Companies find different routes to environmentally sustainable supply chains.

A sustainable supply chain can mean sourcing materials in a way that preserves natural resources. It can be the efficiencies you adopt to reduce carbon emissions in manufacturing or shipping. It can be about the packaging you use.

Obviously, the subject is broad. But how important are sustainable supply chains to your business?

Or Are Sustainable Supply Chains All About the Brand?

Research indicates the world’s largest companies have increased their sustainability criteria in procurement practices.

Paris-based EcoVadis found that 97% of 150 surveyed Fortune 500 companies rated sustainability as a priority in procurement. This was up several percentage points from the firm’s previous survey issued in 2013.

Consumers are said to be largely driving corporate demand for sustainably-produced products. More than 75% of respondents said that adopting sustainable procurement policies improved brand reputation.

The surveyed companies had dramatically expanded their sustainable procurement practices since the previous survey. But the authors concluded the companies had a long way to go. Less than half extended sustainable procurement to cover 75% of their suppliers.

And in a related survey, 56% of 360 suppliers said that sustainability was not a priority among their trading partners.

However, the report indicates that sustainability, over time, did increase value for many companies.

It’s Both

Consumers will put their money where their mouths are. They will pay a premium if they know a company is working toward reducing environmental or social harms.

Among 30,000 consumers from 60 countries surveyed in a 2014 Nielsen survey, 55% said they were willing to spend more with companies committed to positive social and environmental impacts. Only 50% said so in 2012.

Consumers indicated they even changed purchasing behavior to minimize effects on global warming. The more aware a company is of its impact on the environment, the likelier these respondents would buy from it.

Other studies have shown a greater willingness among millennials than other groups to pay a premium for sustainability.

The big picture points to sustainable supply chains growing in importance for all businesses. Even SMBs can move toward more sustainable supply chains. They can:

  • Work with suppliers that make sustainability part of their business model.
  • Use 3PLs that seek new technologies and efficiencies to reduce their carbon footprint in the warehouse.
  • Reduce packaging material or switch to packaging made from sustainable or recyclable materials.
  • Gather data to determine where their supply chains are least efficient, to make important decisions on purchasing, warehousing, packaging and shipping for reducing environmental impacts.

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