Supply Chain Management Review
December 7, 2016
While world leaders debate whether climate change is real, it’s time for supply chain professionals to take the lead.
By Kevin O’Marah, SCM World
Unless there’s an ice cap melting right in front of you, it can be easy to ignore that climate change is happening. But the reality is that each month seems to be ‘the warmest on record’ and 2016 is set to be the hottest year ever.
Numerous A-listers have championed the cause. Leonardo DiCaprio has just spent three years making a documentary on the subject, titled Before the Flood, while Emma Thompson experienced eight days on a boat in the Arctic with Greenpeace. Even Barack Obama took part in a TV show with Bear Grylls last year as part of his efforts to shine a light on the issue.
Yet political leaders are slow to make headway. This is attributed to a range of factors from the complexity of the problem to a lack of political will: President-elect Trump was, for example, accused of treating climate change as an afterthought on the campaign trail.
But while world leaders seem to simply ponder and debate the situation, there is still a great deal that can be done, and it’s clear to me that it’s the responsibility of supply chain professionals to take the lead.
Problem or solution?
The supply chain sector is on the frontline when it comes to the environment. It is us who are cutting down the forests, cooking the chemicals and dispatching the fleets of trucks that emit much of the carbon causing global warming. It’s logical to conclude therefore that we are responsible – but we’re also the ones who are in a position to change things.
I’m not alone in thinking this. In the SCM World annual Future of Supply Chain survey last year, 54% of 1,018 supply chain professionals said they believed their supply chains played a “substantial role in ensuring long-term environmental sustainability”. The other 46% agreed that their supply chains played a “limited but meaningful role” in tackling it.
Take the consumer packaged goods industry as one example where this is significant: 98% of respondents cited their supply chain impact as “substantial”, while 60% said their impact was “limited but meaningful”. Only three ticked the “none” box.
Walking the walk
It’s very easy to talk the talk, but putting it into action is a different matter. But it’s plain to see that supply chain executives are showing a real readiness to attack sustainability challenges. The industry is now doing more than just raising awareness (as important as that is) and is setting clear and accountable goals. In February 2016, for example, Unilever promised 100% elimination of non-hazardous waste to landfill, while IKEA’s Better Cotton Initiative saw it become the first major retailer to use 100% cotton from more sustainable sources.
These are prime examples of companies doing the right thing, and pledging a better, more ecological supply chain now and for the future. It’s also a demonstration of transparency and trust.
The power of the consumer
Shoppers believe their buying decisions make a difference and are increasingly willing to drop brands that fail to deliver on sustainability and climate change promises. Most brands understand the impact of consumer purchasing decisions, but not all of them are capitalizing on it. Brands need to enter a genuine dialogue with consumers where they can build trust and credibility; one where they can authentically say to shoppers, “we’re on the same side, we have a shared goal.”
People aren’t just steering away from unethical products; they’re also willing to pay more for those that meet ethical standards. A 2015 survey from GT Nexus revealed that 52% of US consumers would pay more for food and beverage products that were sourced ethically and sustainably, with 28% saying they would pay up to 20% more.
However, part of the challenge has to be in negating any perception of “greenwashing”. It’s important to strike the right balance between communicating a “green” message that benefits the business commercially, and delivering environmental good. When it tips the wrong way, it can be disastrous. Just look at Volkswagen. The company looked to design a way to circumvent emissions control, with the aim of making it the world’s biggest carmaker of environmentally friendly cars. When allegations emerged that it was in fact rigging its vehicles with software that “cheated” during emissions testing, the reputational damage was huge. People can sniff out the marketing spin and the end result is often a perception of disingenuousness, and even greed.
The bottom line is that buying better is one of the consumer’s most powerful forms of protest – and brands that don’t listen will lose out.
Taking a stand
While the Volkswagen issue was clearly a disaster, it did help to highlight the importance of measuring carbon emissions accurately – and ethically! So in the interest of transparency, why don’t we call out carbon as we see it and encourage companies to declare how much they’re contributing to global carbon emissions? Calculating precise carbon levels per item is a near impossible task but surely even estimates would go some distance? We needn’t offer figures down to the third decimal point but committing to ongoing improvement is a start when it comes to creating a greener planet.
The first step in a long journey
While our research indicates the food and beverage industry is leading the charge when it comes to the issue of environmental sustainability, largely because of its close relationship with consumers who are showing a willingness to spend more on eco-friendly products, the sector’s proactive initiatives will surely cause a trickle-down effect that encourages other industries to follow. And this is how supply chain can start to make a real difference in creating an environmentally sustainable world. Yes, tackling climate change and carbon emissions may only be one aspect of a bigger conversation. But we need to take a stand, and this is a pretty good place to start.