A new type of responsible supply chain What are the beliefs companies hold when it comes to sustainability? How do they steer the course from rhetoric to action? According to studies, many companies are pursuing sustainability programmes to mitigate risk (complying with regulations) or to gain efficiency improvements. Fewer companies focus on achieving top-line or branding effects. Two key drivers influence a company’s commitment to sustainability efforts:
Business strategy: Companies that strive for cost leadership tend to be more hesitant when it comes to assuming social responsibility in their supply chains. Corporations following a differentiation strategy are more actively engaged in socially responsible practices.4 The higher profit margins associated with differentiation strategies provide companies with extra room for supply chain innovation and allow them to take more risk when it comes to sustainability and social investments. On the contrary, cost leaders focus more on low-risk eco-efficiencies.5
Supply chain maturity: Companies with mature supply chains have greater transparency, deeper integration across departments, strong collaboration with partners and solid governance structures. These characteristics of a mature supply chain all facilitate the implementation of sustainability programmes and help companies manage the complexities involved.