Sustainable Development Goals and Global Supply Chains: Why is this not considered a more convenient marriage?

By Maung K. Min, Board Member of Global Sourcing Council

It has been three years and counting since the birth of the Sustainable Development Goals (SDGs). Adopted by the 193 Member States of the United Nations (UN) in September, 2015 SDGs are”… a plan of action for people, planet and prosperity …….. focused in particular on the needs of the poorest and most vulnerable and with the participation of all countries, all stakeholders and all people.“1

The goals are detailed and contain 169 targets. Publicly available resources can help organizations to maneuverer through the maze these goals and targets (PWC,2 SDG Compass3).

Before examining how and which SDG goals are being applied to global supply chains in the business world, a quick primer on what supply chain sustainability is: “Supply chain sustainability is the management of environmental, social and economic impacts, and the encouragement of good governance practices throughout the lifecycles of goods and services.” 4

Here’s why it is so significant. Thorlakson et.al5 state, “Supply chains tied to multinational corporations represent over 80% of global trade and engage over one in five workers. Supply-chain management therefore has a significant impact on key social and environmental challenges.”

Highlighting the compelling reasons of why companies take supply chain sustainability seriously has now entered the conversations of most executive level board rooms.  The social and environmental scores and ratings they receive from financial analysts impact their profit margins. But making the consistent choice to do things differently hasn’t quite reached the level of “standard operating procedures” yet. However, there are some corporations that are already practicing doing the “right thing”; it’s what drives their vision and mission. What helps them steer their mission past just doing good deeds is the development of multi-functional business case scenarios that help achieve mutually beneficial results from a financial and social perspective.

The seventeen SDGs are comprehensive in scope; encompassing:

  1. No Poverty
  2. Zero Hunger
  3. Good Health and Well Being
  4. Quality Education
  5. Gender Equality
  6. Clean Water and Sanitation
  7. Affordable and Clean Energy
  8. Decent Work and Economic Growth
  9. Industry, Innovation and Infrastructure
  10. Reduced Inequality
  11. Sustainable Cities and Communities
  12. Responsible Consumption and Production
  13. Climate Action
  14. Life Below Water
  15. Life on Land
  16. Peace and Justice Strong Institutions
  17. Partnerships to Achieve the Goals

Risk management is one of those key areas that factors into these plans. Companies can protect themselves from potential supply chain interruptions associated with suppliers’ practices, such as labor standards and anti-corruption guidelines, by enforcing contracts, verifying that the defined stipulations in each area of procurement are being followed, and addressing any shortfalls in meeting those contractual agreements if they arise. This can also reduce the risk of a public relations quagmire. Improving productivity through innovation and collaboration, through more active communication between the intricate web of the inter-connected supply chain players, can lead to lower procurement costs and less strain on the environment.  Incorporating these and other pro-active strategies can help companies achieve a competitive advantage and generate new products or services that are available in the market.

So, how have organizations incorporated the UN’s specific SDGs into their supply chain activities?

Different organizations and NGOs look at the supply chain relevance from their individual vantage point. International Labour Organization (ILO) 6, for example, focuses on Goals 8, 9, 16 and 17. The common theme for them is the impact on Least Developed Countries (LDCs) – and, rightly so. There is, however, some convergence on addressing the business supply chain focus, SDG Goal 12: Responsible Consumption and Production. This goal focuses on promoting resource and energy efficiency, sustainable infrastructure, providing access to basic services, green and decent jobs and a better quality of life for all.7 Here are a couple of examples of companies putting those goals into their day-to-day business practices:

  • Brambles is an Australian global supply chain logistics company with revenue of about $5B. It recently announced its 2020 Sustainability Goals in alignment with the UNS’s SDGs. Their goal is for yearly improvements in their supply chain operations that would reduce carbon emissions and waste specifically in their customers’ supply chains. Brambles provides standardized reusable pallets, crates and containers to customers. Customers then use them to transport goods through their supply chains, and either arrange for its return to Brambles or transfer it to another participant in the network for that participant’s use prior to its return to Brambles.8
  • Scania is a Swedish manufacturer of heavy trucks and buses. HAVI Logistics, a global logistics provider for the food industry, is using Scania’s new generation of trucks and vehicles that run on alternative fuels, such as the gas and hybrid models for transportation associated with McDonald’s restaurants in several European countries. While delivering supplies to the restaurants, special equipment on the trucks is used to collect waste for recycling, further reducing their CO2 emissions impact.9

Many corporate leaders now recognize that the percentage of consumers who prefer, are aware of, and are loyal to those companies who deliver eco-friendly offerings continues to increase.10   KPMG 11 reports that 43% of the global 250 (referencing 250 of the largest companies in the Fortune Global 500, headquartered in 31 countries) have linked their sustainability activities with SDGs.  But, why, despite profitable and persuasive business case examples, has the commitment to implement more SDGs been, at best, lukewarm and still considered a “soft”, non-essential component of corporate strategies? Perhaps it’s because companies are not approaching the SDGs as potential drivers to meet or exceed their corporate financial goals.  If the SDGs were better matched and consciously paired with corporate strategies, the correlation between profit and sustainable practices would make for a more convenient, solid and long-term marriage. According to Corporate Citizenship, a global sustainability and business consultancy, “many [businesses] continue to simply conduct a ‘tick-box’ exercise, superficially mapping existing activity against the 17 SDG Goals. Few have embraced the logic and business case behind the Goals, or embedded them into their strategy and operations as a way to support their own long-term growth.”12

While the gaps in connecting SDGs with 21st century business practices are, unfortunately, still frustrating and wide, every day there are more companies that have started the alignment process. I would say that this is promising, and we need to continue to monitor, report on and encourage this alignment and progress.

  1. United Nations, General Assembly, Transforming our world: the 2030 Agenda for Sustainable Development: report of the Secretary-General, A/70/1 (25 September 2015), available from undocs.org/A/69/L.85
  2. www.pwc.com/gx/en/services/sustainability/sustainable-development-goals/mapping-the-way.html  
  3. www.sdgcompass.org/  
  4. Supply Chain Sustainability, “A Practical Guide for Continuous Improvement,” Second Edition UN Global Compact Office and BSR (2015)
  5. Thorlakson, T., de Zegherb, J., Lambinc, E. (2018) Companies’ contribution to sustainability through global supply chains,” www.pnas.org/cgi/doi/10.1073/pnas.1716695115
  6. International Labour Organization https://www.ilo.org/global/topics/dw4sd/themes/supply-chains/WCMS_558569/lang–en/index.htm.
  7. United Nations https://www.un.org/sustainabledevelopment/sustainable-consumption-production/
  8. Bramble Supply Chains https://chepedia.chep.com/vantage/articles/brambles-commits-to-2020-sustainability-goals-aligned-with-the-united-nations%E2%80%99-sustainable-development-goals/
  9. Scania https://www.scania.com/group/en/sdg-12-responsible-consumption-and-production/,
  10. Nidumolu, R., Prahalad, C. K., Rangaswami, M. R., Why Sustainability Is Now the Key Driver of Innovation, Harvard Business Review, September 2009, pp 57-64
  11. KPMG http://gallery.cee.kpmg.com/HU/Newsletters/prezi/CSR_Reporting_2017.pdf
  12. The SDGs: Materially impacting the bottom line 2018 Annual Review of Progress on the Global Goals : https://corporate-citizenship.com/wp-content/uploads/The-SDGs-Materially-Impacting-the-Bottom-Line-FINAL.pdf

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