3 Factors Impacting Environmental Sustainability in Supply Chains
Every business in the world is working toward more environmentally conscious operations. But the journey to sustainability looks different in the supply chain.
Leaders in this space recognize the epic, uphill battle they’ve begun. The heavy lift exists because the supply chain is not just a handful of procedures or processes: it is an immensely complex network of interconnected components, and all players have to agree to the terms of a greener game.
There are three major factors impacting environmental sustainability in supply chains today. Let’s cover those.
Trax is passionate about environmental sustainability in the supply chain. Nothing less than the future is at stake. Our latest innovation introduced a Carbon Emissions Tracker for the transportation industry: go here to learn more.
1. New Energy Solutions
New energy solutions are on the horizon:
- According to the 2021 New Energy Outlook edition from Bloomberg Finance, zero emission energy sources are predicted to be at 60% of installed capacity by the year 2040.
- Despite supply chain bottlenecks and high costs, renewable energy is on track to break global records this year with the addition of 295 gigawatts of new renewable power capacity.
- In 2015, 154 companies in the United States signed the American Business Act Climate Pledge. As of March 2022, that number had risen to over 300 businesses committed to pursuing ambitious carbon-reduction activities across supply chains.
The takeaway is this: ongoing efforts are being made to implement realistic, effective solutions for energy consumption in the supply chain, and business leaders in our space have more opportunity than ever to leverage these opportunities to support continuous improvement in operations.
2. Consumer Demands and Expectations
A catalyzing factor driving the policy-level changes around supply chain emissions is consumers. More than ever, public sentiment has shifted to favor green companies:
- 66% of individuals surveyed by the World Economic Forum said they consider sustainability before making a purchase.
- Online searches for sustainable goods have risen 71% in the past five years.
- 23% of consumers have stopped buying from a brand that lacked efforts toward sustainability.
- 85% of consumers worldwide became “greener” in their purchasing behavior between 2020-2021 and more than 33% of consumers worldwide will pay more to buy from companies that observe sustainable practices.
- 66% of consumers say they are changing consumption habits to lower their environmental impacts, no longer seeing sustainable products as an alternative, but an essential.
The evaluation of “sustainability,” even to an average consumer, is informed by performance through the entire value chain of a product. This includes production, shipping materials, shipping method, delivery method, and more.
Part of not just making promises, but making good on those promises, comes down to visibility and performance metrics. Do leaders in the supply chain fully understand workflows, cycles, supplier agreements, delivery processes/timelines, and more? This level of understanding is only gained through meaningful freight audit and payment processes, which are supported by freight audit technology.
Efforts toward transportation spend management maturity will have the happy byproduct of improving line of sight into carbon use, and uncovering areas that need improvement.
3. The Challenge of Change Management
A final factor impacting environmental sustainability in supply chains is the challenge of change management. New tools are available that will help supply chain leaders track carbon emissions, which is the first step to change. But the interconnectedness of the supply chain means that many parties have to be on board: company leadership, company employees, suppliers, vendors, the list goes on.
Getting everyone, external and internal, on board with new initiatives requires skilled leadership.
Behavioral analysts have studied consumer behavior around sustainability for many years. Those findings, as well as insights from companies in an advanced stage of sustainability, provide valuable guidance. Here are some valuable recommendations:
- Cast the vision. “Why is it a priority to be environmentally sustainable in the supply chain?” There is plenty of existing information — including market and consumer demand — you can offer to support your big vision and mission.
- Use technology. Build automations, make data gathering easy and all points visible. Technology will alleviate the overwhelm from a shift this size.
- Answer “what’s in it for me?” for everyone. Leadership, staff, suppliers, and anyone else in your ecosystem need to see the real and relevant benefits of environmentally sustainable practices.
- What are the (true) investments? It is unwise to mask the probably costly and time-intensive efforts it will take to reach an elite level of “green operations” in the supply chain. Map it out with meticulous detail and be transparent about the costs.
- Create a timeline. Every company that has published a sustainability pledge or plan has it attached to a timeline, which is vital for authenticity and accountability.
At Trax, we’ve been working on supporting environmental sustainability in the supply chain for a while now. Each month, you can read new content on this topic. Here’s a good one: CO2 in the Supply Chain: New Tactics to Support Environmental Sustainability.
Trax Tools Support the Resource Revolution
Implementing more streamlined practices to support environmental sustainability in supply chains is just good business. It’s also the right thing to do, and fresh technological solutions make it easier than ever.
Regardless of the challenges ahead to get to an elite level of environmental sustainability in our operations, we all start from the same line: tracking. That’s why Trax’s first purpose-built tool for this area is a Carbon Emissions Tracker.
Trax is the global leader in Transportation Spend Management solutions. We partner with the most global and complex brands to drive meaningful optimizations and savings through industry-leading technology solutions and world-class advisory services. With the largest global footprint spanning North America, Latin America, Asia, and Europe, we enable our clients to have greater control over their transportation performance and spend. Our focus is on your success.