Pierre-Francois Thaler is co-CEO and co-founder of EcoVadis (ecovadis.com), a provider of a collaborative platform for measuring and rating corporate social responsibility in global supply chains.
One of the most significant shifts we’ve seen since the start of this century is the rising importance of sustainability for businesses—particularly around environmental, social, and ethical performance. Increasing awareness of the catastrophic effects of climate change and the destruction of natural resources as well as a growing concern for human rights violations, inhumane working conditions, corruption, and more are driving companies to incorporate sustainability into their values and their mission statements.
Furthermore, the sustainability movement shows no sign of slowing down. Instead companies are expanding their focus beyond their own four walls. The increasingly globalized nature of our world has created supply chains with dozens of tiers across the globe. Sustainability risks have grown with globalization—but so have efforts to combat the dangers.
Just before the COVID-19 crisis, my company EcoVadis delivered its 100,000th sustainability rating and scorecard. EcoVadis’ ratings track performance of more than 65,000 businesses in supply chains across 160 countries. We’ve seen it all since our founding in 2007—and over the past 13 years, we’ve uncovered three major trends that depict why the 2020s will be a big decade for supply chain sustainability:
Trend 1: Social purpose is now core to business commitments.
Trend 2: Supply chain sustainability performance varies by region and across themes.
Trend 3: Sustainability is becoming a critical risk management tool.
At the core
Over the last few years, there has been a revived corporate emphasis on sustainability—especially as the global investment community’s interest in environmental, social, and governance factors has spiked.1For executives, there’s more pressure and new motivation to serve a purpose that is measured by more than quarterly earnings and growth. And this pressure isn’t only from investors, but customers and employees too; 62% percent of customers2 want companies to take action on sustainability, and nearly 40% of millennials have chosen a job3 because of company sustainability. The new goal: building long-term, sustainable value.
Last year, 181 CEOs of large global companies signed a “Statement of Purpose of a Corporation” that prioritized sustainability, stewardship, and people alongside profits.4 Then 2020 kicked off with the World Economic Forum’s Davos Manifesto, which urged companies to engage all stakeholders and promote respect for human rights throughout their global supply chains. On the funding side, 85% of individual investors now say that they are interested in sustainable investing.5 In fact, early this year BlackRock CEO Larry Fink announced plans to make environmental sustainability the focal point of the company’s investment decisions moving forward.6 While some believe that this progress may have slowed due to the recent COVID-19 pandemic, we believe that ultimately the momentum can’t be stopped.7
Furthermore, we’re seeing corporate sustainability commitments being made from every part of the world. Seventy-two percent of global companies now mention in their annual corporate and sustainability reports the United Nation Global Compact’s Sustainable Development Goals, which define global priorities and aspirations for business development into 2030.8 Companies are actively working toward sustainability, and we believe this will be the decade where transformative progress will be made.
In particular, we’re seeing many organizations make changes to improve sustainability performance starting in the supply chain. Why? Because the supply chain offers a clear and actionable roadmap for creating a networked impact and driving real improvements. For example, many companies are working to create “sustainable procurement” programs, where their corporate social responsibility principles are integrated into their procurement processes and decisions. A recent study found that companies with mature sustainable procurement programs report more benefits across the board, including an 88% increase in risk mitigation, 53% improvement in procurement metrics, 35% more cost savings, and 29% increase in innovation.9 Additionally, a study by the World Economic Forum and Accenture found that sustainable supply chain practices actually reduce supply chain costs by 9% to 16%.10 This fact is crucial because cost reduction is more important than ever as we battle global shutdowns and shortages. The value of sustainability goes well beyond creating a better world.
As social purpose has become central to organizations, global businesses have made noteworthy corporate social responsibility (CSR) improvements in the supply chain, according to the Global CSR Risk and Performance Index.11 However, ratings on overall global sustainability performance has remained stagnant over the last few years with little improvement despite corporate commitments to create a more responsible economy—igniting a push for business leaders from stakeholders to do more than just vocalize commitments.
Variation by theme, region
Our data portrays significant thematic and geographic differences when it comes to global sustainability benchmarks. For example, organizations have been increasing their focus on the labor and human rights theme recently, and are improvingtheir performance year-over-year. With the emergence of laws around modern slavery, supply chain transparency, and disclosure, this trend will continue to dominate 2020 and the years that follow. However, lack of progress in the sustainable procurement theme shows vulnerability and limited visibility on suppliers—which is especially threatening in high-risk areas across the globe. (In the coming years, we predict a heightened focus on sustainable procurement based on our assessments.)
In terms of regions, European businesses have consistently outperformed companies in North America, Latin America and the Caribbean, Greater China, and AMEA (Africa, Middle East and Asia). While Europe’s supply chain sustainability score has improved over the years, North America isn’t far behind. Businesses in Latin America and Greater China are increasingly seeing authorities emphasize environmental inspections as well as anti-corruption and data protection legislations.
Overall, there’s clear evidence that sustainability has become a higher priority across the world. However, when assessing one’s own performance against global benchmarks, it’s crucial to take into account these geographic and theme-based differences. In order for businesses to stay ahead in the race toward sustainability, it will be critical to know where you stand on each theme based on your region.
Sustainability as risk management
Sustainability is also a risk management play. The environmental disclosure charity CDP estimates that companies could face roughly $1 trillion in costs related to climate change in the decades ahead unless they take proactive steps to prepare for the effects, such as cutting greenhouse gas emissions or reducing water usage throughout the entire supply chain.12 Businesses are also taking action to protect themselves reputationally, as society demands sustainable change and societal contributions from the brands they shop with.
