Few companies truly embracing green supply chains

24 November 2015 Consultancy.uk

Creating sustainable supply chains remains a challenging issue for many organisations, according to a new survey. While many organisations remain open to the idea, with best practices proving the case, reasons for implementation often remain at the level of branding and differentiation, while actual execution remains on a small scale and does not produce wide-scale impact across the board. According to the authors, regulation is required to drive most companies towards change.

Producing goods in a way that is sustainable to the environment is becoming more and more important to consumers and the environment itself, as the reality of humanity’s footprint is being realised throughout ecology. A survey from 2014 for instance shows that more than half of consumers would be willing to pay 5% more for a sustainable product, while 76% said they would accept waiting an extra day to have their products delivered in a sustainable fashion.

With consumer sentiment edging toward more sustainable ways of acting, important questions are starting to be asked by organisations about whether sustainable practices should be the norm for their wider supply chains. To gain further insight in the matter, consulting firm West Monroe Partners and the Supply and Value Chain Centre at Loyola University Chicago partnered to identify the current business sentiment toward greener supply chains.

Is having a green supply chain a strategic priority in your organization?

The study involved 52 executives from company sizes ranging from $100 million to over $120 billion. The largest industry represented was consumer packaged goods (30%), followed by retail (12%), although there were respondents from most sectors. The information was further supplemented by data from BearingPoint, West Monroe Partners’ consulting partner in the EMEA region, which conducted similar surveys of both consumers (2014) and supply chain executives (2015) in Europe.

Sustainability matters?
When respondents were asked whether having a green supply chain is a strategic priority in their organisation, 51% answered affirmatively. 22% answered that it will be in 1-3 years, while 8% said it would take 3-5 years before it became one. 12% said it was not a strategic priority.

What were the main reasons for undertaking actions to move towards having a green supply chain

Respondents were also asked about what motivates them to undertake actions to move towards embracing a green supply chain. The most important reason cited by respondents is brand image improvement at almost 35%, followed by innovation in products or processes and then executive management decision. The attribute seen by the most respondents as least important is pressure from lobbyists, cited by 27% of respondents. This was followed by ‘other’ (24%), which includes risk control, customer expectations and consistency with corporate values.

Despite the fact that the motivations for implementing sustainability initiatives greatly vary, the study reveals that across the business community, sustainability can be a clear differentiator and source of competitive advantage, in addition to its other benefits. One case study the authors explore is a firm that has been able to improved its customer rating by approximately 25% through better sustainability in product management, while another company has been able to reduce carbon emissions by 15% – something that gave them an edge against competitors.

Over the past three years, has your organization intensified, reduced or stabilized your efforts in green supply chain 

Sustaining sustainability
When asked whether, over the past three years, their organisation had intensified, reduced or stabilised their efforts in green supply chain, 56% said they have intensified their efforts. “Awareness and, more importantly, action are becoming commonplace and are increasing in both quantity and intensity,” write the researchers. 27% indicated they have either reduced or not implemented any green supply chain initiatives, however, of these respondents, only two indicated there are no plans to add any sustainability initiatives. Interestingly West Monroe Partners and Loyola University Chicago also find that sustainability commitment is not related to organisational size – several of the organisations that aren’t doing anything currently are multi-billion dollar companies.

In the past three years, did you plan, implement, further develop or discontinue a program for green design

Green design is also on the rise, the survey reveals. Almost 60% of respondents that answered acknowledge they have either rolled-out or are planning to execute a “green design” project. The primary focus was on products and packaging (tied for first), distribution/logistics, production processes, the entire supply chain life cycle and components/ingredients (tied). 

“Based on our survey results, it appears very few companies are embracing sustainability initiatives in any meaningful way. Until regulations force action, many companies won’t be able to find resources and funding to make significant change,” conclude the authors.