Page 46 - The European Business Review

Supply Chain

Table 1: Challenges in Measuring Sustainability in Supply Chains

Challenge Desription Starting Points
Developing linkages to the economic, environmental, • Identify relevant thresholds.
Linking to the and social context in which supply chains operate is the • Set science-based goals and targets.
bigger picture.
distinguishing characteristic of sustainability. • Use credible reference points, such as the Planetary Boundaries.
Setting priorities. Setting priorities is difficult given the many players and • Consider positive and negative impacts.
stakeholders in a supply chain, but the company must stay • Consider existing and potential impacts.
focussed. • Focus on a few key priorities.
Accommodating The difficulty in setting priorities is amplified due to the • Consider impacts at different scales.
• Consider resource stocks and flows, as well as political settings.
differing different economic, environmental, and social conditions • Use multi-stakeholder initiatives, such as the SBTi, as references.
conditions. across supply chains.
Measurement boundaries must be clear. This is influenced • Consider how many tiers to include.
Setting by relevance, product traceability, and local capacity of key • Include all major impacts.
boundaries. players. • Set boundaries using credible mechanisms, such as the GHG
Protocol.
Sustainable supply chains cannot be addressed by any one • Collaborate with the competition.
Building local firm alone. Key players must be capable of taking action. • Clarify responsibilities.
capacity. • Use collaborative technologies to align efforts across the
supply chain

efforts must be encouraged. But, supply chain sustainability social science and ethics, such as for health and social equity.
is not about best efforts; it is about staying within thresholds. The 17 goals and 169 targets provided by the United Nations
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This is not easy. Sustainable Development Goals (SDGs) serve as another
potential reference point.
Challenges in Building Sustainable Supply Chains )HZ WKUHVKROGV KRZHYHU KDYH EHHQ VSHFLÀFDOO\ GHYHORSHG
There are many challenges in building sustainable supply for the supply chain level. Science- and ethics-based goals,
chains. The emphasis here is on measuring sustainability JURXQGHG LQ ´VFLHQWLÀF NQRZOHGJHµ DQG ´QRUPV RI IDLUQHVV
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performance. Of course, there are many actions compa- justice, integrity, and respect”, respectively, can help bridge
nies must take beyond measurement, such as re-designing WKLV JDS 6HWWLQJ WKHVH JRDOV FDQ EH GLIÀFXOW JLYHQ HYROYLQJ
their products or implementing supplier codes of conduct. VFLHQWLÀF XQGHUVWDQGLQJ DQG VRFLDO QRUPV EXW WKH NH\ LV WKDW
Performance measurement is the foundation, however, for they are non-arbitrary, linked to meaningful thresholds, and
identifying priorities and determining whether or not the are updated as needed.
supply chain is operating within economic, environmental, Setting priorities. No supply chain can address all
and social thresholds. conceivable economic, environmental, and social thresholds.
7DEOH VXPPDULVHV ÀYH UHSUHVHQWDWLYH FKDOOHQJHV LQ The company must ensure that it considers its key impacts,
measuring supply chain sustainability, as well as how compa- while staying focussed on what matters most. This must be
nies can get started in addressing them. These challenges considered in light of the players and other stakeholders in
must be overcome to develop credible sustainability metrics. the supply chain.
Linking to the bigger picture. 7KH ÀUVW NH\ FKDO- The CDP, formerly the Carbon Disclosure Project, runs
OHQJH LV GHWHUPLQLQJ KRZ WKH VXSSO\ FKDLQ LQÁXHQFHV DQG a supply chain programme focussed on the three key issues
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LV LQÁXHQFHG E\ WKH ZLGHU ZRUOG 7KLV UHTXLUHV LGHQWLI\LQJ of climate change, water, and forest-risk management.
the relevant economic, environmental, and social thresh- Addressing any one of these issues in a complex supply chain
ROGV DQG WKHQ ÀQGLQJ D ZD\ WR WUDQVODWH WKHP WR WKH VXSSO\ LV GLIÀFXOW JLYHQ WKH QHHG WR FROOHFW WLPHO\ UHOLDEOH DQG YDOLG
chain level. data. This is further complicated by the need to develop cred-
Examples of potential thresholds abound. The Planetary ible science-based targets, as the CDP is doing for climate
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Boundaries IUDPHZRUN LGHQWLÀHV QLQH NH\ WKUHVKROGV EDVHG change, as well as the need to consider existing and poten-
on environmental science, including climate change and tial, positive and negative, and short- and long-term impacts.
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global freshwater use. The Doughnut framework builds on Given these challenges, companies must stay focussed on
The Planetary Boundaries and adds 12 thresholds based on essential priorities.

46 The European Business Review January - February 2018