What is Supply Chain Sustainability?

Supply chain sustainability integrates environmental, social, and economic factors throughout a product's lifecycle, from raw material sourcing to end-of-life management. The goal is to reduce negative impacts while enhancing positive contributions across your supply chain. Key elements of a sustainable supply chain include:

• Reduced Environmental Impact: Lower energy and resource consumption, minimized emissions, and responsible waste management.
• Ethical Labour Practices: Ensuring fair wages, safe working conditions, and adherence to human rights principles.
• Responsible Sourcing: Procuring materials from sources that uphold environmental protection and social justice.

Implementing a robust supply chain sustainability program offers numerous benefits, such as:

• Enhanced Brand Reputation: Companies prioritizing sustainability often enjoy greater customer loyalty and improved scores on platforms like Ecovadis.
• Reduced Operational Costs: Efficient resource utilization and lower energy consumption can cut costs.
• Risk Mitigation: Proactive sustainability measures help manage risks related to environmental regulations and resource scarcity.

Devising an Optimal Supply Chain Sustainability Strategy

A successful sustainability program requires a well-defined strategy. Here’s how to craft one:

1. Internal Alignment

Align your sustainability initiatives with your company's overall sustainability goals and business objectives. Ensure your strategy supports your broader corporate vision and mission.

2. Supplier Code of Conduct

Create a Supplier Code of Conduct that outlines expectations for environmental and social responsibility. This code should reflect industry best practices and regulatory requirements, including those set by GRI (Global Reporting Initiative) and BRSR (Business Responsibility and Sustainability Reporting).

3. Stakeholder Requirements

Incorporate the demands of customers, regulators, and other stakeholders into your strategy. Research industry benchmarks and voluntary standards relevant to your sector, such as the GRESB (Global ESG Benchmark for Real Assets) and SASB (Sustainability Accounting Standards Board) guidelines.

4. Selecting the Right Suppliers

Choosing the right suppliers is critical for a sustainable supply chain. Follow this two-pronged approach:

• Critical Suppliers: Focus initially on your critical suppliers—those whose operations significantly impact your environmental footprint. Evaluate their sustainability practices and prioritize partnerships with those already committed to sustainability.
• Non-Critical Suppliers: Expand your focus to non-critical suppliers once you have engaged with critical ones. Use a tiered approach based on risk and impact to gradually integrate sustainability practices across your entire supply base.

5. Developing Supplier Knowledge

To ensure suppliers meet your sustainability standards, invest in their development:

• Training Sessions: Offer training on your sustainability expectations, best practices, and compliance requirements.
• Resources and Support: Provide access to tools and information to help suppliers enhance their sustainability performance.

Empowering suppliers through education and resources fosters a collaborative approach to sustainability.

6. Utilizing a Platform for Program Execution and Data Assessment

Efficiently managing a supply chain sustainability program requires robust tools and data management solutions. Consider platforms like Oren Sustainability Hub (OSH) for the following benefits:

• Industry-Specific Modules: OSH offers tailored modules for various industries, ensuring relevant assessment of material topics and sustainability parameters.
• Scalability: Start small with a subset of suppliers and scale the program as needed. OSH’s flexibility accommodates both comprehensive and scaled-down options.
• Dedicated Supplier Support: OSH provides support to suppliers, helping them navigate the assessment process and ensure accurate data entry.
• Streamlined Data Collection: Suppliers enter data into the platform, which automatically calculates their performance metrics, minimizing errors and simplifying the process.

7. Engaging with Suppliers on Improvement

After receiving assessment responses, analyze the data to pinpoint areas for improvement. Engage suppliers in open discussions to address their strengths and weaknesses. Collaborate on action plans to bridge gaps and enhance performance. Consider having top-performing suppliers share their expertise through training sessions for others.

Offer continuous support and resources, such as policies on Human Rights and Business Ethics, to guide suppliers in adapting to sustainability standards. This collaborative approach helps build a resilient and responsible supply chain.

Conclusion

Creating a world-class supply chain sustainability program involves aligning internal goals with external expectations, selecting and supporting the right suppliers, and leveraging advanced platforms for effective program management. By following these steps and continuously improving your approach, you can reduce your environmental footprint, enhance brand reputation, and build a sustainable and resilient supply chain.

For more insights on supply chain sustainability and related topics, explore our resources on ESG reporting standards, sustainability software, and best practices in environmental management.