There is an intrinsic connection between supply chain and sustainability; studies show that up to 60% of carbon emissions globally are pertaining to this. Of that, 50% of the emissions are apportioned in the following industries: Food, FMCG, Fashion, Automotive, Construction, Transport, Oil & Gas, and Supply Chain. Albeit there being attempts to curb this; through government policies and pledges focused on Net Zero Emissions by 2050, there are more imminent steps to be taken today. It is essential to focus on various aspects but one that stands out is the Global Transportation since it is responsible for almost 16% of green house emissions.
Concurrent to globalisation of the market there is also a clear correlation between supply chain and global warming; frequent disruptions seen in the systems account to extreme weather conditions and unexpected climate fluctuations. As per latest UNSG report, 49% of CEOs interviewed alluded to their own experiences of systems disruptions, as well as 30% stated the same as being the top 3 risks for overall business. At this juncture, the only path that remains is to consciously create responsible and resilient supply chain for long term sustainability. To better understand this we must analyse the relevance of technology & digitisation, actions taken by global leaders as well as frameworks that are creating dynamic evolutions.
Technology and digitisation – Enabler for supply chain sustainability.
The lines between growing technical advancements and its interconnectivity with digitisation has compelled corporates to adopt it as one of their main priorities as a key enabler. New Gen Supply Chain has to simultaneously prioritize ESG elements while also maintaining profitability. Supply chain is a high-volume business involving millions of SKUs / transactions involving thousands of suppliers and one can’t do it manually anymore. Increasingly complex algorithms means optimising more parameters; intelligence then is manufactured through data. Block chain and the impact of digital technology becomes the most crucial aspect.
Another emerging trend is use technology to create transparency and traceability in supply chain. Consumers awareness increasing ,not only alters their buying behaviours but also demands transparency from companies. A three step process ensure evolution of supply chain through Tech and digitisation;
1. Verify – The first step is to verify whether the company follows ethical production norms and whether they have not compromised in the sustainability initiatives in their entire value chain.
2. Trace – Once the consumers are able to verify then the next step is the traceability. With this we will have the ability to look at the journey of the entire supply chain. We can trace if any sustainability factors are compromised.
3. Share – The final step is to share the above information with the customers to take informed decisions. Each product will have QR code which will enable the consumers to verify and trace whether the product has fulfilled the ethical and sustainable path in their entire value chain.
The above empowers consumers to not alter their buying patterns that are more mindful but also ensure recall for companies that are actively participating in amelioration of their carbon footprint.
Supply chain sustainability framework available / adopted by the organisation :
The following are some of the frameworks on sustainability in supply chain:
EcoVadis: EcoVadis is operating an online collaborative platform that allows companies to access CSR ratings of suppliers covering 21 indicators and 150 spend categories.
Suppliers Ethical Data Exchange (Sedex): Sedex is one of the world’s leading ethical trade membership organisation, working with businesses to improve labour conditions in global supply chains. They provide an online platform, tools & services to help businesses operate responsibly and sustainably, protect workers and source ethically. The Web-based database catalogues audit information such as working hours, compensation, labour conditions, freedom of association and child labour.
United Nations Global Compact is a non-binding United Nations pact to encourage businesses and firms worldwide to adopt sustainable and socially responsible policies, and to report on their implementation. The UN Global Compact is a principle-based framework for businesses, stating ten principles in the areas of human rights, labour, anti-corruption and environment.
The CDP (formerly the Carbon Disclosure Project) is an international non-profit organisation that runs the global disclosure systems for investors and companies disclose their environmental impact. CDP is considered as the gold standard of environmental reporting with the richest and most comprehensive dataset on corporate action. In 2021, over 14,000 organizations disclosed their environmental information through CDP.
The Global Reporting Initiative (known as GRI) is an international independent standards organization that helps businesses, governments and other organizations understand and communicate their impacts on issues such as climate change, human rights and corruption.
As seen, the frameworks ensures not only supplier’s sustainability assessments but verifies the same for organisations using a globally accepted metric. Such measures are paramount in improving overall performance and provide incentive for organisations to evolve.
The success of enterprises in the modern age balances on its focus of ESG implementations; not only for their own growth but also for sustainability globally. Stakeholders are in a state of constant advancement and learning, seen as a shared responsibility for all involved. Collaboration plays an monumental role in bridging the gap in awareness and implementation. The mindset today is to augment energy transition agendas to ensure consistent growth; more than ever, an organisations success hinges on its ability to change its mindset and behaviours. It becomes crucial for companies to humanise their transformative journeys ethnologically and drive behavioural changes. We are witnessing a new age in supply chain and ESG is the key element at the core of this revolution. Small intentional actions brings substantial changes in ethical behaviour, transparency and accountability.