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Understand 21st century supply chains in 3 charts

When you think about pollution, it may conjure up images of deforestation, belching power plants and traffic jams. However, while industries from construction to transportation are responsible for huge carbon footprints, consumer goods account for 60 percent of global greenhouse gas emissions.

The good news: Major brands are taking a closer look at their network of suppliers, manufacturers and distributors. That's according to the Sustainability Consortium’s recent 2016 Impact Report: Greening Global Supply Chains: From Blindspots To Hotspots To Action (PDF).

For example, Walmart recently pledged to source from fisheries involved in fishery improvement projects, and approached the Sustainability Consortium to help them create equivalent certifications to the Marine Stewardship Council (MSC) — so that all fresh, frozen, wild and farmed seafood sold by Walmart and Sam’s Club in the United States will have either MSC or equivalent certification.

As the cost of renewable energy plummets and consumers demand social responsibility from their favorite brands, sustainability is becoming cost-efficient. Emerging technologies, including the Internet of Things, are catalyzing corporations to rethink supply chain strategies.


Economic development

Source: The Sustainability Consortium

Sadly, more than 75 percent of forced and child labor is embedded in consumer goods' supply chains, according to the report. Forced and child labor violates the tenet of social inclusion, a critical component of sustainable economic development.

Without social inclusion, emerging economies remain at risk. Establishing good governance, another tenet of sustainable development, will curb these malicious traditions. Greener supply chains aren't possible without eliminating forced and child labor once and for all.

As emerging economies in Africa and Asia continue to rise, nearly 2.5 billion people are expected to join the "consuming class." Therefore, supply chains must rework both who buys and builds goods. The bulk of population growth is occurring in emerging economies, which are rising up thanks to advances in technology, policy and renewable energy — and when they attain consumer status, it will add weight to the global supply chain.

While emerging economies experience strong population growth, involve more people in their economy by ending corrupt labor practices and reach the consumer class, supply chains must accommodate many more people.

Impact industries

Source: The Sustainability Consortium

Which industries make the biggest footprint, and where? Among four main categories — resource efficiency, climate and energy, ecosystems and biodiversity and social — different supply chains outperform others.

For example, while the seafood supply chain performs relatively poorly regarding climate and energy (a very low score of 4), it performs relatively well socially (much higher at 74).

Similarly, while the toy supply chain performs poorly in terms of climate and energy, it also performs well socially — likely thanks to policy reform regarding child labor and forced labor. In 2016, the specialty foods industry appears to be performing the worst socially, while the electronics industry is fairly moderate.

Once these "hotspots" are pinpointed within different industries, the next step is to use established best practices and standards to make changes. Measurement and reporting standards, such as the Sustainability Consortium toolkit, are becoming increasingly sophisticated and accessible for corporations to more easily green their supply chains.

According to the report, it is ultimately on both buyers and suppliers to work together, says the Sustainability Consortium. Suppliers must offer a universal reporting tool for use across all buyers and enhance product development, for example, while buyers must hold suppliers accountable by asking hotspot category-specific questions and tracking their performance. A stronger commitment to teamwork is the key.


Improved tools

 Source: The Sustainability Consortium

One of the Sustainability Consortium's new tools, Commodity Mapping, provides better visibility into corporations’ agricultural-commodity or forest-product purchases — for the purpose of sustainable sourcing. Commodity Mapping, which makes use of import and export data on more than 100 commodities, helps identify problem hotspots in the supply chain such as deforestation, biodiversity and child labor in different regions around the world.

Along with Commodity Mapping, CDP data includes disclosures from companies completing the CDP Climate Change, Water and Forests questionnaires, which require details of greenhouse gas emissions, water data and commodity use that impacts deforestation. Corporations are able to use improved CDP reporting to break their supply chain sustainability down to the product category level, resulting in an 18 percent increase in supplier response rate from 2013 to 2015. 

Ultimately, greening supply chains starts with understanding the conditions and trajectory of the emerging economies that are about to leap into the consumer class — including the economics behind specific types of products.

Finally, sustainable development is critical not only for protecting the environment but also for social inclusion and good governance.

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