Investing in the Green Future

Across industries, enterprises are charting a path toward the future. But unlike the business strategies of previous generations, modern enterprises have an even more important future to consider -- the survival and prosperity of our planet.  

More than ever, sustainability is recognized as a critical societal and enterprise priority, one that is on the topic of nearly every boardroom agenda. From the largest Fortune 500 companies to innovative startups, leaders are faced with the knowledge that without a sustainability strategy in place, they will ultimately fall behind the competition.  

One area in which businesses have started to devote their attention is the supply chain. By preparing to mitigate a product’s lifetime environmental impact -- from raw materials and manufacturing footprint to in-use emissions and end-of-life disposal -- leaders are set to transform the way products, services, and processes come to market.  

Incentive Toward Change 

The push for more sustainable supply chains cannot be attributed to a single factor. It is a global phenomenon brought on by a perfect storm of shifting business and personal priorities. In tandem, businesses, governments, and consumers have all found sustainability at the center of their newly developing lifestyles.  

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For the last several years, consumers have begun to prioritize ethically sourced and environmentally friendly products. Research shows that when Gen Z and Millennial customers believe a brand cares about its impact on people and the planet, they are 27% more likely to make a purchase from that brand than older generations are. This indicates the clear impact that sustainability has on the purchasing behavior of younger generations. What’s further, 63% of consumers want brands to play an active role in their education around sustainable products and 55% believe that the greater a brand’s sustainability effort, the more positive the consumer perception of that brand.  

Due to this mindset shift, companies and governments have begun to improve the sustainability of their operations and supply chains. From an enterprise perspective, the growing societal awareness of the environment is not the only driver of green initiatives. Many of these brands have begun to realize the cost savings associated with sustainability. In the long term, sustainable companies boast increased savings related to energy efficiency, reduced waste, and transportation. What’s further, brands with a strong sustainability strategy mitigate risks associated with supply chain disruption and compliance issues.  

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Beyond cost, companies that embrace sustainability often experience enhanced consumer trust, in turn improving their reputation in the marketplace.  

Governments are also tapping into these discussions. National and global standards and regulations are outlining structures for compliance. The Environmental Protection Agency (EPA) has committed to reducing greenhouse gas emissions, energy, water, and waste at its facilities and has set out several federal sustainability guidelines for companies.  

With businesses, governments, and consumers all tracking toward the same goal, it is clear that the push for sustainability is here for the long haul.  

Roadblocks to Implementing a Sustainable Supply Chain  

While the motivation for sustainable transformation is clear and present, there are challenges that remain -- specifically in the short term.  

Scope 3 emissions, which represent all the upstream and downstream emissions of a single organization, present a major challenge. Unlike Scope 1 and Scope 2 emissions, which are directly controllable, the conversation around Scope 3 is much more complex. There is a very large range of Scope 3 sources, such as supply chain emissions, business travel, end-of-life disposal, and beyond. There is an increased level of difficulty when attempting to accurately track the emissions of an enterprise, as well as any subsidiaries, suppliers, and logistic partners.  

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For example, automotive manufacturers can have thousands of suppliers and several logistic partners; ensuring alignment between all stakeholders requires extensive transparency across the supply chain. Additionally, robust tracking and reporting mechanisms must be in place to get an accurate read.  

Data collection is also a roadblock to building sustainable supply chains. It requires collaboration across all of a company’s stakeholders, which can often be difficult to control. For example, an organization cannot control a customer’s use of their product once it has been purchased, but that customer usage is still included in that brand’s Scope 3 emissions. The challenge increases even further due to the lack of a standardized methodology for collecting emissions data.  

Finally, many businesses looking to build more sustainable supply chains experience cost and regulations challenges. The cost of initial investment in green initiatives can be large, and many leaders must decide between short-term savings and long-term benefits. Similarly, regulations are ever evolving, and leaders must constantly assess their strategies and goals to ensure that they maintain compliance.  

Best Practices for Leaders  

Spearheading transformation in any capacity will require strong leadership to ensure success. Where sustainability is concerned, businesses are embarking on outgrowing a decades-old mindset where our planet was billed as an afterthought.  

In order to execute environmental goals and commitments, leaders should focus on several best practices. Firstly, establishing a clear strategy and goals for how to track and reduce supply chain emissions -- specifically Scope 3 -- is critical.  

Additionally, leaders should weave sustainability into the fabric of their organization from the top down by promoting company-wide environmentally friendly practices. These include recycling, reusing, and relying on the circular economy, and supporting local sourcing where possible.  

Perhaps the most important practice for leaders is to leverage innovative technologies to help track and monitor CO2 and other emissions. These capabilities will provide organizations with more seamless and efficient ways to monitor and optimize their operations. Some of these technologies include:  

By instilling these best practices, leaders can face sustainability challenges head-on and set their organizations up for success.  

Lifecycle Assessment Methodology  

What if it was possible to predict the sustainability impact of design changes at the push of a button? To allow engineers to make ‘virtual’ changes to design, materials, or supply chains, and immediately understand how combinations of decisions change the overall lifecycle environmental impact? Enter the life cycle assessment (LCA) methodology.  

LCA is a standardized methodology that helps design engineers evaluate the environmental impact of a product, process, or service. This method tracks impact across the entire lifecycle, from the extraction of raw materials to end-of-life disposal. It does so by providing 18 environmental KPIs linked to supply chain -- including carbon footprint -- to identify hotspots where carbon emissions are highest.  

For example, consider the extraction of raw materials. LCA can help select more sustainable raw materials and guide brands toward renewables. In manufacturing, LCA can highlight inefficiencies and provide clear assessments, which identify problem areas and offer solutions. In design, this approach can inform product design decisions, encouraging products with longer lifespans or easier recyclability. 

Cultivating a sustainable supply chain will not happen overnight, but organizations can learn many valuable lessons throughout their journey.  

By focusing on best practices, and prioritizing long-term transformation, organizations can foster a greener future and fortify the trust and respect of their customers.