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The United Nations Global Compact (UNGC) defines Supply Chain Sustainability as the management of environmental, social and economic impacts and the encouragement of good governance practices, throughout the lifecycles of goods and services. The objective of supply chain sustainability is to create, protect and grow long-term environmental, social and economic value for all stakeholders involved in bringing products and services to market.
While a fast pivot to growth since COVID-19 recovery is good news for businesses and workers, it also creates challenges. Some off-balances in demands and supplies and logistics capabilities since the pandemic and worker shortages has created challenges for businesses especially those with complex supply chains. These shortages and supply-chain disruptions are significant and widespread—but are likely to be transitory. Growing attention for supply chain sustainability are meant to test the resilience of supply chains and address the transitional needs for a more robust supply chain management, as we are more dependent on the global effort than ever. Question is how businesses can start actively managing the practices of their suppliers, identifying how sustainable they are and determining where sustainability can be improved.
In Part I of this research, we discuss the three sustainability pillars: environmental, social and economic impacts of the sustainable dimensions that incorporate in the modern supply chain sustainability. And its application in the EU Supply Chain Due Diligence Act, which has been voted for its adoption by the European Parliament on March 10th, 2021. The binding EU law requires companies to conduct environmental and human rights due diligence along their full value chain or face concrete fines, sanctions and/or civil liability.
On 23 February 2022, the Commission adopted a proposal for a Directive on corporate sustainability due diligence. The new proposal will require the companies within its scope to:
Integrate due diligence into policies.
Identify actual or potential adverse human rights and environmental impacts.
Prevent or mitigate potential impacts.
Bring to an end or minimise actual impacts.
Establish and maintain a complaints procedure.
Monitor the effectiveness of the due diligence policy and measures.
Publicly communicate on due diligence.
Then we move on to the analysis of Key Trends Towards Supply Chain Sustainability in recent years. Including trends discovered in supply chain Assurance & Risk Management, application of Technology Advancement, and the impact of Carbon Price on supply chain behaviour and transition pathways.
On regards to “How Supply Chain Sustainability is measured?” this paper will focus on four key methods applicable to measure supply chain sustainability, including:
Assess Greenhouse Gas Emissions along the supply chain
Disclose Scope 3 Greenhouse Gas Emissions
Conduct Product Life Cycle Assessment
ESG Risk Management
ESG Due Diligence
Climate Stress Testing and Scenario Analysis on Supply Chain Resilience
If you are interested in ways to improve Supply Chain Sustainability, please stay tuned for Part 2 of this research, which will share insights on “Where Sustainability Can Be Improved in Supply Chains with Case Studies in different industries, such as auto, technology, consumer goods, logistics, NGOs, etc.