Facing growing climate and health risks, companies are now increasingly aware of the need to tackle climate change and to ensure supply chain resilience. The recent global health crisis has accelerated this awareness and has acted as a magnifying glass for inequalities and vulnerabilities, putting the urgent need to achieve the UN’s Sustainable Development Goals (SDGs) back on the agenda.
Here we explore how organisations can transform their supply chains to build resilience and foster sustainable development that benefits all.
SDGs: translating corporate action into the universal language of sustainable development
This September was the 5th Anniversary of the SDGs. They were established by the UN to address the most urgent human, societal, and environmental challenges, ranging from an inclusive economy to international solidarity and environmental protection. This universal agenda of 17 goals to be achieved by 2030 is intrinsically linked to the Paris Agreement (COP21) and the Sendai framework for disaster risk reduction, both adopted in 2015.
These targets are a universal response to the multiple crises we are facing as a global community and can act as a framework for organisations to contribute. In fact, the role of the private sector in innovating and driving change to help us reach these goals, is a vital one.
Why commit to an approach in line with the SDGs?
The SDGs are an excellent way for organisations to make a strong and public commitment to sustainable development and to strengthen their environmental, social and governance (ESG) efforts. There is now evidence that companies committed to these pillars not only face less risk in their supply chain but also improve their reputation among customers and other stakeholders.
In our annual research into the Sustainability Reporting Performance of companies across the FTSE 100, CAC 40, IBEX 35 and DOW 30, 75% of companies are providing evidence of at least some engagement with the SDGs, which is promising progress and demonstrates their recognition across the corporate community. However, we are still falling short as a global community so there is clearly more that needs to be done.
The challenges of supply chain resilience
A large opportunity for action on climate and the SDGs, often lies within an organisation’s value chain. Indeed, the value chain often represents a considerable part of an organisation’s carbon footprint and is as essential as it is complex to reduce. Only by targeting your entire value chain can you take full responsibility for your impact on the climate and enhance your contribution to sustainable development. The SDG international framework encourages us to go beyond climate issues to look at wider human, societal, economic and environmental challenges that are also intrinsically linked.
How can the SDGs be achieved through sustainable sourcing?
Let’s take a concrete example in the cosmetics industry to illustrate the best way to adopt a responsible supply chain approach while structuring the strategy around the SDGs.
The sector represents a growing market for natural raw materials, particularly with the increasing consumer preference for natural ingredients over synthetic. The raw materials used in this sector, such as vegetable or animal derived oils, waxes and colorants, plant materials and essential oils, often sourced from multiple, diverse geographical locations, are particularly exposed to the impacts of climate change, such as water stress or the acceleration in number and frequency of natural disasters. For such a supply chain would advise:
- Prioritising local and responsible supply chains – put in place robust procurement criteria to incentivise suppliers and potential suppliers to improve their own sustainable practices.
- Working closely with key suppliers that are less able to meet your criteria, to promote virtuous environmental and social practices.
Moving towards responsible sourcing means working hand in hand with your partners to ensure that the supply chain is socially and environmentally sustainable. The aim is to improve the working conditions of employees, ensure responsible pricing to offer decent wages, access to adequate training, promote gender equality, tackle illiteracy, etc. Ensuring that your suppliers know how important it is for you as a customer helps to incentivise change, but beyond this, there may be opportunities to share knowledge and provide investment to collaborate for positive change. This might relate to the implementation of virtuous agricultural practices: organic production without chemical inputs, agroforestry, sustainable water management, etc.
For example, Estee Lauder runs a project called Project Lampung, in partnership with the Roundtable on Sustainable Palm Oil (RPSO) which works with independent farmers and those working for larger organisations in Indonesia and provides training around the reduced environmental impacts and the human health benefits of sustainable agricultural practices, such as how to improve yields, prevent soil degradation and minimise the use of excess water and chemicals.
Ultimately, this type of approach will enable you to cultivate better relationships with your local partners while strengthening the resilience of your supply chains and the sustainability of your international operations.
How can the sustainable contribution of a particular programme be assessed?
In the context of the climate emergency, many companies are seeking to set up real-time monitoring of impact projects to provide themselves with reporting information and the means for immediate corrective action if required.
The difficulty lies in the fact that the data can be complex and difficult to collect. However, EcoAct have developed a tool that aims to identify, monitor and report the impacts of projects and actions in the value chain from an SDG perspective and which can be tailored to make the process easier for your suppliers and sourcing managers to understand and administrate.
It is important to analyse your sustainable programmes to assess and quantify their contributions to the different SDGs so that you can report your progress to your stakeholders.
To get a clearer picture, mapping the links between the activities of a programme and the SDGs will allow you to clarify the nature of the contribution generated. You will thus be able to monitor the progress of each programme and its impact on SDGs through these indicators according to a sector, a theme, an SDG, or a project, and make informed decisions about pilot programmes.
Beyond the SDGs, the same tool can help you to assess avoided emissions, and manage multi-channel raw material sourcing indicators providing you with an overview of your value chain impacts and actions.
The SDGs demonstrate that climate and social sustainability can and should be addressed in tandem. Your contribution to improving the societal and environmental impact of supply chains will help to contribute not only to the vital SDGs, but also to the resilience and long-term sustainability of these chains. Sustainable supply chains are becoming a key expectation of businesses, particularly those with complex supply chains and consumer facing products and services. The SDGs are fundamentally about sustainability for all. Using them as a framework for supply chain sustainability and helping to achieve these goals in time, will be mutually beneficial for your organisation, your suppliers and the communities that support them.