Companies embed sustainability in their supply chains

Singapore, 22 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.

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 (18% from Asia-Pacific) across 12 industry sectors including telecommunications, automotive, finance, life sciences, technology, and oil and gas.

Responding to heightened competition and a disruptive environment, more than two-thirds (67%) of global executives now plan to use M&A to upgrade their digital capabilities.

Mr. K. Sadashiv, Managing Director, Climate Change and Sustainability Services, Ernst & Young LLP 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.

“This is all the more relevant for companies in the region in light of ASEAN's Free Trade Areas (FTA) with China, India, Korea, Japan, Australia and New Zealand, as well as regional FTAs such as the Trans-Pacific Partnership and Regional Comprehensive Economic Partnership, which promote integrated sourcing in manufacturing and regionalization of supply chains and production networks,” he says.

Singapore, besides being a global logistics and trans-shipment hub, also functions as headquarter to an ever-increasing number of corporations with operations across Asia.

“Despite growing awareness and being plugged into the global supply chain, most companies in Singapore still generally do not have a comprehensive understanding of the performance risks and sustainability impact of their supply chains. The Singapore Exchange’s ‘comply or explain’ rule on sustainability reporting is a move that will strongly encourage local listed companies to review and disclose the sustainability-related risks they face from their supply chain,” Sadashiv elaborates.

Globally, workplace health and safety incidents, labor disputes, geopolitical conflicts, environmental disasters and new legislation in areas such as conflict minerals and modern slavery are contributing to a growing consumer, investor and community awareness of supply chain sustainability.

Mr. Simon Yeo, Assurance Partner, Ernst & Young LLP comments that improving environmental, social and governance performance throughout supply chains can help companies enhance processes, save costs and increase labor productivity. It can lead to product innovation, achieve market differentiation and have a significant impact on society.

He says: “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.”

“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,” Yeo adds.

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

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Notes to Editors

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