Why sustainability has to extend down the supply chain
The demand for sustainability in business is a trend that has become increasingly prominent on an industry-wide level in recent years. No longer is it enough for a company to just talk about sustainability, they now actually have to turn words into actions, and even ensure that it extends throughout their supply chains. But for what purpose? The truth is that there is a wide array of benefits that arrive with a sustainable business model.
Most associate sustainability with protecting the environment, which is of course a key part of it, but sustainability also goes much further than that. Largely, sustainability can be defined as meeting the needs of today without compromising the ability of future generations to meet their own. The triple bottom line - planet, profit and people - explains exactly how far sustainability extends: working to preserve the environment, but also considering how a business will endure in the long term, and how the work affects both employees and the wider society.
Today, 93% of the world’s 250 biggest companies report on sustainability, and since 2016, it is a mandatory requirement for listed UK companies with over 500 employees to report on sustainability. Clearly, as issues of sustainability come further into the public eye, we can expect these requirements to go further, over time.
As more and more organisations embrace the principles of sustainability, it becomes imperative to also recognise that true sustainability cannot just be about your own company’s actions, but it has to extend down your supply chain as well if you want to really make a difference.
The Wider Environment
Companies now look to incorporate as many different ways of preserving the Earth as possible - and creating a sustainable supply chain can play a huge role in making your company greener. This needs to extend beyond the storage, logistics and truck fleets that are typically brought to mind when considering the supply chain, to the IT supply chain - do you know how sustainable your cloud supplier is, for example? And how sustainable their supply chain is?
Of course, the ultimate benefit from sustainability will always be helping the environment, but there can be more tangible, immediate positives as well. There is a business case to be made from sustainability, to the point where the money saved and the good publicity received from it makes genuine business sense to insist on sustainability in your supply chain.
As organisations with a mature approach to sustainability look to buy from a potential supplier and integrate them into their supply chain, they will evaluate that supplier for their sustainability credentials. Previously, this was used as a tie-breaker when it came to evaluating bids businesses otherwise on an equal footing, but it’s now becoming a requirement to bid in the first place. The increased opportunity for attracting new business means that sustainability is becoming a must.
Insisting on sustainability that extends down a business’s supply chain can seem like an expensive task. Oftentimes, implementing sustainable practices in different areas of a business will come with an up-front fee that, of course, will prove somewhat costly in the short term. But sustainability doesn’t look to the short term.
You get what you pay for, and implementing a sustainable system that will streamline business processes and increase efficiency can lower operational costs, and increase revenue. The return on investment that sustainable practices offer are overlooked all too often. Offering wider margins for profit, while helping to keep a business running for the foreseeable future, is the exact goal of any company, and aiding this through sustainability is a brilliant strategy.
The Power of Awareness
News today can travel around the globe in a matter of minutes, and businesses can come under huge scrutiny as a result of this. Thanks to the ‘always online’ nature of society today, if a service provider has poor cyber security and suffers a data breach - or if this happens to a company within an organisation’s supply chain - the entire world will know about it.
This increased visibility can have a powerful impact on business. 71% of Europeans see the importance of living in an ethical and sustainable lifestyle - and are more likely to buy from companies that have a positive effect on the social, environmental and personal worlds around them. And this proportion will only grow higher.
Many companies might try to hide their internal processes, but boasting a sustainable supply chain will resonate with customers and end users. Instead of trying to cover up, showcase innovation. Some of the world’s biggest companies shout about their sustainability and are gaining a huge amount of recognition for it; consider Dell’s ‘Legacy of Good’ initiative, or Siemens’ determination to align itself with the goals of the UN’s 2030 agenda for Sustainable Development. These are both examples of huge companies renowned for their sustainability, encouraging brand loyalty and awareness.
A business can see several significant benefits through developing a sustainable supply chain. Lower maintenance costs, less frequent downtime, and streamlined logistics will only improve the output of a business.
Not only does a sustainable supply chain improve short term efficiency, but it also helps organisations plan for the long term. Implementing a reliable system affords a company a much more accurate scope for the future. Understanding long-term needs allows the chance to better realise new opportunities, helping to grow a company in a more efficient manner.
Furthermore, a forward-looking approach to a sustainable supply chain means a company is much more likely to be keeping ahead of regulation, protecting license to operate. So while competitors may, at some point, be forced to halt operations in order to conform to requirements, your company’s proactive approach to sustainability continues to boost results.
Sustainability is the Future
Right now, sustainability’s role in business is rapidly growing in importance. As regulation tightens in various sectors, more and more governing bodies are cracking down on unsustainable practices. By developing your sustainable supply chain now, your company will have a much better opportunity to get ahead of the curve when it comes to sustainable operations, and will be able to reap the benefits earlier than competitors - offering a much stronger chance of success in the long term. Sustainability is no longer merely optional; the future of business is heavily dependent on it.
By Carmen Ene, CEO, 3 Step IT
People Moves: Kuehne+Nagel, Asuccini, Algo
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