Businesses are facing increasing pressure to account for the environmental impacts associated with their manufacturing process, driven by growing stakeholder expectations– from consumers, business, civil society, and governments– as well as a recognition that regulatory compliance is no guarantee that products have been manufactured responsibly.
We see this in the apparel sector, where a series of pollution incidents and aggressive NGO campaigns have fuelled consumer backlash and forced brands to become more transparent and to mitigate their impact on the environment, workforce and local communities.
Which raises the question – how can a business drive environmental improvements across entities it does not own nor operate?
Clearly, there is a risk for companies to fall in the trap of adopting a box ticking compliance-driven supply chain engagement approach, that results in a resource-intensive reporting exercise for both businesses and their suppliers. Such programmes can become counterproductive if businesses are unable to interpret the collected data to identify environmental hotspots in their supply chain and map corrective actions and improvement opportunities for suppliers.
From our experience working with actors along the supply chain across multiple sectors such as apparel and textiles, retail, electronics, food and toys, we identified five actions that a business can take to drive environmental improvements across its supply chain:
- Ownership: Secure the buy-in and support of senior management, and have the environmental strategy be communicated consistently across functional departments both internally and externally. If suppliers get mixed signals from Sourcing Managers and CSR Managers, which is often the case when the sourcing decision-making process is purely cost-driven, suppliers will prioritise what will help them to retain the business and shelve the rest.
- Prioritisation: Determine the environmental impacts that are the most material to your business, and focus on them. Conduct a pilot with a limited number of strategic suppliers that account for a majority of your business volume, then progressively scale up to other environmental impacts and/or suppliers.
- Business case: Clearly define the value proposition for suppliers. The more closely the business case is aligned with the supplier’s business drivers and embedded into the commercial relationship, the more likely suppliers will react positively to the supply chain environmental strategy. A few examples include, among others, integrating sustainability criteria in the sourcing decision making process, increased productivity and/or cost savings from environmental efficiency programmes, guarantee that cost savings from environmental efficiency programmes will not be leveraged to negotiate costs, or even setting environmental standards as a minimum requirement for doing business.
- Roadmap and monitoring: Set clear expectations and progressive milestones for suppliers to meet. Track progress regularly, inform suppliers of their performance, determine corrective actions and a timeline for completion.
- Supplier collaboration and support: Consult suppliers during the programme development phase to gain insights into their business drivers, potential barriers and opportunities, and to address their concerns. Allocate resources to invest in meaningful supplier capacity building and to provide support throughout the implementation of the programme.
We believe that major environmental wins can result when buyers work with suppliers, but only if there is a real business case backed with clear targets, performance tracking and supplier engagement.
By Laure Mazzocco
Since Laure joined RESET in 2016 she has collaborated with clients to develop and implement environmental sustainable strategies that support both the business case and the natural environment. Prior to joining RESET, Laure worked for IBM and Schneider Electric. Laure graduated with a master of science in sustainable development from HEC Paris.