How Companies Can Transition to Sustainable Supply Chains
The increasing frequency of climate disasters is changing how everyone approaches their daily lives. Consumers are looking for more eco-friendly lifestyles, so brands must go green to maintain their annual growth projections. Companies can make their supply chains more sustainable by taking these positive steps to help the environment and expand their consumer base.
What Are Sustainable Supply Chains?
Sustainable supply chains are collective groups of suppliers striving to protect the three foundational factors of the human-ecological system — the environment, the economy and society. The three are permanently linked, so taking steps to improve the environment through fundamental supply chain management decisions uplifts all three.
How Can Companies Transition to Sustainable Supply Chains?
Established companies can leverage a few strategies to transition to sustainable supply chains without starting from scratch. Use these ideas to chart your course forward into a greener future.
1. Draft Corporate Social Responsibility Policies
Corporate social responsibility (CSR) policies combine consumer and corporate interests through self-regulation standards in each company. More brands enact these policies because 88% of consumers believe companies should improve the environment and society through their extensive professional reach.
CSR policies guide decision-making efforts from the top down. Company leaders should discuss how they’ll define their policies to focus their efforts on achieving ethical, environmental and social goals. Publishing short and long-term CSR goals promises consumers a greener future and shows them how to hold their preferred brands accountable as transitions to sustainable supply chains continue.
2. Create Custom Baseline Performance Expectations
Training for a marathon effectively requires you to know how many miles you can comfortably run. The same need for realistic benchmarks applies to starting a sustainable supply chain. Company leaders must understand their current environmental baseline to set progressive business goals.
Picture yourself setting two goals — in the next 12 months, your company will use entirely green electricity and have zero-carbon emissions in shipping. Installing solar panels is much easier than networking with various shipping suppliers and getting them to switch to green business practices. Companies will achieve eco-friendly goals more efficiently by managing expectations according to individual supplier’s timelines.
3. Discuss Ongoing Efforts With Current Suppliers
Companies can make supply chains more sustainable by evaluating their new CSR policies with their suppliers. Together, both companies can consider their materials and decide how realistic the sustainable goals are for each other.
A company partnering with local health care clinics could discuss how they minimize their planetary impact. One office might use an inventory management system to avoid purchasing single-use supplies they don’t need, ultimately saving money and conserving natural resources. Another might use outdated paper checklists to do the same thing and achieve less eco-friendly results. If the second supplier doesn’t want to switch management methods, the first would better support your company’s green goals.
The same rule goes for suppliers providing ingredient-based goods. A quick discussion could make suppliers seek alternative ingredients to make their products more green and keep the supply chain connections they currently have.
A beauty company’s manufacturing facilities might switch to bentonite clay to remove impurities like oils instead of sodium lauryl sulfate, which poisons aquatic animals when it drains into waterways.
Specific material substitutes depend on each supplier’s possibilities. If the suppliers can’t meet the environmental expectations of the companies they partner with, those companies would benefit from new business arrangements with other suppliers.
4. Optimize Shipping Routes
It’s always possible to reduce the carbon emissions directly influencing the intensity of climate change. Companies must first analyze their shipping routes’ current CO2 output to make positive changes.
Those changes start by making route adjustments wherever possible. Shorter routes minimize how many times your supplier’s trucks need to refuel. Upgraded vehicles would optimize fuel use through new eco-friendly engine technology.
These changes might seem too simple or too much of an investment, but they’re worth the effort when transitioning to a sustainable supply chain. Reducing carbon emissions is a significant way to directly improve the environment, regardless of your shipping network’s size.
5. Educate Shareholders About the Profitability
Companies large enough to have shareholders should inform them about any sustainability initiatives currently happening or in the planning stages, as they may object to the initial investments or potential revenue loss during the transition period. Shareholders who are also board members could influence any positive change with their votes.
It’s essential to ensure stakeholders understand that any growing pains are worth the long-term profitability. Discussing profits may not feel as noble as saving the planet with altruistic intentions, but it’s a necessary part of corporate or professional transitioning. Companies exist to make money, so meet with shareholders to chart the reality of sustainability and profitable growth charts.
Ongoing environmental challenges affect companies by influencing consumers. They live with climate change anxiety disorder (CCAD) as they worry for themselves and their loved ones. It’s a condition influenced by two factors — fear born from experiencing climate disasters or fear of future disasters.
They’ll buy from companies working to improve the planet with their more extended resources than each singular person’s efforts. Research shows companies improving their sustainability exceed competitors in shareholder returns and add value to their brands. When shareholders and board members support green changes to a company’s supply chain, companies can make supply chains more sustainable with ease.
6. Reflect on Previous Data Collections
After sustainable changes are in motion, remember to reflect on previous data collections to measure if your progress stays on track with your long-term goals. An energy audit conducted before installing solar panels on a warehouse facility should show more electricity drawn from local power plants than one performed after the solar panels activate.
Data should also track the progress of any supply partnerships. When a partner pledges to eliminate 10% of their carbon emissions, they should show the data in a predetermined meeting. If they can’t, the eco-friendly progress falls short of expectations, and another supplier would better support your carbon-reduction efforts.
Make Supply Chains More Sustainable
Companies can make supply chains more sustainable with actionable steps and ongoing reflection. A realistic perspective is also necessary. By choosing suppliers who can make green changes or choosing sustainable companies to replace those who can’t, any company’s leadership team can make their brand more eco-friendly.
Written by: Beth Rush, Body + Mind