When a business sets sustainability commitments, it is crucial that there is an understanding of the role their supply chain will play in helping to achieve these commitments. It is therefore important that the associated requirements are built into suppliers’ objectives and that they are held to account to achieve them. There are potential tensions that could arise from this, generally coming from concerns regarding an unequal share of costs and benefits. Collaboration is therefore key, with both sides prepared to take a transformative approach to the way they operate and interact. This can be challenging, but also crucial to achieving sustainability goals.
Data Sharing and Transparency
Having a supply base with sustainability goals that align to yours, with the ability to measure success together, is crucial. In particular, this is important for commitments such as Scope 3 Carbon, where businesses are required to measure supply chain CO2e reductions. There are similar challenges when monitoring performance against human rights and biodiversity goals, where often the greatest risks are with Tier 2 suppliers (i.e. a supplier’s supplier). New systems and structures must therefore be put into place to enable effective measuring and reporting, with a focus on traceability. This however necessitates data sharing, which can give rise to transparency issues. Generally however, these challenges can be overcome if there is a willingness by both parties to resolve them, based on having mutual sustainability objectives.
Supplier Selection
Supplier selection and influencing is therefore key to achieving more sustainable ways of operating. Burgerville – a food retailer in the US, choses its suppliers solely on their ability to meet their sustainability goals1. They have a reputation for treating their partners and employees fairly and with respect, and in turn, expect the same ethical standards from their suppliers.
Burgerville selected their coffee supplier, Portland Roast Company, due to the highly ethical reputation they have in terms of treatment of coffee farmers, and their reinvestment of profits into the communities where the coffee is grown and manufactured. By carefully selecting suppliers that shared the same values of workforce welfare, Burgerville fostered sustainable, long-term partnerships with these suppliers in a way that can be mutually beneficial for all members of the supply chain.
Another such example can be taken from Chipotle, who partnered with around 22 independently owned agri businesses, providing them with their organically farmed meat used in their restaurant chains. They also partnered with 25 local farms to procure their vegetables in order to support the surrounding communities2.
It is only by selecting suppliers whose sustainability goals reflect your own, using the principle of ‘clean supplier, not just clean supply’, that organisations are truly make progress against their ethical and environmental goals. It is critical therefore that strategic discussions with key suppliers include sustainability goals, and that there is clarity on what is required, how this will be measured and what can be achieved collaboratively.
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