Collaboration and technology key to more sustainable supply chains

Friday, 12 August 2016

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A new report produced by EY in association with the UN Global Compact shows that leading companies are creating more sustainable supply chains that deliver significant business benefits by increasing collaboration with suppliers and making better use of new technology.

Released this week, The state of sustainable supply chains report explores how companies are embedding sustainability in their supply chains and is based on interviews with 100 sustainability, supply chain and procurement specialists from 70 companies globally, including from Australia.

Terence Jeyaretnam, Ernst & Young Australia Climate Change and Sustainability partner, says the study shows a significant shift by leading companies, from a risk and compliance approach to supply chains, to investing in sustainable supply chains for the business value delivered.

“Results of the study show that leading companies are deriving numerous business benefits from embedding sustainability in their supply chains. These benefits include product differentiation, increasing market share and growing consumer support,” says Jeyaretnam.

Workplace health and safety incidents, labour disputes, geopolitical conflicts, environmental disasters and new legislation in areas such as conflict minerals and modern slavery have contributed to this growing consumer, investor and community awareness of supply chain sustainability.

Jeyaretnam says despite this, most companies still do not have a comprehensive understanding of the performance risks and sustainability impacts of their supply chains.

“In Australia, it has generally been the consumer products, financial services and telecommunications sectors that have led the way in embedding sustainability in their supply chains, while the construction, mining, utilities and hospitality sectors have lagged,” he says.

“Improving environmental, social and governance performance throughout supply chains can help companies enhance processes, save costs and increase labour productivity. It can lead to product innovation, achieve market differentiation and have a significant impact on society.”

“This study shows that the leading companies are doing that and we expect to see an increasing number of companies adopt similar approaches. Companies are placing a lot of focus on compliance and reducing risk but, with a little additional effort on overall supplier engagement, they can achieve much greater value and achieve more sustainable supply chains.”

The full report is available at www.ey.com/sustainability.

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