Sustainable is the new “green” for supply chains

BearingPoint study finds social responsibility is pushing supply chain to the next maturity level

Frankfurt, June 9, 2016 – According to a new study by management and technology consultancy BearingPoint, the emerging trend is to move from green to sustainable supply chain management. The company’s 5th Supply Chain Monitor found that European supply chains have already harvested most of the low-hanging fruit of carbon reduction initiatives since the previous 2010-11 study. In between there was even some kind of slow down for green initiatives, as all climate conferences prior to COP21 failed. However, currently BearingPoint sees a revival of green awareness, which is especially driven by the Diesel scandal. For social aspects the study shows a clear trend: the importance of social aspects along the supply chain is constantly evolving. Measurement and reporting of social initiatives and performance today are at a similar level to where green initiatives were four years ago. This reflects a growing demand from some national regulators for companies to include social responsibility information in their CSR reporting.

For 70 percent of companies in Europe, the social aspects of a supply chain were a strategic priority in their supply chain management endeavors, according to the study, with a further 12 percent saying this would be the case within the next 1–5 years. Only 11 percent felt that the social impact of their supply chain to be of no importance.

We see social topics rising quickly in importance for companies as regulators sharpen their focus on social sustainability. Consumers are already increasingly selecting products and suppliers that are ‘fairer,’ or more sustainable. This becomes obvious by the mind change of companies like Wal-Mart that shift from cheap is best to sustainable is best.

Matthias Loebich, Partner at BearingPoint

Ignoring the environmental side of business can lead to a one-two punch from regulators and consumers

The study drilled down into environmental efforts by companies as well, with more than half the survey focused on the current state of green supply chains. Having a green supply chain is high on the agenda for 59 percent of European companies and for 51 percent of US companies. Considerably more US companies (21 percent compared with 6 percent of European companies) see it becoming an important priority in the short term (the next 1–3 years), as they strive to close the gap and bring their activities in line with Europe. The survey shows the current key drivers and willingness to invest, as well as the state of carbon accounting, eco-design and development, green production and procurement, logistics and recycling.

How painful it can be to ignore the environmental side of a company’s business became obvious with the diesel emissions scandal, it can be a one-two punch from regulators and consumers. This together with the agreement reached at the COP21 UN conference on climate change, we see a renewed commitment.

Matthias Loebich, Partner at BearingPoint

Lack of sustainability reports

Almost half (46 percent) of respondents indicated that their companies had either increased or heavily increased the number of employees working on sustainability topics, reflecting the increase in efforts in social terms. The US in particular has raised its game, which is attributed to the fact that activity to date there has lagged European efforts by a visible margin.

However, only 25 percent of European companies in the sample produce sustainability reports, and just 3 percent are planning to, reflecting the immaturity of fuller CSR activities and the current lack of systems which allow these activities to be recorded and measured.

Recommendations

Companies should consider all opportunities for improvement, including those which transcend their own operational boundaries, using tools to streamline and automate the process wherever possible, such as:

• Joining official programs such as LEAN and GREEN by GS1 or Green Freight Europe to structure and report energy and CO2 reductions in a formalized manner.
• Calculate carbon footprint by using leading standards like EN 16258, only.
• Run sustainability programs in line with ISO 26000 or with GRI G4.
• Think of sustainable supplier rating platforms such as EcoVadis (http://www.ecovadis.com/), to reduce the need to handle repeated requests.