Supply Chain sustainability should be top of mind with peace of mind.
By Joanne Sonenshine
Is a company that takes a bold stance on an issue impacting human health, the environment or a social cause only doing so for reputation building, or is business conscious a real thing? Can’t profitability be motivated by social change?
There are many companies operating successfully without contemplating how their investments impact the planet, the communities in which they source or the populations they serve. Yet there remain pretty significant challenges that companies cannot avoid even if they wanted to. Stories still plague food companies about slave labor in seafood supply chains, and clothing companies still grapple with how to improve the lives of apparel workers confined to sweatshops. Transportation companies deal with volatile gas prices and emissions, and big manufacturing is still evaluating ways to be pollution free.
Given these big, meaty issues, many companies have tapped well-intentioned leaders and staffs to improve the efficacy of investments to better our planet and the people that inhabit it, while also addressing these big-picture challenges. These companies have adjusted their approaches, not just because it’s the right thing to do, but also because customers are asking for better, healthier and safely produced products. Many companies have also learned that sustainability makes good business sense. The most reputable companies are already evaluating sustainable sourcing and are dedicating resources with supply chain partners to address social and environmental challenges. What have they learned and how have they been successful?
Sustainability addresses risks. Managing a company’s investments in procurement and sourcing across business units, service providers and time zones is already complex without the added pressure of managing sustainability challenges. Yet realities like shifts in our climate, growing populations, increased dependency on oil and political conflict mean it‘s impossible to avoid issues like volatile energy costs, weather disturbances, higher costs of production and a dynamic regulatory environment. Ameliorating any risk in your supply chain stemming from an environmental or social challenge will pay dividends and allow for competitive advantage when the sky is falling.
Being sustainable is proactive. While some governments attempt to address challenges that improve sustainability, incentive structures, technical training and other assistance is not always enough to affect real change where issues like poverty, lack of access to water, crumbling roads or mobile access prevent employees, factory workers, truck drivers or other stakeholders from doing their jobs. This will ultimately translate into lower productivity and lower profit. Imbedding sustainability investments in business decisions means companies can take a proactive approach to addressing sustainability challenges, rather than wait for governments to implement regulations or policies that are more cumbersome (and costly) to follow. While supply chain sustainability can get a bad rap given the need for audits, third party certifications, data gathering and reporting, by ignoring the benefit of proactivity when it comes to sustainability, the costs of operating without a set of sustainability goals are simply too great.
By identifying partnerships within supply chain, sustainability addresses gaps. Operating in silos is no longer feasible, especially when addressing critical social and environmental issues of our time. Companies must engage their supply chain partners (in sourcing, procurement, financing, inventory management, logistics, etc.) to grasp which interventions are underway and where there is still need for investment or program activity around sustainability. Leading food companies, for example, are facing their challenges head-on by reshaping sourcing strategies to create investment programs for farmers, community leaders, women‘s groups and youth – both to empower these sections of societies, but also to identify solutions from within the supply chain that are innovative and socially relevant. By partnering with farmer groups, exporters, suppliers and those connected at the community level, companies can identify risks easier and tie investments to where products and services are sourced. Addressing challenges as widespread as poverty, lack of electricity or need for improved sanitation will take companies being more targeted with their interventions. This saves resources in the long term and translates to a higher bottom line.
It is only a matter of time before sustainability becomes as much a part of business decision making as current priorities around finances, inventory, legal frameworks and delivery mechanisms. As this space evolves, finding a way to collaborate within your supply chain, address risks before they overcome your operability and getting ahead of cumbersome regulations will ensure sustainability breeds success.
Joanne Sonenshine is a development economist and founder and CEO of Connective Impact, a partnership strategy and collaboration advisory firm helping companies partner for greater social, environmental and economic impact. Sonenshine is also the author of ChangeSeekers: Finding Your Path to Impact, a story on perseverance and determination while overcoming fear, uncertainty and risk aversion to seek fulfillment in one‘s life. She can be reached at email@example.com.