Each year, Earth Day is observed on April 22nd, turning the global spotlight towards the imperative of sustainability. Amidst this pivotal moment, our Expert Insights Series converges on the topic of sustainability in the supply chain.
Across industries, sustainability has transcended its status as a mere buzzword to become a foundational principle driving business decisions. However, navigating the complexities of sustainable practices in supply chain isn't without its challenges, and misconceptions often abound, hindering progress and understanding.
To help address the challenges and shed some light on the nuanced realities, we've reached out to experts across the world who possess a wealth of knowledge in supply chain sustainability, seeking their guidance to debunk common myths and misconceptions.
Let’s explore their insights and diverse views offering valuable insights to empower businesses in their pursuit of a more sustainable future.
Dr Darian McBain. CEO, Outsourced Chief Sustainability Officer Asia. Visiting Professor in Practice, London School of Economics and Political Science (Grantham Research Institute on Climate Change and the Environment)
“The really common misconception around sustainability in supply chains is that it is everyone else’s problem. So often in any kind of sustainability work in supply chains, the problems and costs are pushed down the chain to the producer. We see this time and again, whether with respect to climate change or human rights or ESG data. I recently wrote about the increase in the cost of a bar of chocolate for The Conversation, which is being blamed on climate change. The brands who sell chocolate are saying that it is due to the rising cost of cocoa, and yet the cocoa farmers are still, by and large, subsistence farmers at best and a long way from a living wage. The increase in the consumer price for a bar of chocolate has hardly benefited them at all.
Sustainability in supply chains needs to be looked at from a shared responsibility perspective. Work needs to be done to ensure a distribution of costs and responsibilities, and recognition that this work takes time and requires building trust. If as a brand, you invest in supply chain sustainability, you need to have the confidence that you can reap the benefits. Similarly, if you are a producer or processor, you need to be confident that the investment that you are making in people and processes will be rewarded some way in the market (whether through prices, longer term contracts or access to finance).”
Marisa Brown. Senior Principal Research Lead, Supply Chain Management, APQC.
“A big misconception about sustainability in supply chain is that having an ESG strategy and marketing materials is sufficient, and employees should know what to do from there. The reality is that although there is widespread acceptance of the importance of ESG in supply chain, there is a significant gap between acknowledging its value and the actual integration of ESG goals and principles into the core operations of businesses.
When setting ESG goals, currently only 37 percent of organizations think about available human resources. It will be hard to achieve ESG goals without the resources needed. Additionally, our research finds that 76 percent of supply chain and operations employees lack a strong understanding of how to execute against the overall ESG strategy. Supply chain leaders need to bridge this gap as they operationalize public commitments and legal or regulatory requirements for ESG.
These insights are drawn from APQC research jointly conducted with the Digital Supply Chain Institute (DSCI) to understand the current state of ESG in supply chain management and identify emerging trends: Sustainability Trends in Supply Chain: DSCI-APQC Report.”
Emmanuel Delplanque. Sustainable Supply Chain & Decarbonation Expert, Be-Cause by DownUnderED.
“Sustainability in supply chains has emerged from the shadows of short-term gains and accusations of greenwashing. The climate crisis has reignited its importance, but many misconceptions persist. These are 5 common myths:
1. Sustainability is Just About Carbon Emissions. A truly sustainable supply chain minimizes a company's negative impact on society and the environment throughout production and distribution. The Triple Bottom Line (TBL) framework expands the traditional focus on profit to encompass social, economic, and environmental factors.
2. Sustainable Practices Cost More. Environmental, Social, and Governance (ESG) factors go beyond financial metrics. They consider a company's environmental performance, social responsibility, and ethical governance. Implementing ESG practices can deliver financial benefits, including reduced costs in areas like energy consumption, waste management, and resource use. Optimizing your supply chain can also lead to efficiency gains.
3. Sustainability is Optional - We Can Focus on Profit Now. This myth stems from a short-term profit mentality. While immediate financial gain might seem appealing, it can be a recipe for disaster.
