Supply chains are highly diverse and crucial to the success of businesses as a source of value creation and innovation. Socially responsible supply chains seek to combine both financial return and social good that creates the need for investors to make strategic decisions beyond financial logic and accept responsibility to protect human rights and the environment through all phases of their value chain, including manufacturing and outsourcing. The COVID pandemic has imitated the risks that are associated with diverse and complex supply chains. According to Dun & Bradstreet report, 938 of the Fortune 1000 companies have a tier 1 or tier 2 suppliers so it did not come as a shock that as the pandemic crisis deepened and nations begun instituting lockdowns, supply chains started experiencing a systemic demand shock that stemmed from weaknesses in their sourcing strategies.
The pandemic has tested companies on their operations and highlighted the importance of formulating an action plan for ESG practices, which needs to be integrated within corporate values and disclose supply chain information beyond stand-alone reporting mechanisms to provide insights on constraints of multiple suppliers and get a clear picture of their sourced sub-assemblies. A study cited by Samantha White (2015) found that adopting a socially responsible supply chain led to a reduction in supply chain costs by 9% - 16%. In a recent report, the World Economic Forum found that a company can achieve 20% more product revenue and 15-30% more brand value by focusing on the social aspect of their supply chain. The report also found that emphasizing the importance of a socio-environmentally beneficial supply chain can lead to a reduction in carbon emissions by 13-22%.
Companies can build a responsible supply chain through-
Recent incidences and expert-led reports have shown that adopting a socially responsible supply chain allows a company to gain a competitive edge in the market. With consumers becoming increasingly more inclined to let the ethical aspect of a company affect their purchase, businesses must begin investing in developing a simplified, scrutinized, enforced, and transparent set of principles for a socially responsible network.
Technology can play an important role in building responsible supply chains. Treeni’s resustain™, a modular SaaS-based platform automates and manages sustainability data for ESG risk and performance management, Corporate Social Responsibility, and Sustainable Supply Chains. The resustain™ platform is helping corporates to streamline its supplier data and get a handle on all the essential parameters that go a long way in defining and aligning their business strategy.
-Pallavi Singh is a Principal Consultant at Treeni. She has more than 11 years of experience in Sustainability Consulting. She has worked in the field of climate change, energy and environment, and enterprise sustainability to manage end to end sustainability for corporates starting from maturity assessment to helping create sustainability strategy and roadmaps, and performance management to sustainability reporting.