Ryerson University's Cory Searcy
Ryerson University's Cory Searcy

Setting thresholds to make supply chains sustainable

14 July 2017

It’s important to work together to ensure procurement is good for both business and the environment. While it is tricky, it can be done, says Cory Searcy

The world’s first international standard on sustainable procurement was released in April. ISO 20400 provides organisations with important guidance on their purchasing practices and policies. In addition to economic considerations, it underscores the need to address the environmental and social impacts of their purchasing decisions.

Sustainable procurement is part of a broader set of practices focused on building sustainable supply chains, which include other practices such as codes of conduct, audits and management systems. Reverse supply chain strategies, such as product end-of-life management, are also becoming common.

All of these practices are responsible things to do, but does implementing any of them mean that an organisation’s supply chain is sustainable? Not necessarily.

A sustainable supply chain must operate within the thresholds set by nature and society. Profit cannot come at the expense of unacceptable environmental or social degradation. Thresholds are the foundation of sustainability because they tie performance to a supply chain’s broader environmental and social context. As sustainability consultant Mark McElroy has explained, thresholds are measures of “limits or sufficiency”. Thresholds can represent upper limits (atmospheric greenhouse gases) or lower limits (living wages).

To build a sustainable supply chain, therefore, three key questions must be answered: what are the relevant thresholds? How do they apply to the supply chain? And is the supply chain operating within them?

The relevant thresholds are debatable. There are many possible sustainability issues for any supply chain and there will be different views on priorities. Any prioritised issue must be linked to specific thresholds. How to do so, however, isn’t obvious. For example, the Planetary Boundaries – a 2009 framework designed by environmental scientists to define a “safe operating space for humanity” for sustainable development – identify nine environmental thresholds, such as for climate change and freshwater use. However, some of the thresholds are better developed than others; they also don’t address social issues.

Work on applying thresholds to supply chains is limited. Efforts to translate global-level climate thresholds are ongoing, but they generally focus on the organisational, rather than supply chain, level. For example, Science Based Targets Initiative – another environmental collaboration – requires setting greenhouse gas targets in line with climate science.

Translating thresholds to supply chains can be further complicated by the need to account for differing conditions across the chain.

Finally, key performance indicators (KPIs) are needed to determine if a supply chain is operating within thresholds. These must be linked to science- and ethics-based goals derived from environmental and social thresholds. Supply chains operating within their thresholds would be considered sustainable.

The challenges are complex but not insurmountable. Yet they are beyond the scope of any one organisation or supply chain to address on its own. They need new multi-stakeholder initiatives (MSIs) based on the collaboration of organisations, government, and civil society. MSIs have already been widely used.

This kind of collaboration can help establish the natural and social thresholds for key issues in sustainable supply chains. They can help institutionalise those thresholds by developing learning platforms, KPIs and verification mechanisms. They can also help address questions related to the needs of specific industries and issues covering different geographic scales.

The development of ISO 20400 is another positive step towards chain sustainability. But initiatives like this also need to be considered in the broader context of natural and social thresholds. Only then can we assess their contribution to sustainable supply chains.

Cory Searcy is a professor and director of the Environmental Applied Science and Management Programme at Ryerson University in Toronto, Canada

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