As citizens and governments continue to prioritize environmental concerns like climate change and biodiversity conservation, the importance of supply chain sustainability (SCS) is also growing. And being a champion of sustainability is no longer a nicety—it’s imperative for supply chains across the globe. But supply chain sustainability is a moving target and there’s not a one-size-fits-all solution. Many supply chain leaders are finding it challenging to make strategic and sustainable decisions to augment their supply chain and reduce their carbon footprint.
Today, over 50% of supply chain leaders, including corporate executives, buyers and investors, rate the level of pressure on their business to increase supply chain sustainability as high. In response, supply chain organizations have shifted their goals to focus on SCS in the past three years:
- Prioritizing energy savings and renewable energy increased by 5%
- The need to focus on climate change mitigation rose by 12%
- End-of-life management and supply chain circularity increased by 9%
- The desire for water conservation increased by 7%
- Natural resource and biodiversity conservation increased by 10%
Leaders in the supply chain need to stay up-to-date on the change agents in these areas and make necessary adjustments to create a more sustainable and environmentally friendly supply chain. What are you doing to create a more sustainable supply chain? How does your carbon footprint stack up to others in your industry? In this article, we’re diving into the state of supply chain sustainability and sharing ways you can create a more sustainable supply chain and reduce your carbon emissions.
The Pandemic and its Effects on Supply Chain Sustainability
Even almost three years post-the onset of COVID-19, supply chain organizations are still feeling the effects of supply chain disruptions caused by the pandemic. And while these disturbances rocked supply chains across the world—causing delays, rate increases, trade restrictions, and more—these crises stimulated new opportunities for supply chain sustainability.
According to CSCMP’s 2022 State of Supply Chain Sustainability report, when asked “How has your firm's commitment to supply chain sustainability changed since the start of Covid-19?” 52% of North American supply chain leaders stated that their commitment to sustainability stayed the same while 34% reported that their commitment increased.
Following the pandemic, organizations have made many changes and improvements to create sustainable supply chains. In fact, in 2021, 29% of businesses incorporated environmental, social, and corporate governance (ESG) metrics in their incentive plans. And throughout 2022, we’ve seen organizations continue to improve their supply chain sustainability to strengthen their resilience and mitigate the risk of disruption by:
- Reducing packaging waste (57%)
- Focusing on end-consumer recycling (41%)
- Facilitating a circular economy supply chain model (38%)
- Reducing emissions in the supply chain (36%)
Consumers Demand Sustainability & Climate Change Mitigation
In the wake of the pandemic, 77% of consumers changed brands, stores, and the way they shop. This is in part because 77% of American shoppers are concerned about how the products they purchase impact the environment. And 76% of consumers state they would rather switch preferred brands if it helped lower carbon emissions.
Take Scope 3 emissions, for instance. Scope 3 emissions account for the emissions that are not produced by an organization’s supply chain or their associated assets. Instead, Scope 3 emissions result from consumer actions such as buying, using, and disposing of products from manufacturers and suppliers. And when 70% of a companies’ total emissions come from Scope 3 emissions, it’s understandable that today’s environmentally conscious consumers would prefer to make sustainable purchases.
The proof is in the pudding—today’s customers demand supply chain sustainability. And if you don’t make the necessary changes to adopt a more sustainable supply chain, you’ll fall behind the competition. That’s why Volvo Trucks, North America CEO Peter Voorhoeve, stated that a primary goal of Volvo Trucks is to eliminate its CO2 emissions by 2040.
Likewise, to do their part mitigating climate change, J.B. Hunt Transport Services Inc. released a statement last month announcing its plan to reduce its carbon emission intensity 32% by 2034. Here’s how they plan on doing it:
- Implementing alternative powered equipment into its fleet
- Increasing their usage of biogenic fuels
- Maximizing fuel economy on diesel-powered vehicles
Supply Chain Circularity is Driving Sustainability
Supply chain circularity is the process of making products and obtaining maximum value by using them for as long as possible. Then, at the end of a product’s life, its materials are recycled and regenerated back into the supply chain. This contrasts with a traditional linear supply chain model where a product will get disposed of at the end of its life, leading to a waste of resources.
Gartner finds that “74% of supply chain leaders expect profits to increase between now and 2025 as a result of applying circular economy principles.” The truth is supply chain circularity is a primary driver of supply chain sustainability. And that’s because the benefits of supply chain circularity include minimizing the negative impact on the environment and compacting supply chains. Gartner further claims that “70% of the Supply Chain Top 25 have included circular economy principles as part of innovation and design” to:
- Eradicate waste and toxicity from products
- Create more effective end-of-life resource management
- Ensure raw materials are used for the entirety of their lifecycle
- Allow materials to decompose into the environment
How to Increase Your Supply Chain Sustainability
Becoming sustainable doesn’t happen overnight. In reality, shifting to sustainable means is time-consuming and requires in-depth strategy and execution. Below, we’ve put together a brief list of ways you can begin to increase your sustainability:
- Work with a supply chain consulting firm to conduct supplier audits, supply chain mapping, and a complete end-to-end supply chain assessment
- Explore renewable energy resources to power your facilities and truckloads
- Leverage circular economy principles to return raw materials to the earth safely
- Optimize your network design while keeping reducing emissions at the forefront of your strategy
- Find and partner with suppliers and manufacturers that also prioritize sustainability
- And don’t forget to educate customers on your supply chain sustainability progress and goals!
➡️ See why failing to increase supply chain sustainability is going to be one of the barriers to success in 2023. Check out our blog, The Top 5 Barriers to Successful Supply Chain Management in 2023 [+ Solutions].
Managing the supply chain is tough enough without adding the complexity of ensuring you're reducing carbon emissions. However, today's consumers and even governments demand supply chain sustainability. And it makes sense! Your supply chain has a significant impact on the environment.
So, based on the data presented above, how does your supply chain’s sustainability compare to the rest of the industry?
If you’re struggling to adopt sustainable solutions, it’s time to outsource supply chain management solutions to satisfy consumer demands and create a more sustainable and efficient supply chain. We can help.
Get in touch with us to get an assessment of your supply chain from end-to-end. We’ll provide you with detailed insights on how we can help you become more sustainable.