Infusing sustainability in procurement, suppliers, and logistics can help you build products that encourage sustainable consumption and extend your impact beyond operations
If you are a cricket or football fan, you’ll love the home games way more than the away games. The difference in your team’s strategy is also distinct, as there is the added advantage of playing in familiar home conditions with a supportive crowd versus an almost hostile away crowd. In business sustainability too, comfort zones often dictate our success.
Many companies are great at incorporating sustainability into their operations, but to be truly sustainable, businesses need to look beyond and build a sustainable supply chain.
Infusing sustainability into procurement, suppliers, and logistics can help you build products that encourage sustainable consumption and extend your impact beyond operations.Investing in supply chain transparency and traceability is useful to gauge and convey information on product quality in the value chain.
Traceability also verifies claims of sustainability about raw materials and products, thereby avoiding chances of product defects or recalls by promoting ethical sourcing. At Godrej Agrovet, in our oil palm business, we trace the palm oil we process back to the farmers and work closely with them to ensure sustainable agriculture practices to cultivate palm oil fruit bunches. We have adopted a bottom-up approach supported by digital solutions.
Here’s how businesses can ensure traceability and sustainability in their supply chains:
Sustainable supply chain framework
Global businesses are dependent on multiple suppliers for various raw materials and intermediate inputs. As businesses expand, it’s vital to optimise your supply chain and build a sustainable supply chain framework that will focus on key elements for engagement and improvement. A holistic framework will cover aspects of environment, governance, people, and product quality.
Sustainable supply chain policy
The next step is to codify this framework into a policy and engage all your suppliers to communicate it. It is important to lay out expectations from your suppliers to operate in accordance with the principles of your policy while adhering to all applicable local laws and regulations.
The policy needs to go beyond legal compliance requirements and draw on internationally recognised standards in order to identify and define best practices from across the globe. Also, periodically review the policy for improvements to ensure that it continues to be in line with changing business priorities.
Supplier assessment
To ensure the policy is adhered to, suppliers need to be regularly assessed. With the BRSR Core for value chain compliance, top value suppliers will need to report on their environment, financial, and few people parameters.
Companies can also craft an extensive questionnaire for all their suppliers to assess their sustainable practices and verify them with onsite audits. Evaluations can be based on the degree of compliance with ethical and legal requirements, supplier management’s sustainability maturity, the supplier’s level of public disclosure, and their sustainability performance.
Digital solutions for traceability
As global supply chains are complex, leveraging technology can help ease the process. Digitization can help track transportation distance, fuel usage, and resultant emissions, which helps track Scope 3 emissions. For agri-commodities, companies can geotag plantations with remote sensing satellite imagery to look at the productivity of each tree and work with their suppliers and farmers to improve performance.
Localisation
Another way to improve the traceability of your supply chain is to move towards local purchasing. Ensure suppliers are from nearby locations from your manufacturing, which shortens transport distance (lowering your scope 3 emissions) and provides better oversight on the supplier’s sustainability operations.
Companies are now compelled to reveal the full narrative of their products' origins.
It is not just to satisfy regulatory compliance and investor curiosity but to also meet a growing consumer demand for ethical transparency. The path towards disclosure of sourcing practices is a transformative era for companies. The integrity of raw materials is now becoming as crucial as the end product itself, setting a new standard that champions sustainability.
(Ramnath Vaidyanathan is AVP & Head, Environmental Sustainability at Godrej Industries Ltd and Associate Companies.)