Sustainability has been touted as the next big disrupter that organizations will face after COVID-19. Unlike the unexpected and unplanned disruptions from the global pandemic, however, sustainability risks are certain to materialize in the future. Sustainability and corporate social responsibility have shifted from a “nice-to-do” to a “must-do.” How does an already stretched organization make sustainability and social responsibility a reality? Through a process-first approach.
Customer expectations, regulatory demands and environmental changes are increasing pressure on companies to take meaningful action on sustainability and corporate responsibility. But what do sustainability and responsibility mean? APQC defines sustainability as the capacity to endure, including adherence to environmental practices that protect natural resources needed by future generations; people practices that ensure workers within the organization are kept safe and treated equitably; social practices that promote community development and human rights for people beyond the organization; and governance, management and financial practices that promote ethical operations and long-term organizational health.
A company’s social responsibility involves more than a feel-good community project. In recent years, consumer interest in sustainability and responsibility has included supply chains, and with good reason. According to APQC research, 87% of organizations report that supply chain accounts for 50% or more of their greenhouse gas emissions. When it comes to sources of GHG, organizations are focusing most on reducing waste generated in operations and emissions from upstream transportation and distribution, followed by downstream transportation and distribution.
Companies are now accountable for the social responsibility of their suppliers (and their suppliers’ suppliers). Although 62% have long-term sustainability goals for their supply chain, only 54% percent require first-tier suppliers to set their own long-term sustainability goals. And only 32% include lower-tier suppliers in the overall strategy.
Clearly, leaders want their organizations to be more sustainable, but amid supply issues, cost pressures, and other fast-changing circumstances, they’re often unsure how to pursue sustainability goals while keeping their organizations afloat. In recent APQC research, nearly 25% of organizations had not adopted a program for low-carbon distribution network design, or had only done so to a small degree. Additionally, only 37% of organizations across industries focused on securing contracts with low-emissions providers to a significant or very great extent.
Your organization can achieve sustainability if you approach it like any business challenge: define the strategy, execute the process, define roles and responsibilities, and select tools and approaches. Document your organization’s definition of sustainability and your high-level sustainability strategy. Define ownership for sustainability within your organization. For example, will sustainability be owned at enterprise level, at the level of the supply chain, or by those who own parts of the supply chain? Deploy and strengthen processes to ensure transparency with suppliers, monitor global disruptions, prevent behaviors that introduce risk (such as maverick purchasing) and provide employees with the knowledge they need to make sustainable decisions. Finally, assess sustainability factors within supply chain processes.
Outlook:
Organizations that focus on processes and embed measures within those processes will be able to show how they are working toward their sustainability commitments. With a process-first approach, an organization can pinpoint the right inputs, outputs and choice points; empower employees to make sustainable decisions and informed trade-offs, and collect metrics to know what worked and what didn’t, so they can turn promises into action.
Marisa Brown is senior principal research lead, Supply Chain, with APQC.
