The sustainability opportunity in our supply chains

Date : 10 December 2018

Following increasing legislative pressures on businesses to improve the sustainability and green credentials of their supply chains, the race for sustainability is beginning to speed up. For many organisations, the strength of sustainability strategies is the difference between a competitive advantage and a laggard mentality. 

An increasing appetite

From HSBC’s recent Navigator Survey, published in September 2018, 36% of businesses that were making sustainability changes in their supply chains were doing so to help increase profits and revenue. Whilst in previous years, many sustainability strategies were seen as a means of appeasing environmental legislation, many organisations are now viewing it as a key growth driver. With an increasing global appetite for sustainable products, the visibility of your end to end supply chain can now be an attractive marketing lever to reassure and attract environmentally aware customers.

Companies wanting a genuinely ethical or environmentally sustainable business

 
Source: HSBC Navigator Survey, 2018

True green initiatives

In recent years, however, certain examples of so called “green” strategies have not been truly sustainable. Let’s look at the Toyota Prius, this was heralded (rightly so) for helping to reduce pollution on roads. This may be considered green from one perspective, but the other perspective could be the negative impact it caused on the Lithium supply chain and lack of end to end vision of this strategy. In recent years, Toyota has invested heavily to take a true end to end view of its environmental impact and conditions have since improved.  Within the food and grocery industry this raises the question: what do these strategies really look like, and how are businesses driving growth with their green policies?

Don’t be a binner, have it for dinner

Co-op East of England recently launched its light hearted “Co-op Guide to Dating” aiming to help shoppers understand the difference between “Best Before” and “Use By” dates. By offering shoppers the chance to purchase products that were past Best Before dates at a discounted rate, Co-op was able to prevent at least 100,000 food items going to waste in the first year of the trial. Co-op has since expanded the trial into its fresh produce and bread categories. This case study is a great win/win example of how a sustainability strategy can benefit both the shopper and business, whilst reducing wastage rates and bringing incremental revenue into the business.

 
Source: Co-op East of England

Clean Loop Recycling

At IGD’s Supply Chain Summit in November 2018 we heard about “Clean Loop Recycling”, the process by which waste is collected, recycled and produced to make something new. Effectively, the waste does a full circle without having a negative impact on the environment. The value of this opportunity globally for plastic is thought to be between $50-80bn for plastic packaging alone. A benefit that can be shared between shoppers, retailers and manufacturers through a circular economy approach. Although a significant opportunity, this approach requires a joined-up approach, including collaboration from government to support with convenient recycling solutions that are accessible to all.

 
Source: Tomra

Unilever’s Sustainable Living Plan 

With demand for energy expected to grow by 50% by 2030 and increasing costs for fossil fuels, Unilever created its Sustainable Living Plan (USLP), aiming to half its global environmental footprint by the same date. Through aiming to source all its energy renewably, eliminate reliance on coal and providing surplus energy back to local communities, Unilever has realised multiple benefits. In the last 10 years, Unilever has cut CO2 output in manufacturing by 47% per tonne of production, helping save €490m in energy costs. A notable example of where early adoption and buy in can contribute to the bottom line and demonstrates Unilever’s early commitment to reaching the UN’s Sustainable Development Goals.

 
Source: UN.org

Summary

For businesses, a true end to end understanding of the environmental impact of your supply chain is needed to create great sustainability strategies that will stand the test of time. To truly understand the end to end, collaboration with your trading partners will be essential to take a single view across the entire landscape to uncover win-win opportunities.

To understand more about supply chain sustainability and how other businesses are tackling the challenge, visit our Resilient & Responsive hub on Supply Chain Analysis.
 

Alex Edge

Alex Edge

Supply Chain Insight Manager

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