The sustainability slog

The path to sustainable supply chains is proving to be a long, hard slog with numerous obstacles along the way. Firstly, there is a gaping hole between the rhetoric and the reality. According to a global study by UN Global Compact and Accenture in early 2019, 92% of CEOs believe that integrating sustainability is a critical factor for business success, but less than half of them are actually integrating it into their operational processes. Secondly, there is a gap in value potential, since CEOs largely see sustainability as adding value in five years’ time rather than right now. Then there’s the circularity gap: just 9% of the economy is currently circular and the trend is negative rather than positive. And these statistics all date from before the coronavirus pandemic…!

The question is, how will the current worldwide recession affect companies’ progress on their unavoidable sustainability journey? Will a focus on costs perhaps slow them down or will they carry on regardless? Some changes in consumer behaviour during the coronavirus crisis have already supported the shift towards greater sustainability, but will these changes be permanent during a lengthy economic crisis?

According to consultancy firm McKinsey, the end-to-end supply chain is responsible for 90% of the environmental impact. The COVID-19 pandemic has hugely increased the demand for real end-to-end supply chain visibility from not only businesses but also consumers. If the pandemic has made one thing clear, it’s that companies (and even countries) can no longer act alone.

Pool strengths

Change Inc., a community of over a hundred companies including DSM, HAK and Plus Retail, was launched in May of this year. They aim to pool their strengths to support a smart, clean and robust future for the economy. It sounds very worthwhile, but what will it actually do in practice?

At the start of this year I chatted with the managing director of HAK during a breakfast session. He said that his company had measured the entire carbon footprint of a 250g jar of garden peas, and asked whether other food manufacturers had conducted similar exercises to assess their improvement potential. His question remained unanswered.

Circular Transition Indicators

The World Business Council for Sustainable Development launched the Circular Transition Indicators early this year, developed by leading firms such as Philips and DSM. Let’s hope that this will finally be a practical tool which helps companies overcome the obstacles to sustainable supply chains together.

Martijn Lofvers, Chief Trendwatcher Supply Chain Media
martijn.lofvers@supplychainmedia.nl