In the world of streamlining, optimizing, expanding, and trying to lead the way in supply chain operations, it’s easy to see environmental sustainability as a “nice to have” or a “someday” consideration.
But the truth is that the pressure is mounting. The SEC issued a statement on March 21 delineating a proposed mandate on climate-risk disclosures, applicable to public companies. A briefing explains, “if adopted, it would provide investors with consistent, comparable, and decision-useful information for making their investment decisions and would provide consistent and clear reporting obligations for issuers.” It’s important for every business to take seriously the call to evolve practices to meet new environmental sustainability standards.
Who Cares About Environmental Sustainability?
Back in 2016, experts predicted that carbon emissions, air pollution, deforestation, water shortages, and other outcomes of environmentally unsustainable practices would diminish value and create a state of vulnerability for the supply chain.
In 2021, through a partnership with SAP, analysts at Oxford Economics surveyed 1,000 supply chain executives around the world. They found that 73% of companies identified environmental sustainability as a “major concern” that would impact every stage of the supply chain. Leaders in this space face a dynamic imperative and bear a significant responsibility to enact change for the good of the environment.
Keys to Moving Toward Sustainability
There are several challenges to building a supply chain with environmental sustainability in mind. So, what will it take for supply chain companies to enact environmentally sound practices?
A first component is how to operationalize environmentally sustainable practices, especially when many of the foundational functions in the supply chain aren’t green. Toxic waste, air quality, energy use, land use: all of this is tied into what it takes to transport goods, and the use of non-renewable resources may feel like a Titanic-sized course correction. But it is one that can be achieved through strategic, consistent shifts like the following.
Make a realistic plan. “Carbon neutrality” is the battle cry of many companies, and they peg a 10-, 20-, even 50-year timeline to achieve it. But to get even close, strategic thinkers in the supply chain are pushing “lower carbon intensity” as a realistic move that can start as soon as today. This simply means lowering the amount of greenhouse gas per unit of output. It’s measurable, it’s doable, and it won’t upend current operations. Find a starting point like that, then create a plan.
Create a roadmap. There is no supply chain company in the world that can afford to shut down operations for a full-scale rework. Nor can you realistically swap out all equipment, machines, components of infrastructure, etc. This change has to be incremental, and you need to roadmap it out. Start with leadership, gain buy-in, create a structured plan, attach it to a timeline, and assign areas of responsibility.
Collect and report on the right data. Leaders should have readily available reports that relay current GHG emissions and where they come from. This means coordinating the collection and organization of reliable data on supply vendors, transportation activities, physical plants/warehouses, and more. Then, this data should be used to set KPIs and benchmarks that support practices for consistent reduction over time.
Celebrate success along the way. Small or big, every move toward more environmentally sustainable practices counts and should be celebrated. This hedges against the natural decline in velocity after the novelty wears off. Environmental sustainability in supply chain operations is likely to be a significant course correction, and one that will take time. Keep the wins front and center to maintain momentum.
Permeating every link in the chain are paradigms that drive practices. Changing these is a big lift, but one that any conscientious leader must undertake if real transformation can occur.
Being environmentally conscientious stems from belief systems and culture. These are already embedded, and hopefully you are tuned in enough to your people to know who they are and what they think is important. Now, you have to enlist their alliance to a common cause. Here are some tips to do that:
Embed environmentalism into everything else. It may be time to revisit mission/vision/values. Or perhaps you need to remap your chain of command, adding in a new role. Whatever it takes to assess and evolve your deeply embedded cultural dynamics, do it. It is mission-critical if you hope to achieve environmental sustainability in your company.
Get as many people on board as early as possible. Efforts toward environmental sustainability shouldn’t feel like “yet another top-down initiative.” There is a lot of power in grassroots effort here, with identified ambassadors in departments and an overcommunication of the mission. Think strategically from day one about how to achieve that and authentically communicate your ideals and goals.
Reward engagement. Incentivizing people to be involved is a standard practice with varying degrees of success, but one that you can’t ignore if you are really going to capture and keep awareness company-wide. Work closely with HR to understand what’s worked best in the past, and how you can publicly reward great performers.
What’s Good for the Environment Is Good for Us All
The United Nations’ Guide for Continuous Improvement in Supply Chain Sustainability speaks to a myriad of factors, including the environmental impact of supply chain operations. It describes a multi-phased approach, beginning with establishing expectations and ending with tracking and communicating performance.
The idea is to create an open (albeit mandatory) invitation, where every stakeholder, employee, partner, and vendor sees the important role they play in achieving environmental sustainability in the supply chain.
When everyone is on board, change can happen a lot faster. And that’s good for business, good for the earth, and good for us all.
Steve Beda is Executive Vice President at Trax Group. With a long history of supply chain automation and transportation logistics experience, he works closely with numerous Trax clients across the globe to aid in their success enabled by maximizing the use of services offered by Trax. Additionally, Mr. Beda heads the Advisory practice at Trax.
This article originally appeared in the May/June, 2022 issue of PARCEL.