Supply chain sustainability….change on the horizon (Part 1)

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Although there’s a lot of talk about “sustainability” today, I’m often surprised that most folks overlook the important role played by supply chains.  To the general reader, supply chain management may not be the most exciting topic, but it will play a major role in our sustainable future.

In this series of posts, I’ll talk about what sustainability means for business and explore recent developments and trends as they relate to supply chains. As Executive Director of Tompkins International’s Supply Chain Consortium, I speak to top executives at hundreds of leading companies in a given year, and I can tell you that regarding sustainability, change is on the horizon.

Before we can begin to understand what the future holds for sustainability, we first need to define it. Given the breadth and relative immaturity of this topic, a widespread definition has yet to be solidified. Broadly speaking, I believe the Brundtland Commission (the UN World Commission on Environment and Development ) was correct to say that “sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

Looking at it more narrowly, from a business perspective, one of the best definitions I have read calls sustainability “an approach to business that creates long-term stakeholder value by embracing opportunities and managing risks derived from economic, environmental and social developments.” However you define it, supply chains should play a key part of any sustainability strategy, and more and more, other industry experts agree.

One of the hottest topics within sustainability right now is climate change. Climate change is increasingly seen as a business opportunity and as a risk management tool. The Carbon Disclosure Project Supply Chain Report 2011 states that more than 50% of the average corporation’s carbon emissions are typically from its supply chain. This understanding has created significant agreement between the traditional business goals of reducing inventory and increasing overall supply chain efficiencies, and reducing one’s carbon footprint.

At Tompkins we’ve seen a significant increase in the number of companies reporting on Scope 1 & Scope 2 GHG  carbon emissions—this translates to a 40% increase over last year, with a total of more than 1100 companies participating. This trend will continue. Many companies are now moving forward with aggressive sustainability strategies in which their supply chains play a heavy component.

In my next post, I’ll talk about some of the diverse trends that are elevating supply chain to the forefront of the sustainability discussion.

Bruce Tompkins