Sustainability was once considered something of a ’soft’ topic that just made good PR. That has changed. It is now ingrained in strategies and is seen as a key business driver and risk mitigation. More than that though, its importance is growing further.
BlackRock, the largest asset manager in the world, sent shockwaves through the business world when it recently announced that if companies want to receive its support, they needed to think beyond profits. Instead, the company said, they need to think about the contribution they make to society.
BlackRock’s stand is notable for two reasons: It shows investor confidence that sustainable business practices contribute tangible bottom-line value. It also brings to light the fact that business leaders recognise the role organisations play in contributing to global betterment.
The sustainability narrative doesn’t stop with BlackRock. VW’s suspension of its head of sustainability for allowing the use of monkeys in vehicle emission tests shows liability for irresponsible practices goes all the way down to individuals. This shift should push business leaders in every industry to take a closer look at the inner-workings of their company and supply chain practices. As Apple’s recent slavery scandal shows, sustainability risks are everywhere and no company is immune to the reputational and financial consequences.
This means that it is even more important to prioritise due diligence to protect against significant damage and crippling corporate and personal liability in the future.
Technology has a role to play in this due diligence.
New, disruptive technologies, such as blockchain, supply chain mapping programs and pain point-specific tools, such as those that measure a company’s plastic emissions, are making it easier for companies to meet new transparency standards.
Coca-Cola is probably one of the most noteworthy examples. The soft drink giant is using blockchain to proactively address forced labour in its supply chain. Given the network of influence an industry heavy-weight like Coca-Cola has, the positive impact this step could have on the company’s global supply base, and the food and beverage industry at large, is huge.
Coca-Cola isn’t the only company making strides here.
Technology firm Cisco is using artificial intelligence (AI) to move the dial on social and environmental responsibility in its manufacturing operations. By being able to process data faster, and from better sources, the company can get a complete view of what is happening in its supply base and use these insights to protect the livelihood and fair treatment of its workers. The human-centric approach to AI allows Cisco to make value-driven supply chain decisions that are in line with its code of conduct, which not only reduces risk and protects the bottom-line, but also has a positive, residual impact on the global community.
Using disruptive technologies like AI and machine learning for sustainable development is only going to grow as more firms put their weight behind the tools and use them to solve problems and boost revenues and profits.
A study by Rutgers University and NYU showed the ‘inverted curve’ of reduced ROI for half-committed programmes. Companies can’t hold back and expect to yield notable results. It’s not enough to tweak a product here and there to be incrementally more responsible, but rather the mandate is to create entire product lines and services that deliver against sustainability expectations – and prove this transformation to customers, investors and stakeholders. This takes superior supply chain transparency and visibility into the performance of all suppliers – and the guts to move on from a relationship if a partner can’t deliver. The strong connection between sustainability and sales is undeniable and too big to ignore.
As sustainability moves into the global spotlight, we must consciously push it to centre stage. Investor backing and support of responsible business means the reasons for companies to operate more sustainably only grow. There’s no room for backwards progress in the case for sustainability: there’s only one way to go, and it’s forward.
Pierre-Francois Thaler is Co-CEO of EcoVadis
This contributed article has been written by a guest writer at the invitation of Procurement Leaders. Procurement Leaders received no payment directly connected with the publishing of this content.