Discovering sustainable supply chains for tomorrow’s consumer
In 2015, the United Nations set 17 sustainable development goals (SDGs), driving towards a more sustainable world by 2030 (1). Sustainable and transparent supply chain solutions for businesses and consumers are crucial in achieving this brighter future.
A sustainable supply chain upholds environmentally and socially sustainable practices, with the aim of protecting the environment and people at every stage of the chain (2). As governments, organisations, businesses, and consumers become more educated on the social and environmental impact that their buying decisions have, incorporating sustainable practices throughout the whole of a supply network will build a better world for tomorrow’s consumer.
Fewer than 30% of companies have set sustainability targets
A recent research report by Standard Chartered, ‘The sustainability commitment paradox’, revealed that 55% of companies in Europe and North America would trade lower financial returns for positive sustainability outcomes, but challenges prevent action (3).
Participating in sustainable supply chain innovation must be a financially viable enterprise for each member of the supply chain. A challenge for small-medium enterprises (SMEs) within developing markets that comprise a large chunk of supply chains is the cost of Environmental, Social and Governance (ESG) reporting. Large corporations in developed markets have the resources to absorb the costs of ESG reporting (4). However, SMEs in emerging markets may not have the available liquidity to cover the cost of these reports and stay afloat.
The inconsistency in ESG reporting leads to inconsistent quality and quantity of data, with over half globally struggling to access data and reporting on suppliers’ ESG and sustainability practices (3). Measuring the value-add that sustainable business practices can have for companies and creating achievable targets within today’s fast-changing economy is difficult without access to accurate data.
There is also a need for a standardised cross-border regulatory approach which creates a framework for which to operate within, be guided by, and adhere to.
There is motivation for companies to take action
There is motivation from the top organisations of society through to the individual to take action for a more sustainable future. In 2022, the Inflation Reduction Act (IRA) was signed into law in the US to increase spending and incentives for reducing carbon emissions, lowering health costs, and improving tax revenue (5). In 2021 Statista reported that 69.6% of British respondents stated they were more likely to purchase from a business that had a B-corp certification (6). In the UK there are now over 1,300 B Corp-certified businesses, the second largest market behind the US (7).
Over 65% globally believe that being more sustainable helps position their company as a long-term investment option (3). Building a supply chain from a sustainable platform sets a positive precedent for future business partnerships, the relationship that businesses have with their customers and their reputation within wider society.
Enabling end-to-end sustainable supply chains is possible
Innovating end-to-end sustainable supply chains is possible with new digital technologies and transnational agreements on sustainability goals. Agreements such as Article 6 of the Paris Agreement will allow countries to transfer carbon credits earned from their own greenhouse gas (GHG) emission reductions to help other countries meet climate targets (8).
The impact of these financial agreements is already visible in emerging markets such as Ghana, which has already benefited from creating state-of-the-art, sustainable digital infrastructure. In 2023 the World Bank’s Forest Carbon Partnership Facility paid Ghana USD4,862,280 for reducing 972,456 tonnes of carbon emissions through climate-smart agro-forestry approaches (9).
Digitising trade and incorporating new technologies within supply chains will bring true efficiency to economies of scale in emerging markets, and better fuel the economy in existing developed markets for tomorrow’s consumer (10).
Supporting the transition to a sustainable future
Standard Chartered can support its clients in achieving sustainable supply chain goals through its innovative banking services, global market presence and industry-leading partnerships across technological financial solutions.
For example, the Standard Chartered Green and Sustainable Product Framework allows Standard Chartered Sustainable Account customers to play their part in financing progress towards solving global sustainability challenges whilst maintaining liquidity flexibility for operational needs. The focus on integrated and transparent finance solutions provides a secure service for customers, helping them achieve a more sustainable future (11).
References
- https://sdgs.un.org/goals
- https://www.sedex.com/blog/what-is-supply-chain-sustainability-and-why-is-it-important/
- https://www.sc.com/en/media/press-release/what-holds-back-sustainable-supply-chains-less-than-30-of-companies-have-set-targets-to-improve-supply-chain-sustainability/
- https://cityperspectives.smu.edu.sg/article/why-esg-so-difficult-practice-understanding-challenges-esg-disclosure#:~:text=Companies%20have%20the%20difficult%20task,but%20face%20the%20same%20challenges
- https://www.mckinsey.com/industries/public-sector/our-insights/the-inflation-reduction-act-heres-whats-in-it
- https://bcorporation.uk/
- https://www.statista.com/statistics/1257610/importance-of-b-corporation-certification-for-purchases-uk/
- https://www.worldbank.org/en/news/feature/2022/05/17/what-you-need-to-know-about-article-6-of-the-paris-agreement?cid=ccg_tt_climatechange_en_ext
- https://www.worldbank.org/en/news/press-release/2023/01/24/ghana-begins-receiving-payments-for-reducing-carbon-emissions-in-forest-landscapes
- https://www.sc.com/uk/2023/04/25/finance-as-a-catalyst-for-change/
- https://www.sc.com/en/banking/banking-for-companies/transaction-banking/sustainable-account/