Two recent reports highlight top global supply chain sustainability trends and opportunities
Eliminating supply chain risk is the primary driver for sustainability initiatives and industry collaboration is the biggest opportunity according to a recent report published by Ethical Corporation titled “Sustainable Supply Chain Trends 2015.” The report features insight from 415 CSR and supply chain professionals primarily based in Europe, North America and Asia Pacific.
–Eliminating supply chain risks is the main driver of sustainability initiatives. Over 32 percent of executives polled say they are still incentivised by eliminating supply chain risks.
–Industry collaboration is the biggest opportunity. Just over 24 percent say that industry collaboration is the single most exciting opportunity in relation to supply chain sustainability. The second most exciting is creating a circular economy and third is customer/consumer awareness, at 16 percent and 11 percent respectively.
–Traceability and environmental concerns are the biggest issues to watch out for. Nearly 30 percent stated that traceability and environmental improvements will be key issues in the coming years.
Suppliers in USA, Brazil, China and India least resilient against climate change risks
In January, CDP and Accenture released a report titled “Supply chain sustainability revealed: a country comparison” that revealed that lack of preparation is currently leaving supply chains in Brazil, China, India and the United States more vulnerable to climate risks than those in Europe and Japan.
–Suppliers in France, the UK, Spain and Germany are the most sustainable. They take extensive measures despite comparatively low levels of exposure to climate risk.
–Japan is the only country with suppliers that are well-equipped to respond to high climate risks as they have matched their awareness and actions with the high levels of risk to which they are exposed.
–Suppliers in China, Italy and the United States are vulnerable. However, the majority constituent of the CDP Supplier Climate Performance Leadership Index – suppliers identified as taking the most positive actions to address climate change – are headquartered in America.
–Suppliers in Brazil, Canada and India are identified as inactive. These suppliers are subject to fewer physical, regulatory and consumer-related climate risks and tend to less actively report emission reduction initiatives and mitigate water risks.
–A collaborative approach and profitable emissions reductions initiatives give China and India a competitive edge. Suppliers in China and India offer the best return on investment in terms of emissions reductions and monetary savings.
Suppliers with high sustainability performance are seeing opportunities for risk reduction, operational efficiencies as well as market differentiation.
The study found that the quantity and percentage of suppliers setting emissions targets shows a steady upward trend: nearly half (48%) of suppliers set targets last year, compared to 44% in 2013 and 39% in 2012. There has also been an increase in the number of suppliers achieving emissions reductions since 2012, with the percentage rising from 34% to 40% in 2014.
As suppliers become more advanced at carbon management, the number of companies realizing monetary savings from their actions to reduce emissions mirrors the rising trajectory, jumping from 29% in 2012 to 33% in 2014.
Companies across global supply chains need to recognize the risks posed by climate change and water scarcity, and the opportunities presented by the low-carbon economy. And as firms step up the pressure on their suppliers they need be prepared to collaborate with them on sustainability initiatives.
Developing a strategy to improve performance—both in terms of your own operations and by encouraging suppliers to become more resilient and efficient will aid in maximizing the opportunities a more sustainable supply chain provides.