The Trouble with Supply Chains

Lessons from the UN Global Compact Corporate Sustainability Report 2013

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Leading Sustainable Organizations

Corporate adoption of sustainable business practices is essential to a strong market environment and an enduring society. What does it mean to become a sustainable business and what steps must leaders take to integrate sustainability into their organization?
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Last year’s United Nations Global Compact report marked a dramatic shift in corporate attitudes towards sustainability.1 Even in the face of the worst economic downturn in nearly a century, commitments to the principles of sustainability are at a historic high.

But the report, which includes surveys of over 1,700 companies and 750 CEOs, found that despite rising expectations, most companies continue to fall short when it comes to actually embedding sustainability commitments into the supply chain.

When asked to rank the challenges “slowing or blocking advancement to the next level of sustainability performance,” over 50% of companies put “extending corporate sustainability strategies through the supply chain” at the top of their list. In fact, the report found that supplier sustainability was “the top barrier for large companies in their advancement to the next level of sustainability performance.”

While companies are making progress in terms of setting expectations for supply chain sustainability, most fail to implement tangible measures to drive adherence.

Cynics have pointed to low rates of implementation as evidence that the majority of compact signatories do not take sustainability commitments seriously. But survey results seem to point to a more forgiving explanation. Both lack of familiarity and the unavailability of data were cited by survey respondents among the top five reasons businesses did not push sustainability into the supply chain, suggesting that a big part of the problem could be a lack of information

The sheer size and complexity of global supply chains means that many companies that begin their journey towards collecting information on their suppliers quickly become overwhelmed with data. As interest in responsible supply chain management grows, increasing numbers of initiatives have sprung up in every sector promoting various tools and standards, leaving buyers with the sometimes daunting task of choosing between best practices.

This means that while most companies are only able to audit a small number of their suppliers due to limited resources, many suppliers face multiple audits each year from different buyers according to a wide array of standards. In order to limit auditing fatigue, collaborative industry platforms such as the Global Social Compliance Programme and the

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Topics

Leading Sustainable Organizations

Corporate adoption of sustainable business practices is essential to a strong market environment and an enduring society. What does it mean to become a sustainable business and what steps must leaders take to integrate sustainability into their organization?
More in this series

References

1. United Nations Global Compact. “Global Corporate Sustainability Report 2013”. Accessed March 2014, http://www.unglobalcompact.org/docs/about_the_gc/Global_Corporate_Sustainability_Report2013.pdf. All subsequent quotes and figures refer to this source, unless otherwise specified.

2. Albanesius, C. “40 Percent of Globe Has Web Access, 4.4B Still Unconnected”. PC Magazine, Oct. 7, 2013, accessed March 2014, http://www.pcmag.com/article2/0,2817,2425305,00.asp

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