Why half of supply chain bosses would sacrifice profit

13 September 2022

Half (51%) of chief supply chain officers (CSCOs) would sacrifice profit to improve sustainability outcomes, according to a survey.

The survey, by data company Celonis, found those respondents would be willing to give up on average 5% of profits in the name of sustainability.

Two-thirds (66%) of CSCOs said sustainability was a core business value and they were using it to redesign workflows to shape more circular economies.

The survey – involving 500 CSCOs across banking, consumer products, healthcare, electronics, telecommunications, insurance, industrial products, manufacturing, automotive, and life sciences – found almost three-quarters (71%) said their organisation planned to “aggressively move to carbon neutral”.

Procurement is increasingly becoming the avenue by which sustainability is pursued – 78% of CSCOs said they were incorporating environmentally-friendly practices into supply chain planning activities and 72% had embedded sustainability initiatives into procurement and sourcing.

The specific actions CSCOs were taking included:

  • Improving energy efficiency (50%)
  • Incorporating circular economy practices (45%)
  • Using more organic and recyclable materials (39%)
  • Improving recovery levels (36%)
  • Establishing net zero targets (32%)
  • Creating fewer high-pollution products (32%)
  • Improving water management (30%)
  • Reducing disposal of waste to the environment (30%)
  • Reducing full product lifecycle environmental impact (26%)

Circular economies emerged as a significant aspect of sustainability initiatives. The report found significant advantages to investment in the circular economy including security of the raw materials supply, stimulating innovation, boosting economic growth, and creating jobs.

Almost half (47%) of CSCOs said they were initiating “fully lifecycle design” of materials and products, with intent to increase reusability of components and reduce waste. Over a third (35%) planned to develop new products based on renewable energy, and 30% expected to engineer new zero-waste products and services. 

Reduction of single-use plastic packaging was a priority for 32% and 30% aimed to use more recyclable and biodegradable packaging.

One chief sustainability officer at a consumer products company said: “We must humanise the sustainability emergency. This is a call to action – the relationship surrounding equity for all. We are experiencing ‘carbon tunnel vision’. So many executives are only talking about net zero transitions. 

“There are other critical risks that are larger, including: biodiversity loss, water scarcity, air pollution, ocean health, and over-consumption. Sustainability is the next systemic impact on the entire system – and supply chains are front and centre to build a better planet for us all.”

The report found other priorities in the face of widespread supply chain disruption included using new technologies, with 69% planning to accelerate cloud technology usage and process optimisation and 72% aiming to automate most processes within three to five years.

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