be more loyal to companies that support social or environmental issues. Yet, Accenture reports that only 54% of CEOs have achieved supply chain sustainability.

Demonstrating sustainable supply practices is the new demand, by consumers and regulators, and businesses must embrace it. It’s not just about jumping on the latest craze — for lack of a better term — because businesses are learning the negative effects unsustainable supply chains can have on their operations. Many global brands have experienced first-hand the reputation damage and drop in sales that result from customer backlash after activist groups revealed they were not responsibly producing their products, despite claiming to do so.

Implementing sustainable supply chain practices is not as simple as clicking your fingers. For businesses to become completely sustainable, they need to make a commitment, assess their priorities, implement practices and measure their performance. These goals are achieved by working with suppliers at all stages of the supply chain and production process.

Make a commitment to change

Businesses that have been most successful at implementing supply chain sustainability have made a conscious commitment to embrace new and different practices. For most businesses, achieving sustainability meant making changes to longstanding operations and encouraging suppliers to come along for the ride. While it’s much easier to let unsustainable practices continue than switch to sustainable practices, executives must reaffirm that all areas of the business are dedicated to investing in change and the future.

Assess everything

Once an organisation makes a commitment to change, they must assess their current efforts and determine areas of priority. By developing a comprehensive overview of all areas of the business that may be impacting sustainability, companies can understand where their focuses should lie. It will also allow businesses to identify which suppliers it may need to work more closely with, or which it should part ways with. Ideally, businesses should encourage suppliers to embark on the sustainability journey with them, because it will benefit the bottom lines of all enterprises involved.

Implement the plan

Implementation is one of the most critical parts of achieving a sustainable supply chain. Businesses must work with suppliers to communicate their intentions and needs, and discuss what further steps suppliers should take to achieve sustainability.

Businesses must encourage the adoption of sustainability charters, which suppliers can design to continually remind them of their commitment to sustainability. Achieving certification from independent industry bodies and NGOs will also allow suppliers to demonstrate their sustainable practices. The Programme for the Endorsement of Forest Certification (PEFC) and Forestry Stewardship Council (FSC), for example, are international organisations that promote sustainable forest management practices and provide chain of custody certification, showing suppliers that organisations are adhering to sustainable forestry. Some major retailers require products be certified by industry environmental standards to be stocked on shelves.

Set measurable outcomes

Businesses should develop targets for themselves and for their suppliers, and encourage all parties to reach them. Targets show businesses whether they and their suppliers are successfully meeting their sustainability goals, and can show which areas need to be improved, whether it be where resources are harvested, how they are produced in a factory or how they are transported to retail outlets.

Regular audits of suppliers should be implemented to remind suppliers about their expectations. When suppliers know their continued service depends on demonstrating environmental sustainability, they are likely to produce greater tangible outcomes.

By meeting targets, businesses receive reputational and financial rewards. Being allowed to keep logos of independent regulators on products is seen as trustworthy by consumers. Likewise, when businesses achieve carbon neutrality, they receive carbon offsets from the government, which benefit them financially.

Gain a competitive advantage by being accountable

Shifting the blame to suppliers is no longer an acceptable position for businesses to take. By committing to change, assessing current efforts, implementing strategies and measuring outcomes, businesses will be better positioned to maintain a sustainable supply chain, and gain a competitive advantage in their market.

Image credit: ©stock.adobe.com/au/ gustavofrazao