Sustainable supply chains: both development motor and competitive advantage
Why commitment to sustainable supply chains pays off and how companies can get started.
On the one hand, advancing globalisation and the accompanying global trade bring about many positive things, but on the other hand, the consequences are increasingly being felt - for example, through increased emissions of climate gases, water and air pollution or poor working conditions. The Covid pandemic and the Ukraine war have also shown how fragile global supply chains are and how quickly they can be disrupted, with serious consequences for consumers.
Often, however, these negative impacts remain unrecognised or only become apparent on closer inspection, because supply chains are often confusing and non-transparent. This applies to all steps along the value chain, from the extraction of raw materials to the intermediate trade, the sale in the shop and all the way to the end customer.
Transparency creates trust and promotes sustainable action
In recent decades, global challenges such as the protection of human rights, the climate, biodiversity and the environment have become increasingly urgent and present - and with them, socially and ecologically responsible action in the area of supply chains. Against this backdrop, the member states of the United Nations have committed to 17 Sustainable Development Goals (SDGs), which aim to implement sustainable development at the economic, social and ecological levels.
The private sector plays a central role in sustainable supply chains, and three key drivers are increasing the pressure on companies to make their supply chains more sustainable:
- Consumers are increasingly demanding "clean products" - trust is thus becoming a key success factor for brand value.
- Investors and analysts are increasingly prioritising social and environmental risks in their company valuations.
- Corporate due diligence is becoming the focus of regulatory and legislative developments, such as the German Supply Chain Act, which comes into force on 1 January 2023 and applies to all companies with more than 3,000 employees (in Germany, this means around 900 companies). Here, for the first time, clear requirements for corporate due diligence are defined and an external audit by the Federal Office of Economics and Export Control is guaranteed.
In order to fulfil corporate due diligence obligations in one's own supply chain well, relationships with supplying companies are important (Copyright © GIZ / Sabrina Asche).
On the way to a sustainable supply chain, companies have to reckon with an increased effort, but this pays off, because:
- The companies meet the increasing requirements and regulations.
- They strengthen their brand(s) and reduce reputational risks.
- They build solid relationships with suppliers and thus ensure resilient and transparent supply chains.
Sustainable supply chains have never been easier
Big data management, new analytics technologies, artificial intelligence and security tools such as blockchain and RFID sensors now provide unprecedented levels of transparency and control in modern supply chains. However, the achievements of digital transformation and the ever-improving technologies for the digital supply chain can also help in particular to make supply chains more transparent and sustainable. This is because companies can (and must) assume social responsibility much better and more easily here and communicate their best practices for green supply chains and sustainable logistics to their stakeholders.
Guidance frameworks for companies are available
As ethical supply chain practices become more important for companies, the number of standardised compliance targets and sustainability benchmarks is also growing. In addition to national regulations, such as the aforementioned German Supply Chain Act, the United Nations, for example, has also formulated ten criteria for measuring the sustainability of supply chains with the United Nations Global Compact. These cover areas such as environmental responsibility, labour standards, human rights and corruption, and are based on the premise that socially responsible business practices and appropriately manufactured products not only benefit people and the planet, but also help build brand equity and a positive image, increase competitiveness and operate profitably in the long term.
Sustainable supply chains and leverist.de
The matchmaking platform leverist.de is a German development cooperation project that focuses on attracting private sector companies to participate in development cooperation projects. Here you can also find numerous business opportunities that revolve around the development of sustainable supply chains. For example, a matching area was recently developed specifically for Ukrainian SMEs whose former supply chains have collapsed due to the war and are important for stabilising the supply situation in the country.
