Challenges in Supply Chain Sustainability

In late May, WSP USA’s Kealy Herman and Kevin Martins hosted a supply chain discussion at the Climate Leadership Exchange, a virtual event hosted by the Climate Leadership Conference dedicated to addressing the climate crisis through policy, innovation and business solutions. 

During the event, sustainability leaders joined a conversation about advancing climate ambition in supply chains. Much of the dialog was focused on the barriers that organizations face when trying to integrate sustainability into their supply chains. 

Three key themes emerged from the discussion: 

• Where to Start?
• Supplier Capacity Building
• Equity and Justice

Where to Start? 

 For sustainability teams that are often small, but mighty, deciding where to start is often the most daunting element of launching a supply chain sustainability program. “Data” was a challenge voiced by many session participants.

There are typically thousands – if not tens of thousands – of suppliers, as well as a general lack of information transparency and often decentralized purchasing organizations that present challenges for practitioners who are assigned accountability, sometimes without the corresponding authority, to deliver program outcomes. 

Here it can be helpful to start small, and with focus. Prioritize the suppliers that matter most with the potential to make the biggest impact. If you have access to your organization’s procurement spend, then start by organizing spend by supplier from greatest to least and prioritize engagement with the largest contributors. This can be a proxy for greenhouse gas (GHG) emissions impact if that information is not available. 

If you don’t have access to supplier spend yet, you can begin with the suppliers that are the most crucial to your products and services. Is your organization’s procurement function already segmenting suppliers based on strategic importance? That is likely where there is both the largest operational risk to your organization and a supplier relationship where you are an important customer – likely making it easier to begin engaging on sustainability. 

Even if this is a new endeavor for your organization, there are likely customers, peers or suppliers well-along on this journey. Some of the questions you will want to ask yourself include:

• What can you learn from them to help build the internal case? 
• How many of your organization’s suppliers are already disclosing to CDP? 
• How many customer or investor requests has your organization received in the last year for sustainability performance that would include supply chain? 
• Are there peers in your industry that you can engage with in non-competitive collaborations that can connect your organization to key industry focus areas? 

It will be easier to get internal buy-in with these external data points.

This then leads to supplier capacity building. Once you have decided where to start and which suppliers to focus on, how do you engage them to improve and drive sustainability within your suppliers? 

Supplier Capacity Building 

One common challenge is that supplier sustainably maturity varies greatly. So how do you effectively scale expectations across your organization’s entire supply base without leaving suppliers behind?

You’ll first you will want to evaluate suppliers to understand where they are today so that you can meet them there. One mechanism for this is to start with requests for data transparency first before defining any specific requirements or signing your organization up for supply chain commitments. Have these suppliers completed a GHG inventory before? What information and initiatives to they have today?  

For example, you may ask a supplier to complete a third-party climate disclosure using only the information they have available today. This serves multiple benefits – using a third-party standard reduces “survey fatigue” because it allows your supplier to use this response for other purposes. It also connects them to an ecosystem that has resources beyond what your organization may be able to offer. It also gives your organization a common reporting standard to compare all suppliers against. 

It’s important to note that these surveys are not typically an easy ask, and it will be equally important to direct your suppliers (particularly those that are less mature) to the most important questions to answer, given that a complete survey could be overwhelming. 

In tandem, it can be helpful to host webinars or “office hours”-type sessions during the disclosure cycle to answer questions and connect suppliers to resources as needed. This not only helps with task completion, but also engenders trust and a shared approach. 

The outcome of these efforts will influence your subsequent program cycles, target-setting approach and what future capacity building resources to offer.  

Equity and Justice 

One important topic that came up is that prioritizing sustainability could reward the largest suppliers, while inadvertently putting smaller, diverse suppliers at a disadvantage that they are ill-equipped to overcome. Many diverse suppliers are small and medium enterprises, which makes it more likely that they don’t have capacity to respond to requests for climate disclosure, much less to take bold action like setting science-based targets.

One participant shared that their organization is seeing some conflict between efforts to support equity and elevating their diverse business partners, who don’t always have the resources to respond to sustainability requests. When sustainable supply chain programs are unintentionally at odds with supplier diversity objectives, it’s important to take a step back and consider the potential impacts. 

As is the case with all suppliers, but especially those in supplier diversity programs, we must meet suppliers where they are. This starts with internal collaboration – sustainability and supplier diversity teams can work jointly to assess potential unintended consequences of proposed sustainability programming, and design solutions to mitigate them. 

Many supplier diversity programs have well-established and effective supplier capacity building programs. Integrating sustainability into these existing educational mechanisms can help diverse suppliers meet sustainability expectations. Leveraging supplier capacity building approaches designed by supplier diversity programs can also benefit all suppliers, as we ourselves have seen across several clients. 

These are just three of the challenges that organizations face when trying to develop and implement sustainable supply chain programs. There are many more complicated and interconnected challenges in this area; perhaps more than one organization can ever resolve. 

However, there was general agreement among participants that we must start somewhere and starting small is better than not starting at all. We look forward to seeing how organizations continue to drive sustainability in their supply chains, and among their suppliers. 

For more information about WSP’s sustainable supply chain capabilities, explore our Sustainability, Energy and Climate Change services at www.wsp.com/advancingsustainability

 [To subscribe to Insights, contact the editorial staff at insights@wsp.com.]