Lots of efforts are being made to get businesses to focus on their supply chains, which have been severely disrupted during the COVID-19 pandemic. However, according to new research from the MIT Center for Transportation and Logistics (CTL), investments in supply chain sustainability (SCS) have hardly slowed, even with the outbreak of the pandemic.
The findings in the State of Supply Chain Sustainability 2021 report are sending companies notice that they are ignoring the sustainability of their supply chains at their own risk. This is particularly the case for organizations with low or medium commitment to SCS, such as the organizations classified as “low-effort” and “dreamy” in the new SCS company rating that appears in the report for the first time.
The research also highlights the increasing pressure companies are under to allocate resources to SCS. This pressure came from various stakeholders last year and indicates that sustainability in supply chains is a business trend, not a fad.
CTL publishes the 2021 State of Supply Chain Sustainability Report in collaboration with the Council of Supply Chain Management Professionals (CSCMP), a leading professional membership association. This year’s report is sponsored by BlueYonder, CH Robinson, KPMG, Intel and Sam’s Club.
Sustainability efforts not disappointed by COVID-19
“We believe that cross-sectoral collaboration is vital to understanding the complexity and evolution of sustainability efforts more broadly,” says David Correll, Research Scientist at CTL. “Our work with CSCMP and our sponsors helps us embed this essential research and its findings into the context of real-world supply chain management practice.”
The research included a large-scale international survey of supply chain professionals with more than 2,400 participants – more than double the number received in the previous report. The survey was conducted in late 2020. In addition, 21 in-depth executive interviews were completed, and relevant news, social media content, and reporting were analyzed for the report.
More than 80 percent of survey respondents claimed that the pandemic had not had any impact or increased their companies’ commitments to SCS: Eighty-three percent of executives interviewed said COVID-19 either accelerated SCS activity or at least increased awareness of bringing urgency to this growing field.
Pressure to support sustainability in supply chains has come from multiple sources, both internal and external, but has increased more among investors and industry associations. Internally, company executives have been the protagonists of SCS.
Although there are many approaches to investing in SCS, interest in protecting human rights and workers’ welfare, along with providing energy and renewable energy, has increased significantly last year. Supplier development has been the most common mechanism companies use to deliver on SCS promises.
Overinvestment, some speed bumps
Given the momentum behind SCS, the future is likely to bring more investment in this increasingly important area of supply chain management. Practitioners who bring their deep domain expertise and corporate perspectives to the bargaining table will become even more influential as advocates for sustainability.
But there are some huge hurdles to overcome, too. For example, it is noted that most of the momentum behind SCS appears to come from large (more than 1,000 employees) and very large (more than 10,000 employees) companies included in the research. SMEs have been far less committed, and more work is needed to bring them into the fold with a better understanding of the obstacles they face.
A broader concern is that more interest from stakeholders – particularly consumers, investors and regulators – will lead to more scrutiny of companies’ SCS tracking records, and less tolerance for code efforts to make supply chains sustainable. The report suggests that improving supply chain transparency and disclosure are critical to companies’ responses.
Some high-profile issues, such as combating social injustice and mitigating the effects of climate change, will continue to increase pressure on companies to invest in meaningful SCS initiatives. It follows that the relationship between SCS corporate performance and profitability is likely to strengthen over the next few years.
Will the companies follow up?
As companies grapple with these issues, they will face some tough decisions. For example, the chief operating officer of a consumer goods company interviewed for the report described working through pandemic restrictions as an “ethical arithmetic” where some sustainability commitments must be temporarily sacrificed to achieve others. Such calculations are likely to challenge many companies as they juggle their responses to SCS demands. The key question is to ascertain the degree to which companies’ recent net zero commitments will translate into effective SCS actions over the next few years.
The CTL and CSCMP research teams lay the foundation for the 2022 Supply Chain Sustainability Report. This annual status report aims to help practitioners and the industry make more effective and informed sustainability decisions. The survey for next year’s report will open in September.
The pandemic affected 90% of consumers surveyed opinions about sustainability
The State of Supply Chain Sustainability 2021, sscs.mit.edu/
Provided by the Massachusetts Institute of Technology
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