Sustainable supply chains climbing the corporate agenda
Customers are demanding more sustainable supply chains. This is the key finding from an international survey conducted by DNV GL and the research institute GFK Eurisko on more than 2,160 professionals from businesses in different sectors in Europe, The Americas and Asia.
According to the survey, when choosing a supplier or making buying decisions, 96% of the companies consider sustainability aspects, with low environmental impact as the most important aspect at 56%. Health and safety of workers (51%) and economic aspects (43%) follow. Ethics comes next at 29%.
The survey also found that 42% of firms already adopt formal supply chain strategies contemplating sustainability; this percentage rises to 57% for bigger corporations and 81% for leaders.
Pressure from Customers
80% of companies experienced pressure from their customers to demonstrate the sustainability of their supply chains. Of all the stakeholder groups, customers are the most interested in sustainability. They are driving this more than the authorities (33%) and other external stakeholders, such as local communities (7%), NGOs (4%) and unions (2%).
Key initiatives
Even though most companies feel they are just getting started, they are making concrete efforts to make their supply chain more sustainable.
Supplier audits are the most common initiative. 41% of companies claim to have undertaken one in the last three years (rates reach 57% for leaders). The proactive adoption and communication of an ad hoc strategy proved to be quite widespread among leaders (60%) and bigger corporations (1 in 3). Among small companies only 15% companies did this and 36% didn’t undertake any activity at all. Among the sectors, with 47% of companies having conducted audits and 36% adopting and communicating specific sustainability policies, food and beverage stands out as one of the most active industries.
However, two-thirds of companies limit their activities to tier 1 suppliers without any real control of other activities upstream in the supply chain.
Main obstacles and main benefits
Companies are hindered from progressing on sustainable sourcing for two reasons: economic shortages and the lack of a clear and harmonized frame of reference. Conflicting demands from customers (22%), lack of consensus on what to do (21%) and resistance from companies in the supply chain (20%) are barriers.
Despite these difficulties, benefits outweigh costs for 40% of the companies. Ability to meet customer needs (54%) is the top reason. Leaders are those benefiting the most in terms of improving their market performance: increased market share (45%), competitive advantage (52%) and enhancing brand reputation (59%) are key explanations.
Future outlook
Companies expect supply chain sustainability to become more critical for market success, both when it comes to meeting customer needs (+2%) and most of all to gain a competitive edge (+ 19%), improve market share (+17%) and enhance their brand reputation (+7%). 66% of the companies surveyed expect to improve the sustainability of their supply chains in three years’ time.
