Fifty-one percent of supply chain executives in North America consider sustainability a strategic priority, but most of the changes implemented are too small to make a significant impact, according to a new sustainability report from West Monroe Partners, a business and technology consultancy.
Conducted in partnership with Loyola University’s Supply and Value Chain Center and BearingPoint, the sustainability study also finds that 36 percent of companies have plans to incorporate sustainability into their operations and 22 percent of them plan to do so in the next one to three years.
However, the study also finds that only 37 percent have dedicated sustainability individuals or teams at their companies. When asked to prioritize the importance of environment, social affairs and economy for their sustainability teams, environmental impact ranked highest “by a small margin,” followed by economic impact and social affairs.
In terms of green certifications, 20 percent of respondents are certified by the Forest Stewardship Council; 10 percent are certified by Green-e; seven percent are certified by Greenguard and seven percent are certified by GreenSeal. About 16 percent of respondents are certified by Smartway, and only two percent are certified by WasteWise. Fifty-one percent are not certified by any third party, and 18 percent cited other certifications.
One of the top motivations for implementing sustainability initiatives, according to the survey, is brand image improvement, followed by innovation in products and processes, and executive management decision. Other top reasons cited include regulations and cost reductions.
Survey respondents were also asked if they planned, implemented, further developed or discontinued a program for green design over the past three years. Sixty percent said yes with focus areas of products, packaging, distribution/logistics, production processes, supply chain life cycle, and components/ingredients.
Over the past three years, about 56 percent of respondents said they have intensified their efforts in implementing a green supply chain. The survey also finds that more than 27 percent have either reduced or not implemented any green supply chain initiatives. Of these respondents, only two indicate there are no plans to add any sustainability initiatives, while the remainder said it is a priority.
West Monroe also conducted a sustainability survey of North American consumers in 2014. More than half of consumers would pay at least five percent higher prices for products ordered online if they’re delivered sustainably, and 76 percent would wait at least one extra day for climate-friendly transport, said the consultancy.
“It’s telling that more companies aren’t implementing sustainable business practices in their operations given the demands of customers,” said Yves Leclerc, managing director at West Monroe Partners, in a statement. “Most supply chain teams are struggling to manage the complexities of globalization, the war for talent and increasing demands so allocating budget and resources towards sustainability doesn’t seem feasible unless companies can put together a business case for the return on the investment.”
West Monroe said companies need to make a “compelling business case for senior leadership, which includes at a minimum:"
- A carbon footprint assessment that identifies, quantifies and contextualizes environmental impact
- A customer sentiment analysis to determine potential revenue upside
- Bottom line cost savings
Benefits from sustainable supply chains, said West Monroe, include improved brand image, reduced logistics and production costs, and regulations compliance. It also helps businesses improve the ease of recycling and meet customer needs, as well differentiates them from competitors.
“What we hear from our clients and the business community is that sustainability can be a clear differentiator and source of competitive advantage, in addition to its other benefits. For example, one of our clients was able to reduce carbon emissions by 15 percent – something that gave them an edge against competitors,” said West Monroe Partners.