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Why 2015 is the Year to Advance Your Company’s Sustainable Supply Chain Efforts

Submitted by: Ian Lifshitz

Posted: Mar 10, 2015 – 06:00 AM EST

Series: Supply Chain Sustainability: Special Focus

Tags: supply chain, sustainability, csr

 
Ian_lifshitz

This is the most recent article in our series on Supply Chain Sustainability. For more articles, go to
http://www.csrwire.com/blog/series/75-supply-chain-sustainability-special-focus/posts

Companies are often reluctant to conduct supply chain audits, for reasons ranging from costs and limited company resources to other unforeseen challenges.

Although investment and infrastructure are needed to audit suppliers, the fact is that delaying the auditing of your supply chain to ensure that your business is compliant with environmental and social standards can prove to be more costly than proactive engagement. Worse, it may have a long-term negative effect on your customer base and brand. The good news is that there is a “second-mover” advantage for supply chain audits today. 2015 is the time to act.

On the whole, European companies were the “first-movers” in leading many sustainability supply chain audits. This push resulted in building the infrastructure needed to have sustainability metrics throughout the supply chain. Many companies in the U.S. are just now waking up to the reality that customers are demanding transparency and sustainability isn’t just a buzz-word, but a concept that’s here to stay.

The infrastructure is now in place for downstream audits around the globe – and there is a real second-mover advantage – as the cost of these audits has come down considerably. The time is right to make a positive impact – be it socially or environmentally – and it’s never been more cost-effective for companies to ensure their supply chain meets the requirements of customers, regulators, NGOs and international governmental bodies like the United Nations.

As a representative of a company that has worked to implement a sustainable supply chain, here are three important points that should be taken into consideration when taking that next step:

1. Initiating a supply chain audit is too expensive and time consuming is a misconception 

Part of the reason why companies are reluctant to engage in auditing their global supply chain is because of the misconception that it will cost too much and be far too time consuming. While some investment is needed to initiate the process, the investment is worthwhile in the long run considering the massive damage that could result if environmental or other harmful infractions are present within the supply chain. 

The good news is that there is an existing infrastructure in place to help reduce costs and time resources. For instance, when APP decided to initiate a comprehensive audit of its supply chain it engaged a third party, The Forest Trust (TFT), to help carry out this review. It is important to recognize that this type of work requires commitment and patience; however, ultimately, the initial investment will yield profound benefits that will help the company’s long-term interests and objectives. 

2. The costs of inaction are far greater and potentially damaging

There are a multitude of examples demonstrating that the costs of inaction have pervasive and lasting financial and reputational consequences. For instance, a great example of a company that proactively sought supply chain sustainability improvement is Unilever. Unilever implemented a “Responsible Sourcing Policy” where efforts are under way to “ensure supplier partners collaborate, understand and embrace the criteria in the Policy” to improve system-wide sustainability efforts. The company is enjoying better relationships with its customers, which helps to improve its brand reputation and better establish and maintain effective risks and controls within its supply chain.

In the case of APP, working within the pulp and paper industry in the Indonesian rainforest, the company is not immune to supply chain issues. But, by acting decisively, listening and engaging with stakeholders, APP moved to end natural forest clearance and began the implementation of a comprehensive policy known as the Forest Conversation Policy (FCP) in February 2013, which, among many other activities, establishes regular audits of our global supply chain in collaboration with key experts and partners.

3. Utilize the competitive advantage of being a proactive second-mover

Companies are now able to leverage the various constituencies (e.g., NGO partners, audit tools, private consultancies) that first-mover companies traditionally could not rely upon. Because these elements are now in place, proactive second-movers can take advantage of best practice audit processes and bolster the efficiency and competitiveness of their global supply chains. For instance, for companies launching large-scale CSR initiatives, engaging third parties allows you to reinforce CSR claims and can also help detect any risks in your supply chain, or breaches from suppliers that you may not have realized existed.

A number of global brands have recently declared significant zero deforestation policies throughout their supply chains, ranging from Proctor & Gamble and Unilever, to Cargill, Asia Pulp & Paper and Mars. They correctly understood the financial, reputational, and environmental benefits of proactively launching these sustainability initiatives, which promote greater internal and external transparency into their supply chains. 

While auditing your global supply chain may appear to be a costly, time consuming and seemingly insurmountable process, an existing infrastructure of widely available tools and resources affords companies the opportunity to do this efficiently and effectively. Ultimately, the benefits of acting now and making the necessary investment will pay long-term dividends for the future reputation and performance of your company.

This is the most recent article in our series on Supply Chain Sustainability. For more articles, go to
http://www.csrwire.com/blog/series/75-supply-chain-sustainability-special-focus/posts

The opinions, beliefs and viewpoints expressed by CSRwire contributors do not necessarily reflect the opinions, beliefs and viewpoints of CSRwire.

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