After the U.S. announced its departure from the Paris Climate Accord in June, retail and supply chain professionals across all industries spoke out against the withdrawal, arguing that sustainability should be – and will continue to remain – a top priority for organizations across the globe.
Since the announcement, retailers have shown increased concern around global climate change and overall sustainability initiatives. With wildfires, hurricanes and intense flooding rampant across the nation in recent months, supply chain disruption continues to grow, and retailers are forced to face the issue in order to mitigate it. Sustainability and transparency are becoming the core focus for retail professionals around the globe, and companies are making it clear that they are committed to sustainable practices regarding procurement, packaging and more.
In 2015, the United Nations announced its Sustainability Development Goals (SDGs), featuring 17 objectives to mobilize efforts to fight inequalities and tackle climate change over the next 15 years. The UN introduced goals to “end poverty, protect the planet and ensure prosperity for all.”
Further, in 2015, Gartner introduced sustainability as a scoring factor in its annual Top 25 Supply Chains list. Gartner’s list identifies companies that best exemplify the demand-driven ideal for today’s supply chain, and document their best practices. This year, four out of the top five companies – Unilever, Inditex, Cisco and H&M – received CSR scores of 10 out of 10.
With consumer demand in favor of sustainability, companies’ bottom lines – not to mention the future of our planet – ride on today’s CSR efforts. Large manufacturers and retailers may pressure their upstream suppliers to reduce costs while improving product quality, but without increased collaboration and transparency, sustainable practices may be at risk.
Organizations’ supply chains can make a significant impact in promoting human rights, fair labor practices, environmental progress and anti-corruption policies. However, implementing these initiatives can be difficult due to the size and complexity of a company’s supply chain. To get ahead, successful retailers will focus on increasing visibility and communication with suppliers and other partners to ensure they are receiving sustainably sourced materials.
This transparency is imperative to ensure organizations are aware of how tier 2 suppliers and beyond are conducting business. Just this year, major fast fashion brands such as Inditex and Marks & Spencer were linked to the production of viscose, a cheap alternative to silk that pollutes the communities where it is produced. Investigators found severe environmental damage, including water pollution from untreated contaminated waste and air pollution around factories that produced the material. On the flip side, Crate & Barrel was among furniture retailers who signed on with Dipantara in 2014, a teak sourcing company that encourages environmentally and socially sustainable harvesting practices. Through this partnership, Crate & Barrel can track teak wood back to the actual stump from whence it came – talk about transparency!
Let’s be honest: When transparency is low, there can be inadvertent or intentional corners cut. Retailers can minimize this potential by using emerging digital technologies such as blockchain, internet of things (IoT) and digital sourcing to improve relationships with suppliers and consumers alike. As long as retail and supply chain professionals are putting sustainability and transparency at the forefront of their operations, they are bound to succeed.
Open collaboration and transparency with suppliers can help retailers foster their sustainability initiatives – all while providing a source of constant innovation.