UN sustainability plan on right track but no quick fix

Written by Nick Murry, Chief Sustainability Officer at global supply chain sustainability site Ecodesk

UN Secretary General Ban Ki Moon’s speech last month promised a sustainability framework for global business. The aim, he said, is to address the pivotal role of business in helping to make the UN’s global vision of sustainable development a reality. So can ‘global business’ rise to the challenge? Interestingly, Accenture found that 1000 CEOs from companies around the world backed the UN roadmap, which aims to drive corporate action on sustainable development once the 2015 deadline for achieving the Millennium Development Goals has passed.

Plenty of commitment to taking action then – good news indeed – and no disagreement that business needs a sustainability framework driven by an independent global organisation, such as the UN. But any framework will need businesses to buy into it with action, not just rhetoric, if it is to have  any real and lasting effect. And for the majority of large organisations, this doesn’t mean reporting yet more data on sustainability initiatives and in-house programmes, but implies actively opening up supply chains and mapping key sustainability performance data. Ideally with even the smallest of suppliers in the remotest of regions. Impossible?

A few weeks ago the annual UN Global Compact Sustainability report supported this idea but revealed that weakness in supply chain sustainability strategies among large companies is resulting in a disparity between what is promised and the results that are actually produced. Although the majority of companies have set expectations of their suppliers - sustainable procurement policies, codes of conduct and the like - compliance is often not tracked and suppliers are not generally given a great deal of help.

The report acknowledged that making sustainability a requirement in the supply chain isn’t ‘an easy or straight forward process’; citing that according to 54 per cent of large companies surveyed ‘extending corporate sustainability strategy through the supply chain’ is the number one factor blocking advancement. Notably, only 26 per cent of SMEs ranked this as the biggest barrier, behind financial factors and lack of relevant knowledge.

This disconnect between large corporations and SMEs is one area in which the UN should focus its energies, working with governments who are trying to introduce mandatory measures and enabling companies to reach out more effectively to even the remotest supplier. It’s a tough ask. But if those 1000 CEOs are serious about the importance of this agenda, it becomes a matter of how, not why, and finding the means of engaging and driving sustainability in the supply chain becomes the challenge.

So where are we in practical terms? According to the UN report, the percentage of companies mandating supplier adherence to sustainability commitments has doubled to over 13 per cent since 2008. However, the effect of this is only just beginning to be felt in terms of tangible results. It’s a slow burn but, despite global recession, things are moving steadily in the right direction.

With greater awareness and an UN-sanctioned framework within which to work, the hope is that there will be more fluidity of data within supply chains. SME suppliers will hopefully elevate transparent sustainability disclosure closer to the top of their agendas, seeing it as essential to customer relations and long term business success, not as just another requirement, and time-consuming survey to complete.

However, sustainable supply chain projects are not quick fixes. They need to be an intrinsic part of an organisation’s sustainability agenda and appropriately funded, if the potentially extensive benefits are to be realised.  Organisations first need to be clear about their objectives and strategy, and then define what’s required in terms of data collection and analysis. Data needs to be converted into relevant information and used to support decision making that will drive business value.

It’s also important not to put the financial onus on suppliers, who are bound to be less inclined to respond to data requests if they have to pay for ‘the privilege’. Better to have a free point of entry for basic information that is readily available and open to scrutiny from existing and potential stakeholders.

So is trade the financial carrot that will ultimately drive sustainability? It’s certainly necessary - economic progress depends upon it - but it isn’t sufficient. For issues like climate change that require a strong and urgent response, the ‘business case’ can only take us so far. Combined with an effective UN framework (at the international level) and strong government regulation (at the national level), however, business could be part of a perfect storm that precedes the emergence of a sustainable economy.

Ultimately, this will only happen if companies start to ‘mandate’ disclosure on key issues and work together with their supply chains in taking the necessary action. Only then will high level commitments to sustainability, and their associated policies and strategies, have the potential to cause a ‘ripple effect’ that will change corporate culture and result in truly sustainable business.

Definition – what is supply chain sustainability?

A growing issue facing businesses on how non-financial factors - energy and material resource consumption, environmental and social impacts - in the supply chain, affect business efficiency, risk and opportunity.  Sustainability in the supply chain is increasingly seen among senior executives as essential to delivering long-term profitability.