Implementing Sustainability in Supply Chains in Practice – Easier Said Than Done
In this article, Dr Alexander Trautrims discusses implementing sustainability in supply chains operationally and shows how this is easier said than done.
Most businesses today have, to a more or lesser extent, accepted the need to include sustainability considerations in their supply chains. However, the strategic decision to include sustainability in a business’ supply chain only becomes real and meaningful through the implementation in operational supply chain practices. With supply chains being global, longer and more specialised than before, much of the supply chain’s impact often lies outside their own organisation. Much effect on the supply chain’s sustainability performance therefore lies in the sourcing decisions of procurement departments.
Making supply chain impact visible and measuring it is the first step in the implementation of sustainability practices. The conduction of a lifecycle assessment, applying a widely accepted reporting standard such as PAS2050 of the British Standards Institution or the Green House Gas Protocol by the World Resources Institute, enables an organisation to understand its supply chain’s emissions but only in the area of carbon emissions. Although the conduction of such a lifecycle assessment of the supply chain is challenging enough, it does by no means cover all impacts. Other environmental impacts, for example water consumption and pollution, is not covered and neither is the impact on the social dimension of the triple bottom line.
Whereas the carbon emissions performance of potential supply options can be compared by the sourcing decision makers through the CO2 equivalents of their lifecycle assessment results, the comparison of social performance is less straightforward and also harder to quantify. Certifications and audits are commonly used to avoid the selection of suppliers engaged in socially and environmentally harmful practices. Current auditing approaches of social sustainability are facing increasing criticism as a tick-boxing exercise that contains little understanding of the underlying problems and the context, meaning that to achieve sustainability in their supply chain, businesses must get further involved in more distant tiers of their supply chain.
The application of product certifications in the sourcing decision can be a convenient way when the focus lies on a particular issue, like rainforest protection or fair trade. However, it is important to understand who awards the certification and what the criteria are. Furthermore, somebody will need to pay for the certification activity and if that cost is charged to the supplier it may exclude small and less well-resourced suppliers.
Assessing a supply chain’s sustainability and comparing the sustainability of supply options becomes even more difficult in situations when different sustainability criteria are in a trade-off. What if supply option A uses more water but is emitting more CO2 than supply option B? And what about a supply option that emits less CO2 but has worse labour conditions for the workforce than another?
In their book Sustainable Logistics and Supply Chain Management David Grant, Alexander Trautrims and Chee Wong explain the various aspects and decision involved in making supply chains more sustainable, including chapters on sustainable procurement, ethics and lifecycle assessment.