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Collaboration on sustainability is the way forward

23 June 2022

Despite ambitious climate targets focussing hearts and minds on making businesses more sustainable, there is still a prevailing view that a trade-off exists between environmental performance and financial results. James Butcher argues that is a fallacy. 

There appears to be a long-held, cross-industry view that investing in sustainability costs businesses money, rather than driving bottom-line profit. While this may have been the case a decade ago, recent research proves that this is a myth and shows that sustainable practices can deliver markedly better financial results for businesses.

When you take a deep dive into sustainability operational performance and assess business performance for retailers and brands, the data shows that sustainability is responsible for approximately 20% of a business’ financial results, with supplier collaboration the most effective sustainable practice that businesses can undertake when compared against practices such as product design, process design and customer collaboration. 

If brands take steps to proactively engage with their suppliers through sharing data, establishing mutual understandings of responsibility around sustainability requirements, and developing products that support brand sustainability goals, they can make significant improvements to both their environmental impact and their bottom line.

The idea that there is a compromise between environmental and financial performance is outdated, and as such, there should be less hesitation and more commitment to sustainability adoption at a board level.

An encouraging statistic from the research we worked on was that ‘moral motivation’ is the biggest driver for companies looking to be more sustainable, with 87% of brands pointing to ‘environmental concern’ and 88% governed by ‘doing the right thing’.

This sentiment is promising, but the key to delivering on the vision is by combining collaboration and insight. If you start from the standpoint of asking yourself what matters most to your brand and – equally as important – your stakeholders, this allows you to then set realistic and achievable goals that give the clarity and confidence needed to invest a team’s energy in the right places.

Crucially, by benchmarking these collaboratively alongside your suppliers, it is possible to create a strategic alignment where everyone is pulling in the same direction and toward a common goal. This helps clarify what is expected from suppliers and maintains communication lines so you can tell them how they’re doing and help them improve.

This isn’t an easy task, and most supplier initiatives fail to deliver return on investment (ROI) due to the complexity of the supply chain. However, by identifying and meeting the most valuable commercial gains, this approach creates a long-term strategy that continues to deliver value as you grow.

A global issue
Research from McKinsey suggests that a single prolonged shock to production could wipe out 30 to 50% of one year’s earnings for most sectors, so the growing issue of raw material availability, rising costs, and shrinking profits, means that brands and retailers are having to be increasingly creative and dynamic in the way they work with suppliers.

Through dynamic engagement within the supply chain, brands and retailers can quickly identify solutions and ultimately become more agile – something that will serve them well long into the future and help them meet sustainability targets.

The solution is in our grasp, but together, we need to take the step and make it a reality. As David Attenborough said at COP26 last year: “We are, after all, the greatest problem solvers on Earth. If, working apart, we are a force powerful enough to destabilise our planet, surely working together we are powerful enough to save it.”

James Butcher is CEO at Supply Pilot.

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