Report: Companies are focused on sustainability, but lack progress

Supply chain executives say they are sharpening their focus on sustainability initiatives, but many say they lack the business case, end-to-end supply chain visibility, and technology to achieve their goals.

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That’s according to the EY 2022 Supply Chain Sustainability Report, which surveyed 525 senior supply chain executives from large organizations across North, Central, and South America and found that despite having articulated a long-term vision, 33% said they lack a business case to support sustainable supply chain development. The survey also found that one in five executives do not have a sustainability strategy or know where to begin, and half said they don’t have an integrated scorecard to measure supply chain sustainability results.

“Despite having a long-term vision for ESG [environmental, social, and governance initiatives], supply chain executives struggle to embark on a sustainability journey due to lack of visibility from the products and services they source to their distribution centers and delivery operations,” Raj Sharma, vice chair for EY Americas consulting, said in a press release. “Customers today are not only concerned with why products aren’t available on the store shelves, but they are asking tough questions about a company’s sustainable sourcing, working conditions of suppliers, and much more.”

The EY report recommends five ways corporate leaders can jump-start their sustainability initiatives:

• Estimate the gap with goals. Understand current sustainability performance and examine how your current supply chain design supports (or does not support) organization-wide sustainability commitments and goals;
• Improve visibility and traceability. Deploy technology and improve processes for broader data sharing with suppliers;
• Expand the business case. Include drivers beyond cost savings–for example, increased revenues, market share, reduced risk, customer loyalty, talent proposition;
• Broaden your focus and prioritize. For sustainability, look beyond procurement to other functions in the supply chain such as manufacturing, logistics, and product design;
• Leverage incentives. Leverage available tax incentives and grants to fund future initiatives.

The study found that supply chain leaders are prioritizing an increase in supply chain visibility (58%) and resilience (47%) in an effort to improve sustainability, but that cost savings remains the primary motivation (61%). Reducing water intensity, using renewable energy, and minimizing material waste are key focus areas for improved efficiency, according to the report.