Today’s sustainability landscape is a glass half full, half empty situation, according to a recent Stanford report around global supply chains’ contributions to sustainability. Though organizations have implemented various strategies to reach their sustainability goals in recent years, researchers say current efforts have plateaued as nearly half (48 percent) of organizations do not have practices in place to address sustainability challenges in their supply chain. This should serve as a wake-up call to companies as consumers continue to demand more sustainable products and practices from those they do business with.
The report mirrors EcoVadis’ findings from the 2017 Global Risk and Performance Index: While global supply chains continue to invest in robust sustainability programs, there’s still vast opportunities to improve them and make a bigger impact. The Stanford research, based on a survey of 449 publicly listed companies in the food, textile and wood-product sectors, further demonstrates the continued difficulties many global supply chains face while implementing sustainable practices.
For instance, researchers found that more than 70 percent of sustainable sourcing practices cover only a subset of materials for a given product. Consider an organization with a sustainable palm oil commitment, but palm oil is only one of many ingredients that goes into their products. This is unlikely to cover all a company’s sustainability commitments, and leaves the remainder of a product’s upstream impact unaddressed.
Supply Chains’ Sustainability Issues Don’t Happen in a Vacuum
Multinational organizations play a crucial role in the success of sustainability. These supply chains employ more than one in five workers and touch more than 80 percent of global trade, making collaboration across suppliers and industries critical to long-term success. Researchers say that while companies are much more likely to work with their first-tier suppliers to address sustainability challenges, they typically do not have contact with tier two suppliers and beyond.
The idea that organizations have little visibility into their supply chain operations beyond their immediate supplier network is not new. Last year, EcoVadis found that only 15 percent of organizations have complete visibility into the CSR and sustainability performance of both tier one and two suppliers, and only six percent have full visibility into tier three suppliers and beyond.
Along those lines, the Stanford report suggests almost all sustainable sourcing processes address only a single tier in the supply chain, such as vendors that secure a company’s raw materials. Often, the remaining processes, such as manufacturing and packaging, remain unaddressed. Increasing supplier collaboration can certainly assist organizations looking to improve sustainability efforts. With over 95 percent of environmental impacts stemming from food and retail supply chains, it’s crucial for organizations to take action in their supply chains.
The good news: Nearly half of companies in Stanford’s report use some form of sustainable sourcing, whether through third-party verification or environmental training for suppliers. Though the global supply chain has made huge strides in sustainability in recent years, the time is now to take the next step and assess global operational impact. To effectively drive sustainable change, global supply chains must gain greater visibility into their suppliers and adopt stricter codes of conduct to ensure their sustainability goals are consistently being met.
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