The COVID-19 pandemic caused supply chain disruptions and highlighted the necessity of long-term supply chain strategies. The pandemic revealed flaws in global supply chains, including an overreliance on single sources of supply, a lack of transparency, and insufficient emergency planning.

Supply chain sustainability refers to the methods, processes, and strategies used by businesses to ensure that their supply chain activities are not harmful to the environment, society, economy, but instead contribute to their sustainable development.

According to the US Environmental Protection Agency (EPA), organizations’ supply chains account for more than 90% of their greenhouse gas (GHG) emissions. Violations of human rights have long been a problem in international supply chains. The 2018 Global Slavery Index found that 40.3 million people were victims of modern slavery, with 71% of them being women and 29% of them being men.

Adopting sustainable supply chain methods will help firms in lowering their environmental impact , improve their reputation, and mitigate risks linked with social and environmental challenges. It can also result in cost savings, higher efficiency, and better supply chain resilience.

Consumers are increasingly expecting businesses to demonstrate sustainability in their supply chains. According to a recent IBM study, approximately 80% of consumers prioritize sustainability, and 60% are willing to adjust their purchasing habits to reduce their environmental impact. Consumers are interested in the sourcing of raw materials as well as ethical production procedures such as fair labour practices and human rights. Businesses that demonstrate that they are improving the sustainability of their supply chains gain a competitive advantage and are perceived as sustainability leaders.

Challenges business face in Supply chain sustainability

Traceability : Supply chains are frequently complicated and contain numerous levels of suppliers, making it difficult to effectively track products and their components. This situation is compounded by the fact that suppliers may be in different countries, each with its own set of standards. A key issue is also the absence of standardisation in supply chain practice and reporting because different suppliers may use various forms or terminology which can be hard to compare and monitor information throughout the supply chain.

Companies are increasingly demanding end-to-end insight in their supply chains to reduce scope 3 emissions. This means that businesses are attempting to understand the emissions connected with all aspects of their supply chain, such as raw materials, manufacturing, transportation, and end-of-life disposal. Companies can discover opportunities to minimise greenhouse gas emissions and work with suppliers to encourage more sustainable practises by studying these emissions.

Cost : While shifting to a more greener supply chain may incur additional costs, according to CDP report environmental supply chain risks costing businesses $120 billion by 2026. Sustainable materials can be more expensive than their conventional counterparts because they are produced using ecologically friendly practises and are frequently acquired from more expensive or difficult-to-reach regions. Switching to renewable energy sources such as wind or solar power can necessitate substantial upfront investment in new infrastructure and technologies, which can be costly in the short term. Implementing sustainable practises may necessitate organisations complying with new rules, which may necessitate additional expenses such as hiring compliance officers or investing in modern technology.

Many industries will face significant up-front expenditures before reaping any benefits from this transformation. It is essential to structure investment decisions, infrastructure upgrades, and technology or industry-model shifts in such a way that opportunities for green routes to grow and this can help protect financial value.

Supply chain sustainability trends

Circular economy

Both business leaders and governments recognise that continued wealth creation necessitates a new industrial model that is less reliant on primary energy, linear supply chains, and material inputs. circular economy can contribute to building more resilient and sustainable supply chains by reducing resource depletion, minimizing waste, and creating closed loops of material flows.

Report published by Ellen MacArthur Foundation Accelerating scale-up across global supply chains intend to establish a circular model with today's global economy and complex multi-tier supply chains. If businesses concentrated on promoting the development of circular supply chains to boost the rate of recycling, reuse, and remanufacture, they might produce over USD 1 trillion annually by 2025 and create 100,000 new employments over the next five years. It is worth emphasising that the adoption of circular economy and sustainable supply chain techniques has been rising fast in recent years, driven by several factors such as consumer demand, government legislation, and resource restrictions. As a result, companies are focusing to implement circular economy practises in their supply chain around the world.

Data driven supply chains : By leveraging data, supply chain managers can gain insights into their operations, identify inefficiencies, and make informed decisions to reduce waste and improve resource utilization. EY surveyed 525 multinational firms in Argentina, Brazil, Canada, Mexico, and the United States (US) regarding sustainable supply chain initiatives. According to the findings, while many executives have long-term sustainability goals for their supply chains, few have the visibility, technology, and comprehensive programmes in place to track their supply chains.

Challenges in promoting sustainable supply chains can be improved by data in today's digital age, supply chains generate vast amounts of data at every stage of the process, from procurement to delivery. By leveraging this data, businesses can optimize their supply chains for greater efficiency, cost savings, and improved customer satisfaction. data can also be used to improve supply chain visibility and transparency. By tracking products and shipments in real-time, businesses can improve their ability to respond to disruptions and proactively manage risks in their supply chains.