Achieving net-zero supply chains is an era-defining challenge for organisations worldwide. Scour the world’s boardrooms, and you’ll struggle to find a CEO who fails to speak passionately about the importance of sustainability and their commitment to it.
Frankly, though, talk is cheap – unlike the reality of actually embedding sustainable practices across the workforce and beyond, all the way to the far reaches of the supply chain.
Few people are better qualified to speak about supply chain sustainability than Sheri Hinish, who is Consulting Global Leader for Sustainability Services, Alliances and Strategy at IBM, but is better known to her 47,000 followers on LinkedIn as ‘The Supply Chain Queen’.
Hinish – who describes her job as “helping people make better decisions to design a better world” – spoke about supply chain sustainability at Procurement & Supply Chain Live, which was held in London in April.
Dubbed the ‘Risk & Resilience Conference’ to reflect the current state of affairs for procurement and supply chains, the event saw Hinish query a live and remote audience which among them “feels sustainability is a personal responsibility” in their life? Every hand in the room went up. Next, she asked if people carried that same responsibility with them into their work lives. Same result.
IBM research shows chasm between ESG talk and action
The study – an annual undertaking – explores the intersection between digital transformation, modernisation and sustainability at a time when there’s a shift towards a values-based economy.
“Our research shows environmental sustainability is absolutely a priority,” Hinish said. “But it also shows there's a gap between ambition and intention, and what actually happens in the decisions we make.”
She revealed that, although 86% of CEOs surveyed said their organisation has a strategy for sustainability, less than half – just 35% – have actually acted on this.
Such statistics pierce the very heart of the supply chain’s sustainability issue: there is enormous will and positive intent, but this is not translating into action. But it must – and soon, says Hinish.
IBM’s study also showed that CEOs view sustainability and regulatory pressures as their greatest challenges, with demand from boardrooms, investors and other stakeholders on this front – including customers – increasing by 20% since 2021’s figure. “CEOs are reporting pressure to be transparent in their business operations and in the communities they operate,” Hinish said.
Having shone a light on CEO mindsets, Hinish went on to ask what, exactly, transparency and sustainability mean?
Transparency and sustainability ‘all about trust’ – Hinish
“A lot of folk think transparency and sustainability are all about due diligence and compliance. No, they’re not; they’re about trust, about fundamentally helping your customers, trading partners, employees and investors to feel like they're making a difference when they choose your brand – when they interact with you at every transactional point, every touchpoint across your global network and supply chain.”
Hinish stated that technology has a huge role to play in helping businesses make progress on sustainability, but she struck a note of warning: “The adoption and scaling of technology can operationalise ESG and sustainability, but what comes after that?”
This was followed by Hinish pointing out that too many businesses think they can “buy a suite of solutions, turn the light on and be transformed". That, she emphasised, is “not the journey we're on”. Instead, she says businesses need to be looking at how they are innovating.
“Innovating is what I help people do,” she said. “Often, it starts with product innovation; with design and deploying upstream thinking. Up to 85% of today’s negative ESG impacts are designed into products and services. It’s about engaging the ecosystem – manufacturing, supply chain, customers. The transformation trailblazers have this figured out.”
But too many organisations have not figured it out because, according to Hinish, “they believe it’s all about acting, when the truth is that it’s really all about thinking”.
Sustainable supply chains ‘requires change of thinking’ – IBM
“For example, what is their thinking around designing for a circular economy? What is their thinking around addressing the ESG-related risks that make our jobs really tough? How are they taking their people with them? Are they giving people what they need to make the right decisions, to design a better world?”
Hinish added: “That's what we're after. It’s all about helping human beings become better versions of themselves. It’s about empowering people so that their personal values and personal responsibility shows up in their work.”
‘Thinking’ may well be more fundamental than ‘acting’ in the quest for supply chain sustainability, but a big problem is that too many organisations appear to be doing neither. Hinish calls these the “stragglers and sideliners”.
Such businesses have made no sustainability investments to date. “Inaction is a decision, right?” Hinish highlighted. “It’s disappointing, but listen, I spend a lot of time with these folks. These are good people, just like you and me. They want to make a difference, only they’re paralysed. They don’t know where to start.”
Sustainability trailblazers ‘are investing smartly’
Businesses in such a state of paralysis are fundamentally unlike those at the other end of the sustainability spectrum, who Hinish dubbed “trailblazers” and “strivers”.
“These organisations outperform in carbon-reduction initiatives and strategy,” she said. “When you use carbon as a leading indicator, it becomes clear these folks are breaking the barriers; the differentiator is how they're using smart investments in technology to modernise and make it real.”
Hinish offered Unilever as an example of a multinational company who are “walking the talk” on sustainability.
“For them, it's a core value – and it shows,” she said. “It has cascaded down through their performance, on a strategic, operational, and tactical level. Using technology, they leverage sustainability as a competitive advantage.”
On that point, Hinish explained that sustainability and profitability must not be viewed as mutually-exclusive goals. “It’s a mindset shift,” she said. “It’s a culture change, a talent transformation change. It’s about seeing sustainability as being good for the planet, good for society, and good for business.”
- Procurement & Supply Chain Live London 2022 will take place at the QEII Centre from 12-13 October. To find out more, click here.