Supply Chain Leaders Urged to Embrace Climate Change Solutions
October 3, 2016
When BSR (Business for Social Responsibility) convened its annual conference in San Francisco in 2015, there was considerable celebration about the landmark agreement at COP21 – also known as the Paris Climate Conference. It meant that for the first time in over 21 years of UN negotiations, standards were finally established to achieve a legally binding and universal agreement on climate, with the aim of keeping global warming below 2°C.
As BSR meets again next month in New York, the current cri de Coeur is for “bold climate action,” with analysts observing that multinationals must raise their ambitions by investing in climate finance, transition to renewable energy, and find more innovative was of ensuring resilient supply chains.
It’s challenging to change organizational culture to embrace clean energy and other climate solutions, BSR analysts admit. But they insist that supply chain managers and join Corporate Social Responsibility (CSR) managers in becoming “intrapreneurs” charged with persuading a wide variety of stakeholders that climate-focused initiatives are in their best interest.
Effective communication of both material risks and opportunities is key to overcoming barriers such as capital constraints, management attention, and lack of in-house expertise, BSR adds. A strong messaging strategy, however, can make the task less daunting.
Kevin O’Marah, Chief Content Officer for the consultancy, SCM World, came to similar conclusion recently. Indeed, one of his major briefings this fall has been to alert and inspire supply chain managers to become “climate change leaders.”
This call to action, he says, goes out to supply chain leaders because they’re the ones who can tackle this without waiting for government to act. Furthermore, he notes, what gets measured gets managed:
Supply chain people love metrics. We’ve been pounding away at inventory turns, utilization rates and on-time delivery for decades to great effect. Isn’t it about time we start measuring and managing our environmental impact, and in particular, operations’ contribution to atmospheric carbon?
O’Marah observes that supply chain executives are the ones ultimately driving all raw material extraction, all mechanical, chemical or thermal conversion in manufacturing, and all packaging and delivery from source to end consumer. This applies to food, clothing, medicine and machinery as well as all human infrastructure in our towns and cities.
To be blunt, he adds that supply chain managers up until now been quick to cut down the trees, cook the chemicals, weld the steel and dispatch the trucks that emit much of the carbon causing global warming.
But he also feels that a new awareness is bringing about change. Last year, 54% of 1,018 supply chain professionals surveyed by SCM World said they believed their supply chains played a “substantial role in ensuring long-term environmental sustainability.” Of the remainder, nearly all agreed that their supply chains played a “limited but meaningful role” in tackling sustainability.
Among 161 respondents from the consumer packaged goods industry for instance, 98 said their supply chain impact was “substantial.” 60 called their impact “limited but meaningful”, but only three claimed “none.”
“We seem to understand what’s happening,” O’Marah concludes.
Call to Arms
Supply chain managers have also shown a readiness to attack sustainability challenges with goals that do much more than simply raise awareness. Unilever, for example intends to achieve 100% elimination of non-hazardous waste to landfill, while IKEA’s “Better Cotton Initiative” seeks to establish 100% sourced cotton. For the Coca-Cola Company the goal is to have water replenishment in 100% of its bottling operations
All these companies – and several others, says O’Marah – are “taking it to the limit.”
Efforts by Kellogg, Land O’Lakes, Nestlé and General Mills are typical of the food business that leads all industries, with 77% saying their supply chain plays a substantial role in securing the future of the planet.
According to O’Marah, this may be because food and beverage companies “feel the pinch” of a fraying ecosystem upstream in agriculture, and also downstream with consumers tilting away from industrial-era “big food.”
He maintains that the unique challenge now is to articulate the earth impact of product sold to consumers who increasingly believe their shopping decisions can make a difference. Part of the challenge is to avoid being perceived as “greenwashing” by consumers who may perceive a marketing spin on labels:
Why not take a stand and call out carbon openly and consistently? I know that precise carbon calculation at an item level is impossible, but can’t we offer estimates? The main promise need not be perfect accuracy but a commitment to continuous improvement. Since most consumer food purchases happen very regularly, we could in essence partner with the shopper to save the planet.
The SCM survey suggests that other industries are less suited to meet this challenge, though, with only occasional (automotive) or non-existent (chemicals) contact with consumers. O’Marah adds that some also clearly have other imperatives (pharmaceuticals) or have genuinely small carbon footprints (media).
BSR and SCM World agree that carbon and climate change may only be one thread of the broader social and environmental sustainability problem, but supply chain managers can – and must – play a major leadership role in addressing the alarming consequences of aberrant global weather conditions.
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