As outlined in the Sixth Report of the Intergovernmental Panel on Climate Change (IPCC), the latest advances in science reveal the scale and intensity of climate-related disruptions and the disproportionate impact they have on marginalized communities. In fact, of the 169 targets in the Sustainable Development Goals (SDG) over 80% are impacted by the climate emergency including gender equality, decent work conditions, arable land, and reducing inequities to ensure social, fiscal, and wage protection. According to the Harvard Business Review, nearly 40% of U.S. jobs are in the supply chain. This represents perhaps the biggest opportunity to affect the 2030 sustainability agenda as businesses adjust to a post-COVID-19 world.
Every system is perfectly designed to get the results it gets.
There are many lessons unearthed from the pandemic including the inextricable link between operational performance and long-term value creation. Two things stand out: the power of existential threats to impact our daily lives and the strength of collaboration when organizations around the world mobilize to solve complex problems.
Up to 85% of environmental, social and governance (ESG) related impacts, including greenhouse gas emissions, occur in the supply chain. This requires cooperation and collaboration to affect meaningful systems change at scale. But not all profit is equal. Profits involving a social purpose are a higher form of capitalism and one that will allow our society to advance. With a shared sense of purpose, community prosperity and business performance can co-exist. This shift requires disruption of the “business-as-usual” approach and a move toward embracing the entire global supply chain process from design through operation.
Sustainability is a complex and often misunderstood web of interconnected systems and decisions. We see social unrest and corruption due to systemic inequities and want to make a change. But we are often missing transparency, an auditable chain of custody, and ground truth to ensure a fair living wage and ethical trade. We see raging fires on one side of the globe and erratic flood events occurring on another. We struggle to connect the impact of carbon emissions across supply chains in a holistic interconnected view that quantifies the human impact on the communities we serve.
Sustainability isn’t someone else’s problem. Supply chains have been designed to iterate to the lowest cost which creates far-reaching networks entrenched in a web of assumptions. Risks tied to non-financial performance have been externalized leaving communities and trading partners paying the price for unsustainable behavior. Moreover, sustainable benefits realized through optimization and lean levers have been largely consequential and incremental, rather than intentional and inclusive.
This is rapidly changing as businesses re-define the total costs of ownership and the gate of responsibility creates a renewed lens of value and stewardship. We are able to use new methods to quantify a quadruple bottom line that not only transforms sustainable economies but also impacts the lives of people who stand up our global supply chains. As paradigms shift and regulatory environments adapt, frameworks like the Task Force on Climate-Related Financial Disclosures (TCFD) and Germany’s Lieferkettengesetz, legislation designed to uphold the rights of the environment and potentially exploit people in complex, multi-tiered supply chains will become fundamental expectations in global trade.
One thing is clear: sustainable supply chains can bridge the gap between ambition and action for global change. Building resilient communities means holistic steering is needed as supply chain leaders navigate social and environmental restoration, network stewardship, and the building of responsible, equitable supply chains.
Three things to consider
1. Meaningful and measurable change requires visibility.
Supply chain organizations have become foundational to delivering new value using the SDGs as a roadmap for creating benefits and equity that leave no one behind. 80-90% of data needed for SDG and ESG steering exists in supply chains. You can’t fix a problem if you can’t see it. Some problems are so ubiquitous and ingrained that they are assumed to be an inherent risk of business. A significant share of human rights violations occurs beyond the tier-1 aggregator in raw material extraction and agriculture making due diligence and traceability challenging. Managing a multi-enterprise supply chain through a new lens of value means designing out network risk, marrying disclosure and self-audit with sensing for ground truth, and incorporating new environmental impact factors in supply chain buffers that promote anti-fragility. Tri-sector partnerships, designing for process harmonization and the use of cognitive interventions can help organizations create reliability and trust from the field to the factory to a customer’s front door.
2. Instead of constantly looking back, lean into leading indicators.
An organization’s purpose, sustainability, and ethics have become measurable performance indicators, whereby carbon can be a leading indicator for operational excellence and demonstrable environmental gains. Businesses with lower emissions show leadership in designing for the environment, deliberate product design and raw material selection for zero-waste, process and operational efficiencies, and scope 3 collaboration toward network-based SBTs. Additionally, diversity, representation and supplier experience can be leading indicators for innovation, inclusion, and well-being. To effectively use this data, cross-industry, multi-enterprise ecosystems and platforms require shared visibility, interoperability, and verified chain of custody for data aggregation. Agile operating models can help organizations realize near-instant insights for transparency across an entire organization and its ecosystem.
3. Going far together means technology must document proof of stewardship and be a companion in decision orchestration.
A company’s ability to realize business objectives is tied to others realizing theirs in the communities they serve. Bridging the gap in insights across global supply chains means technology must become a conduit to document proof of performance, influencing changed behavior in decision orchestration at scale. The alignment of purpose, an ethical supplier model, touchless operations, and digital networks is a powerful differentiator. The biggest impact is upstream by connecting the first mile and last mile for sustainability in supply chains for CPG companies. Technology can facilitate multi-stakeholder cooperation in AI, data, and analytics to influence stewardship for end-to-end ethical behavior and risk insights by connecting disparate systems, data, processes, behaviors, and partners in an ecosystem. The automation of slow points in due diligence across direct and indirect operations, together with financial insights that extend through the value chain, allows decision-making based on immutability and trust. Measuring and disclosing social impact has never been more important. Technology helps organizations move from footprints to handprints. Trust, transparency visibility, and collaboration are key to transitioning from a linear way of working to a sustainable, climate restorative, and responsible world that puts equity — for all — at the center.
"To make life a little better for people less fortunate than you, that’s what I think a meaningful life is. One lives not just for oneself but for one’s community.”
—Ruth Bader Ginsberg
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The original article by Sheri Hinish, IBM’s global sustainability services lead, is here.
The views and opinions expressed in this article are those of the author and do not necessarily reflect those of CDOTrends. Image credit: iStockphoto/Tryaging