Stakeholder Trends and Insights
Study:
Companies Prioritizing Supply Chain Sustainability, But the Real Work Remains Ahead

Our recent research suggests that sustainability is gaining some traction in business, yet few organizations have taken meaningful steps toward developing a green supply chain. Furthermore, North American companies lag their European counterparts.

While the concept of “sustainability” is the subject of much discussion in boardrooms, many organizations still struggle with determining what sustainability means for their businesses and supply chains — and more significantly, with committing the resources necessary to make meaningful change.

West Monroe Partners and the Supply and Value Chain Center at Loyola University Chicago wanted to gain insight into how companies are addressing sustainability in their supply chains and adapting to changing consumer preferences. So we recently surveyed more than 50 executives of companies ranging in size from $100 million to over $120 billion across an array of industries. This study follows on our previous year’s research, which examined whether consumers would be willing to pay more or wait longer to have products delivered sustainably.

The bottom line: Just over half (51 percent) of U.S. supply chain and sustainability leaders said they consider developing a sustainable supply chain a current strategic priority, and an additional 36 percent plan to address it in the short, mid or long term. The leading motivators for pursuing sustainability initiatives are brand improvement, followed by innovation in products and processes. Factors such as cost-reduction opportunities, competition, and lobbying have had less influence.

More attention, but is there enough action?

Strategic prioritization: When asked to prioritize among three pillars of sustainability, respondents placed slightly higher importance on the environmental impact than on economic impact or social impact.

Areas of focus: Approximately 56 percent of respondents said they have intensified their supply chain sustainability efforts over the past three years. Moreover, about 60 percent said they have taken action to plan, implement, further develop, or discontinue a program for “green” design over that period, with primary focus areas including products and packaging, distribution/logistics, production processes, and components/ingredients. Some are focusing on the entire supply chain lifecycle.

Accountability: Responsibility and accountability are critical to change. Even though more than half of all respondents say that a sustainable supply chain is a current strategic priority, only 37 percent have established individuals or teams dedicated to sustainability in the past three years.

Third-party participation: Nearly half (49 percent) of those surveyed said their organizations are certified by or participate in outside organizations that promote sustainability. For example, 20 percent are certified by the Forest Stewardship Council, 16 percent by Smartway, and 10 percent by Green-e.

Progress and priorities differ in Europe

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:

• More European companies (59 percent) said that a sustainable supply chain is already a strategic priority
• European executives, like their North American counterparts, cited 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 were more likely to prioritize the environmental impact

Regulations and a more compact distribution network are among the factors that have propelled European companies ahead of North American companies when it comes to implementing sustainability initiatives and reducing carbon emissions.

Sustainable supply chain practices: “nice to have” or “business as usual”?

Pioneering organizations have a tremendous opportunity to differentiate themselves and to drive both business and societal value.

While the survey showed many companies are thinking about and/or prioritizing supply chain optimization, few at this point seem to be embracing sustainability initiatives in a meaningful way. Until regulations force action, many companies likely won’t prioritize the resources and funding necessary to make significant change.

Change, of course, is never easy. Executives looking to build support for taking meaningful action in their supply chains and to move the sustainability needle from “nice to have” to “part of our business as usual” will need to start with a compelling business case for change — one that includes, at a minimum:

• A carbon footprint assessment that identifies, quantifies, and contextualizes environmental impact
• A customer sentiment analysis that quantifies potential revenue upside
• Examination of supply chain requirements for ESG compliance and assessment of demands by capital sources to demonstrate ESG activities
• Understanding direct/indirect COP21 requirements on the industry/sector supply chain
• Development of a materiality matrix supported by a benefit/cost analysis
• Competitor analysis and determination of value proposition for undertaking sustainability actions

To learn more about the survey, please contact Yves Leclerc or David South.