Sustainable supply chain: Reimagine the future with technology

Why we need change

Africa is home to one-fifth of the world’s population, but accounts for only 3% of global emissions, but this does not absolve African based operations from making every effort to reduce this low level even further. In the past seven decades, the world’s carbon emissions have increased by almost eight-fold. The shared global goal is to cut carbon emission by 45% of 2010 levels by 2030.

Holding stakeholders through the value chain accountable

Today, consumers, shareholders and the international community are all demanding that enterprises make commitments to decarbonisation and make radical changes to their internal processes and building management. Businesses must simultaneously hold service providers and suppliers through their entire value chain accountable for their own reduction of carbon emissions.

Evidence of companies’ migration to more environmentally friendly processes must be tangible and auditable. However, when it comes to establishing sustainability credentials of external stakeholders, it gets difficult for an organization if there is lack of sufficient data. For example, in the business of consumer goods, more than 80% emissions are contributed by procurement, packaging, distribution, and logistics – which cannot be brought down unless there is information on how the emissions are happening.

The call for accountability is being heard across the world. Stock exchanges, including the Dow Jones and the JSE, have a sustainability index and have developed climate change disclosure guidance protocols to support the net zero journey of investors and listed companies meaningfully. It is also worth noting that a high sustainability score has a direct positive impact on a company’s share price.

Consumerism with a conscience

To create a real impact, consumers too need to actively choose credible sustainable product labels, which helps them make informed decisions. A number of international retailers, including German company Lidl and UK’s Tesco chain, are labelling their products to highlight their sustainability efforts, which necessitates accounting for the provenance of raw materials, packaging, etc.

Not just in consumer goods, but in the automotive sector, original equipment manufacturers (OEMs) are leading the way with data sharing initiatives with their suppliers and vendors, capturing information on climate risk, water stress and social impact of their businesses.

Pledging for the future

TCS and Microsoft jointly analysed publicly available data on best environmental practices in a number of companies across a range of sectors and industries [Supply Chain Decarbonization: The Missing Link to Net-zero (tcs.com)] .

More than 100 companies have pledged 100% use of renewables. Investment and finance companies are increasingly taking an ethical stance, and in turn, pledging not to invest in any operations that can be held responsible for the destruction of natural forestland.  Companies in the manufacturing, energy, consumer goods and retail sectors are leading the way in carbon emission reporting.

Companies in South Africa are also making sustainable efforts in a big way. Anglo American, through its Sustainable Mining Plan and Accountability Dialogues, is working towards both transformation and transparent reporting on its efforts. Investec is focused on delivering profitable, impactful, and sustainable solutions and is committed to looking at existing and new business opportunities to finance sustainable solutions to socio-economic and environmental issues. With a large South African operation, Unilever has committed to a deforestation-free supply chain by the end of this year, and is working with their partners to ensure this.

Making such a pledge is one thing — finding ways to measure, track, and implement it is entirely another. Technology companies have a strategic role to play here, as data transformation partners for businesses which can help in monitoring and measuring progress with actionable insights.

Reimagine Sustainable Supply Chain with Technology

Identifying and implementing the right technology can provide actionable insights and intelligence, which will go a long way in strategically planning competitive advantage for businesses.

Cloud adoption provides businesses a big step towards net-zero emissions through benefits of cost savings, operational efficiency, business agility, and innovations. According to a Microsoft research, the migration to cloud for digital data management demonstrates reduction in carbon emissions to more than 70-90% for an organization with 10,000 users.

To build competitive supply chain data, businesses must ingest data from suppliers. This information allows businesses to record emissions more accurately across the entire value chain and operations, to analyze and visualize emissions and environmental impact, and to eventually set goals for reducing the environmental footprint.

While it is essential for enterprises to work with their suppliers to embark on digitalization, it is also imperative that they modernize their core IT systems and infrastructure. A strong digital core provides the ability to deliver on sustainability principles and meet sustainability goals faster.

For businesses, an even more positive impact with shareholders will be created through sustainable methods. An increase of 10% to 42% in the sustainability index since 2017 positively impacted the share price in the range of 15% to 233% in the same time period.

By Langa Dube