There are several reasons why prioritizing sustainability is no longer optional, including consumer preferences, regulations, resource scarcity, and investor scrutiny. With consumers increasingly demanding eco-friendly products, companies lagging behind risk market share loss. Regulations are becoming stricter globally, leading to fines and operational disruptions for noncompliance. Resources like water and raw materials are scarce, necessitating sustainable practices to secure access and stabilize prices. Investors increasingly scrutinize ESG factors, making it challenging for companies with poor performance to attract capital.
4. Only Europe Leads in Sustainable Supply Chains. While Europe has been a leader in promoting sustainable practices, other regions are making significant strides. For example, Brazil is a frontrunner in industrial ESG, implementing innovative recycling programs and focusing on cleaner production processes in key industries. China is rapidly developing market for electric vehicles (EVs) and EV infrastructure. This shift towards cleaner transportation will significantly reduce emissions throughout their supply chains. Additionally, many developing nations are actively participating in the global sustainability movement – seeing it as an opportunity to leapfrog traditional practices and create a more sustainable future.
These examples showcase the global commitment to building sustainable supply chains. Collaboration and knowledge sharing across regions are crucial for accelerating progress.
5. Production is More Important Than Supply Chains - We Can Clean Up Our Own Operations. Focusing solely on production efficiency ignores a significant portion of a company's environmental impact. A holistic approach is essential.
Sustainable practices require transparency throughout the supply chain. Businesses need to collaborate with suppliers to implement sustainable production methods and reduce overall environmental impact.
By acknowledging the critical role of sustainable supply chains, companies can achieve significant environmental benefits and build long-term resilience.”
Brendan O'Keeffe. Founder & CEO of Circular Supply Chain (CSC) Advisory.
“Firstly, let's look at what 'sustainable' means in general terms, and as we all know if this condition can't be met, then there are usually unpleasant consequences. As it applies in the supply chain context and particularly in today's supply chain and sustainability practices need to be integrated.
Sustainability is not a separate function of an organization; it's part of its DNA and businesses who have strived for this as a common objective are now reaping its many benefits.
Sustainability practices are not just 'projects'; it's about adapting and changing to the present & future business demands whilst ensuring these practices are maintained and updates also. Employees are your greatest asset in your sustainability successes, as their attitude makes the great difference and supports positive culture change - and make your organization attractive for others to join.
This is not achieved by the efforts of the solo 'Sustainability' professional - otherwise, they would be carrying this overbearing responsibility on their individual shoulders. We know how that would typically work out!”
Sofia Rivas Herrera. Supply Chain Ambassador. President of CSCMP MX Roundtable Guadalajara. Supply Chain Network Design and Optimization Manager at HP.
“A common misconception is the standardization of measuring environmental impact and reporting. Very few have mastered the art of identifying the activities and processes that are the top offenders in terms of negative environmental impact and even fewer have mastered reporting and sharing their performance. The problem is not only around data availability but also around access to key talent and upskilling of the workforce to master measuring and reporting methodology.
The lack of dedicated teams and organizational structure that prioritizes the task of quantifying environmental and social impact is also deterring the industry from achieving its sustainability goals and strategies.
External pressure from regulatory authorities and the need for compliance could accelerate the adoption of best practices and standardization, but for developing countries, this might take longer than we have to prevent further climate crises; therefore, pressure to do better must come from the inside. Supply chain professionals must drive the change we expect to see in the world.”
Dr. Josué Velázquez Martínez. Research Scientist at the MIT Center for Transportation & Logistics. Director of the MIT Sustainable Supply Chain Lab
We recently featured an exclusive Q&A with Dr. Velázquez, in which he provided a response to this specific question. Here’s what he said:
“Companies persist in operating under the assumption that business as usual will somehow lead to achieving sustainable solutions, which is often not the case. This is very contingent on the context of each business and company. Let me give you a few illustrations from the research we have done in the lab to explain myself:
Green Logistics – A common misunderstanding is that in green logistics, minimizing distance (i.e. mileage) automatically translates into a reduction of fuel and CO2 emissions. Our research has revealed that when defining a delivery sequence, prioritizing delivering the heaviest loads first or considering the street elevation by avoiding steep streets may result in an increase in distance traveled while providing significant reductions in fuel and CO2 emissions.
