Sustainability in Supply Chain and Logistics

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Sustainability in Supply Chain and Logistics

A company’s supply chain and logistics system can greatly impact the environment, human rights, and anti-corruption policies.

Key Insight

Pressure from investors, customers, and governments—in addition to extreme weather events and trade tensions—has resulted in new efforts to build sustainability into the supply chain for many companies.

Why It Matters

A company’s supply chain and logistics system can greatly impact the environment, human rights, and anti-corruption policies.

Examples

Swedish packaging company Tetra Pak requires third-party verification that its paperboard suppliers do not use wood from any form of deforestation that breaks the natural forestry cycle. A company cannot supply Tetra Pak if it fails to meet these requirements.

Japanese chemical and cosmetics company KAO has been actively encouraging suppliers to reduce CO2 emissions; at least 80% of its suppliers have set emissions reduction targets. The Zero Discharge of Hazardous Chemicals Programme (ZDHC), the Sustainable Apparel Coalition, and the Outdoor Industry Association are all working toward sustainability goals in the apparel industry.

Some say that 2019 was the year that sustainability finally burst onto mainstream for the fashion industry. Esquel, a textile giant in Hong Kong, is working to make the apparel supply chain more environmentally friendly, and a number of designers including Gucci and Kanye West made sustainability pledges last year.

What’s Next

Improving environmental, social, and economic performance throughout supply chains enables companies to find cost savings, as well as opportunities to increase productivity and optimize processes and systems. Building sustainable practices into logistics and the supply chain may be an aspiration today, but in the near future, it may be a requirement as extreme heat, air pollution, deforestation, water shortages, flooding, and worker health and safety issues make procurement less predictable. Regulators, too, are beginning to impose new restrictions on product development, manufacturing and shipping.

The Impact

The next decade will present significant opportunities for companies in manufacturing and consumer goods, as well as for those that manage logistics. Sustainability factors will impact growth and investor returns.

Watchlist

Companies in the fashion, consumer goods, shipping and manufacturing industries.