The ’20s will be an exciting time for sustainability—especially where it matters most: the supply chain. Changes will be made to protect the world for our grandchildren and their grandchildren, keep vulnerable populations safe, save organizations money, and give brands the competitive edge they need to compete in a sustainable world. Supply chain professionals will need to get on board today to reap the benefits throughout the decade.
8. Louise Scott and Alan McGill, “Creating a strategy for a better world: How the Sustainable Development Goals can provide the framework for business to deliver progress to our global challenges,” https://www.pwc.com/gx/en/sustainability/SDG/sdg-2019.pdf
Artificial intelligence (AI) tools can help users build “smart and responsive supply chains” by increasing workforce productivity, expanding visibility, accelerating processes, and prioritizing the next best action to drive results, according to business software vendor Oracle.
To help reach that goal, the Texas company last week released software upgrades including user experience (UX) enhancements to its Oracle Fusion Cloud Supply Chain & Manufacturing (SCM) suite.
“Organizations are under pressure to create efficient and resilient supply chains that can quickly adapt to economic conditions, control costs, and protect margins,” Chris Leone, executive vice president, Applications Development, Oracle, said in a release. “The latest enhancements to Oracle Cloud SCM help customers create a smarter, more responsive supply chain by enabling them to optimize planning and execution and improve the speed and accuracy of processes.”
According to Oracle, specific upgrades feature changes to its:
Production Supervisor Workbench, which helps organizations improve manufacturing performance by providing real-time insight into work orders and generative AI-powered shift reporting.
Maintenance Supervisor Workbench, which helps organizations increase productivity and reduce asset downtime by resolving maintenance issues faster.
Order Management Enhancements, which help organizations increase operational performance by enabling users to quickly create and find orders, take actions, and engage customers.
Product Lifecycle Management (PLM) Enhancements, which help organizations accelerate product development and go-to-market by enabling users to quickly find items and configure critical objects and navigation paths to meet business-critical priorities.
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
The Raymond Corp. has expanded its energy storage solutions business with the opening of a manufacturing plant that will produce lithium-ion and thin plate pure lead (TPPL) batteries for its forklifts and other material handling equipment. Located in Binghamton, N.Y., Raymond’s Energy Solutions Manufacturing Center of Excellence adds to the more than 100-year-old company’s commitment to supporting the local economy and reinvigorating Upstate New York as an innovation hub, according to company officials and local government and business leaders who gathered for a ribbon cutting and grand opening this week.
“This region has a rich history of innovation,” Jennifer Lupo, Raymond’s vice president of energy solutions, supply chain, and leasing, said in welcoming attendees to the ribbon cutting ceremony Monday.
Lupo referred to the new factory as an “exciting milestone” in Raymond’s history and described it as the next step in the company’s energy storage solutions business, which began nearly 10 years ago with the development of a lithium-ion battery to power its “walkie” pallet jack. That work has expanded to include larger batteries and other technologies to support battery-electric equipment.
“We’re not just keeping up with the electrification movement,” Lupo said. “We’re leading it.”
Raymond, a business unit of Toyota Material Handling, has been building forklifts, pallet jacks, and other material handling equipment at its nearby Greene, New York, headquarters since 1922. The Binghamton factory supports local efforts to boost manufacturing and innovation in New York’s Southern Tier, which was recently designated as a regional technology and innovation hub by the Biden Administration.
Raymond is leasing the 124,000 square foot facility at 196 Corporate Drive, situated in an established industrial park. The manufacturer is currently utilizing just 10,000 square feet of the space to produce its 8250 lithium-ion battery, which can power Raymond’s class 1 and class 2 fork trucks, as well as a smaller TPPL battery for powering pallet jacks.
The Binghamton factory employs 15 people, but the company expects to scale up quickly in space and personnel, adding 12 to 25 employees next year and ramping up to 60 employees by 2027, according to Jim Priestly, battery manufacturing manager for energy solutions at Raymond.
The Binghamton facility also represents Raymond’s larger commitment to helping develop greener, more sustainable supply chains, according to company President and CEO Michael Field.
“We recognize energy’s critical role in shaping our future,” Field told attendees at the grand opening, adding that Raymond is seizing the opportunity to participate in the clean energy transition locally and beyond.
“This facility is just the beginning,” Field said.
Economic activity in the logistics industry expanded in August, though growth slowed slightly from July, according to the most recent Logistics Manager’s Index report (LMI), released this week.
The August LMI registered 56.4, down from July’s reading of 56.6 but consistent with readings over the past four months. The August reading represents nine straight months of growth across the logistics industry.
The LMI is a monthly gauge of economic activity across warehousing, transportation, and logistics markets. An LMI above 50 indicates expansion, and a reading below 50 indicates contraction.
Inventory levels saw a marked change in August, increasing more than six points compared to July and breaking a three-month streak of contraction. The LMI researchers said this suggests that after running inventories down, companies are now building them back up in anticipation of fourth-quarter demand. It also represents a return to more typical growth patterns following the accelerated demand for logistics services during the Covid-19 pandemic and the lows of the recent freight recession.
“This suggests a return to traditional patterns of seasonality that we have not seen since pre-COVID,” the researchers wrote in the monthly LMI report, published Tuesday, adding that the buildup is somewhat tempered by increases in warehousing capacity and transportation capacity.
The LMI report is based on a monthly survey of logistics managers from across the country. It tracks industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP).