NAEM Report Highlights Challenges and Opportunities of Sustainability Practices of Supply Chain

Environmental sustainability, or the efforts made by everyone everywhere to safeguard the planet as well as responsibly use and replenish the finite resource we have in this world, has achieved the rightful status of being a strong business value and a boon to any company’s brand.

Many organizations now realize how a company operates as an environmentally and socially responsible provider of goods and services is – simply put – a good-for-business practice. Specific regulations in Canada, the United States and around the world guide corporations in terms of what they “must” do to achieve compliance. Business ethics, employees, customers and partners compel companies to go above and beyond these prescriptive rules.

Consumer demand for environmentally responsible products is continuing to push the sustainability agenda in terms of importance, transforming how companies relate to their supply chain partners. It’s not enough for a business to do everything it can to apply sustainable practices on its own. The business partners who are part of the supply chain likewise must fall in line.

But how common are formal supply chain sustainability programs today? What are the key components of these programs? How are they implemented? And what, if any, are the consequences for suppliers that do not respond to the call for transparency?

The National Association for Environmental Management (NAEM), a Washington D.C.-based professional association that support environmental stewardship, sought to shed light on these questions through a benchmark study conducted in July 2018 with corporate environment, health, safety and sustainability (EHS&S) leaders. A total of 68 leaders participated in the study, which took place during NAEM’s 2018 Sustainability Conference in Providence, R.I.

A report published in September reveals how companies are defining sustainability in the supply chain, how they are collecting information from their suppliers, and what they are doing with it. It also synthesizes key insights gleaned from on-site discussions with these professionals around the challenges associated with introducing and managing such a program.

Among other things is the revelation that 40 percent of the study’s participants said they have a formal supply chain sustainability program, while almost half (46 percent) said they did not. These results echo the results of a similar 2016 benchmark in which 45 percent of respondents said that they had a formal program and 50 percent said they did not.

Among the challenges identified with adopting a supply-chain sustainability program was the fact that 55 percent of respondents said they have 1,000 suppliers or more and that requires significant resources to introduce such a program – from collaborating with procurement and engaging suppliers to analyzing the data, conducting audits and ensuring that corrective actions are closed. The scale and complexity can be daunting for many.

Other key highlights of the report include:

  • Formal supply chain sustainability programs are still an emerging practice,
  • Transparency is the basis of most supply chain sustainability programs,
  • Almost half of respondents say they request data related to sustainability from all suppliers, and,
  • Those who are surveying their suppliers say they are also communicating their expectations.

The complete NAEM report, entitled “Sustainability in the Supply Chain”, provides much more detail and all statistical results. It is available, courtesy of Intelex, and can be downloaded here.

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