How companies can better leverage data-led solutions to drive sustainability across the supply chain
In today’s global economy, sustainability has transitioned from an optional to essential component of business strategy. The evidence for this is widespread, from new legislation on corporate sustainability requiring close attention to the fact that 90 percent of Russell 1000 firms produce annual ESG reports with ambitious social and environmental goals.
Despite many ESG-related demands and public commitments, translating these aims into real-world practices is often a challenging, long-term project. Attention is deepening on companies’ operational practices, extending even to day-to-day sourcing activities.
The impact of media
As the media continues to report on brand and investor greenwashing, a recent study revealed a stark disconnect in the supply chain sector; 40 percent of North American senior supply chain managers do not yet prioritize sustainability in their decision-making processes. Yet research shows that businesses could achieve up to 372 percent return on investment in supply chain sustainability activities, but skepticism about the benefits of integrating sustainability remains within procurement departments.
Apprehension continues even as new corporate responsibility laws take effect, which 37 percent of US and Canadian procurement leaders admit they aren’t aware of. This highlights a significant gap in legislative developments and compliance readiness.
Several other factors reflect broader market uncertainty. In the investment world, debates rage over the value of ESG funds, with some investors moving away from the category and analysis showing either underperformance or out-performance, depending on the source. Consumer behavior is also at play, with unsustainable, ultra-fast fashion brands seeing soaring profits despite professed consumer demands for sustainable products.
In the meantime, the last few years have shown how complex and fragile global supply chains can be. The pressure is mounting on procurement departments to deliver more resilient and sustainable supply chains. Fortunately, certain key tasks and supporting tools can serve both objectives.
Aligning sustainability-related demands
Owning and embedding sustainability demands a holistic approach, not just focusing on procurement departments. This involves harmonizing goals across all departments and leveraging technology for pan-ESG risk assessment, resource prioritization, and enhanced transparency. As scrutiny over supply chain practices increases, procurement’s role is expanding to align strategic decisions with corporate sustainability goals, supported by robust data analytics and comprehensive supplier insights.
Regardless of changing markets and legislative requirements, certain key practices are vital for sustainable success and enhancing resilience. These include comprehensive supply chain risk assessments, supplier mapping at all levels and tiers, and the integrated analysis of multiple datasets on suppliers and supply regions.
Although these are known as traditional sustainability tasks, they are also essential for business continuity and help to empower procurement leaders to anticipate and proactively respond to disruptions.
Leveraging data-led technology for actionable insights
Intelligent, data-led tools are essential aids, enabling sourcing professionals to prioritize ESG areas and allocate resources (aligned with company goals), identify high-risk areas, and gather in-depth data to draw an increasingly detailed picture of a complex global supply chain.
Platforms offering detailed risk assessments, supplier data-capture tools, and data analytics are instrumental in these efforts by offering insights and benchmarks that inform better decision making.
One of the foundational practices for improving sustainability in supply chains is comprehensive assessment. Regular risk analysis, supplier information, and in-person audits (such as social and ethical audits) provide transparency, validate data, and help to drive sustainability standards.
These tools enable businesses to understand and improve both working conditions and environmental performance across the supply chain. By building this detailed visibility and capturing progress made, companies can not only enhance sustainability credentials but also mitigate risks to improve overall supply chain resilience.
But the buck doesn’t stop at procurement. Business leaders must support sourcing departments to balance immediate operational demands with long-term sustainability goals. This balance necessitates enhanced visibility alongside meticulous risk management and strategic planning, all of which can be supported by robust data-driven solutions. Procurement departments can lead the way by demonstrating the ripple-effect benefits from data-powered insights on a complex supply network and how this empowers more effective decision-making.
Supply chain visibility
The more you know about your supply chain, the better you can prepare for, respond to, and navigate supply chain shocks and sustainability-related demands.
Certain aspects of sustainability, such as reducing Scope 3 emissions and enhancing energy efficiency, remain a business priority for CEOs. For example, McKinsey names ‘energy transition’ as a top three priority for CEOs in 2024, and the World Economic Forum notes that leaders are clearer than ever on sustainability’s business case.
Achieving complete sustainability across an entire supply chain in the next five years may be unattainable, and the journey towards this is continuous and ever evolving. It requires complete commitment from an entire organization to embed a more sustainable approach.
This is supported by leveraging tools and insights to manage the complexities of modern supply chains, assess progress towards global standards, and respond proactively to ever-changing economic and environmental landscapes. Businesses that invest in long-term environmental and social sustainability practices ensure long-term success.
Strong relationships with staff, suppliers, and broader communities secure support in times of crisis and drive the changes to unlock the benefits of more efficient, sustainable, and resilient operations.
Embracing sustainability is not just about meeting regulatory requirements or addressing stakeholder expectations; it’s a strategic necessity that drives innovation, improves risk management, and enhances overall business resilience. In the evolving global economy, companies that prioritize sustainability in their supply chains will lead the way, demonstrating that sustainable practices are not only possible but essential for ongoing success and market leadership.
Jon Hancock
Jon Hancock, CEO at Sedex, is a technology sector professional with more than ten years’ experience in executive leadership spanning retail banking, consulting, and IT service. He brings extensive experience in driving high-performing growth strategies for international organizations and is passionate about the power of technology to improve lives.