Rental clothing – There is a common misconception that the act of reusing materials or products will automatically result in a decrease in the impact on the environment. We conducted a comprehensive analysis of various business models for clothing rental and quantified the environmental benefits in comparison to the buy-once model, also known as fast-fashion. Our findings confirm that the practice of reusing clothes in general effectively decreases the emissions linked to the extraction and production of materials. However, our research also demonstrates that rental clothing exhibits a greater quantity of increased emissions linked to transportation activities (such as pick-up and delivery), dry-cleaning, packaging, and a larger number of returns when compared to fast fashion. Although renting clothes for special occasions, such as dresses or tuxedos, appears to be the most environmentally conscious choice, the buy-once approach is more environmentally friendly for consumers who need clothes on a regular basis.
Recycling and Logistics – Another misconception is that the utilization of recycled materials is always beneficial for the environment. In an effort to better understand the effects of using recycled materials in packaging, we worked with Dell on a project. We discovered that sometimes these materials are heavier or take up more space, which raises the CO2 emissions associated with transportation.”
Read the full interview with Dr. Velázquez here.
Alexandra Morton. Founder & Managing Director at Circularify | Supply Chain & Operations University Lecturer at Quadriga University of Applied Sciences
“Misconception 1: Sustainability is primarily about the environment. Sustainability in supply chains encompasses environmental, social, and economic factors. This means considering not only the impact of organizations on the environment, but also the impact of company activities on topics like fair labor practices, ethical sourcing, and community development. A truly sustainable supply chain aims to minimize negative impacts across all these areas.
Misconception 2: Sustainability is a one-time project. Sustainability is an ongoing process that requires continuous work and investment (time & resources). As technologies evolve and regulations change, businesses must adapt their practices to remain sustainable. This means regularly monitoring and evaluating the environmental and social impacts of their supply chains and looking for ways to improve.
Misconception 3: Sustainability is expensive. Yes, there may be upfront costs associated with implementing sustainable practices, such as the investments in new technologies or processes. However, these are often offset by long-term savings. Sustainable practices can lead to reduced waste, lower energy consumption, and improved efficiency throughout the supply chain. Additionally, companies that prioritize sustainability can attract customers who are increasingly looking for eco-friendly products and services.
Misconception 4: Being local is always the most sustainable option. While supporting local businesses can have sustainability benefits, it's not always the most environmentally friendly choice. Factors like transportation efficiency and manufacturing processes also play a big role. A product made overseas using sustainable practices might have a lower environmental impact than a locally-made product with less sustainable practices. The key is to look at the bigger picture and assess the sustainability practices across the entire supply chain.”
“The most common misconceptions I hear about sustainability in supply chains are:
1. All solutions are more expensive than what we have so far
2. Sustainable solutions are more complex than traditional ones
3. Sustainability is just a ‘project’ and it won't last, especially not in supply chains (i.e. it is a ‘hype"’ only). I still hear this one and cannot fathom, how.
These could not be further from the truth, thankfully. We have ample solutions that are sustainable, cheaper or on par with traditional supply chain solutions (if executed and evaluated correctly!). The complexity of solutions never comes from sustainability itself, but rather from lack of competencies and trying to cut corners. Sustainability will stay with us as the new way of working in supply chains and I cannot wait to see the new solutions scale and flourish!”
In navigating the intricate landscape of sustainability within supply chains, challenges abound, and misconceptions can obscure the path forward. Yet, amidst diverse perspectives, one resounding truth emerges: sustainability is not just an option but an imperative, and it's a responsibility shared by all.
Stay tuned for more in our Expert Insights Series as we share views and opinions from thought leaders and industry peers on key topics in the ever-evolving supply chain landscape.
