Are You Sustainable? Should You Be?

Editor’s Note: Is sustainability a luxury or a priority? That’s a question we’re trying to answer at SCMR. For instance, in the November issue of SCMR, we published three articles on the current state of sustainability, including Sustainability As Strategy: Caught In The Luxury Trap. In that piece, our authors argue that for many companies. sustainability has become a luxury. Business, they contend, needs to refocus its sustainability efforts through a different lens.

At our recent Supply Chain Outlook Summit, on the other hand, presenters such as the University of Tennessee’s John Bell argued that sustainability will be an imperative to successful supply chain managers going forward. On SCMR.com, the Environmental Defense Fund’s Elizabeth Sturcken contends that counter argument sustainability is alive and thriving.

So which is it? Maybe a little of both. In this column, Yves Leclerc and David South of West Monroe Partners discuss recent research that found that many executives are still struggling to define just what sustainability means to their businesses.
We'd like to hear from you. At your company, is sustainability a priority or a luxury? Feel free to send me your comments at [email protected], and let me know how your supply chain is viewing sustainability post the Great Recession. Bob Trebilcock, Editorial Director, Supply Chain Magazine Review.

“Sustainability” is a frequent buzzword in boardrooms, strategy sessions, and the media—and for good reason. In addition to reducing carbon footprint and delivering societal value, sustainable practices can improve efficiency and increase sales and revenue.

But many organizations are still struggling with what sustainability means for their businesses and supply chains—and with their appetite for making the changes required.

If supply chain sustainability has been a point of discussion for your organization, you may be interested in our latest research conducted in partnership with the Supply & Value Chain Center at Loyola University. This study looks at how companies are addressing sustainability in their supply chains and adapting to changing consumer preferences. We surveyed 52 executives representing a range of industries and companies ranging in size from $100 million to over $120 billion. These are a few top-level findings:

• Nearly half of supply chain executives surveyed do not currently consider developing a green supply chain as a strategic priority, have no formal sustainability team, and do not plan to pursue any third-party certifications; 12 percent said they place no importance on a green supply chain.
• Only 37 percent have plans to incorporate sustainability into their operations, and just 22 percent of those plan to do so in the next three to five years.
• Among the three pillars of sustainability, respondents placed the greatest importance on environmental impact, ahead of economic impact and social affairs.
• Brand image is the leading motivator for moving toward a green supply chain, followed by innovation in products and process.

Our global alliance partner, BearingPoint, conducted the same survey of supply chain executives in Europe to understand whether practices and attitudes vary by geography—and found some marked differences:

• 59 percent of European companies surveyed state that the green supply chain is already a strategic priority
• European executives, like their North American counterparts, cite brand image as the most important motivator, but far fewer (36 percent versus 47 percent of North American respondents) consider innovation to be important
• European supply chain executives prioritized the economic impacts of sustainability, whereas North American executives prioritized environmental impact.

Looking across both surveys, it is clear that regulations, a more compact distribution network, and more advanced thinking have propelled European companies ahead of North American companies when it comes to implementing sustainability initiatives and reducing carbon emissions.
Until regulations force action, many North American companies likely won't prioritize resources and funding to make significant change. Yet, pioneering organizations have a tremendous opportunity to differentiate themselves by becoming early adopters and to drive both business and societal value.
Companies interested in making substantial changes should put together a compelling business case for senior leadership. The business case should include, at a minimum:

• A carbon footprint assessment that identifies, quantifies and contextualizes environmental impact
• A customer sentiment analysis to determine potential revenue upside
• Bottom line cost savings

As you consider plans for 2016 and beyond, ask this: Should sustainable practices should be an option or be part of our “business as usual”?

Yves Leclerc is a managing director and leader of the West Monroe Partners' supply chain practice. David South is a senior manager with West Monroe Partners and leader of the firm's Sustainability practice. They can be reached at [email protected] or [email protected].

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