Value-building sustainable business practices must start at the top — here’s what enterprise business leaders should be doing to make sustainability part of their culture and operations.
Pursuing profit and growth at the exclusion of other considerations is no longer an option for enterprise business leaders who want to be successful. Ignoring corporate social responsibility (CSR) risks exposing your company to fines, supply chain disruptions, and brand-eroding public scorn.
To be effective, sustainable business practices must originate at the top, and they must extend through all tiers of the supply chain. If executives want their organizations to stay relevant, they must re-orient and embrace supply chain sustainability as part of their core strategy and operations.
Leaders need to ensure their organizations meet today’s sustainability standards to safeguard their market share. But ideally, they should rise to tomorrow’s standards. They should differentiate their organization with actions that transform the sustainability of their entire supply chain and the organization itself. Growth-focused leaders should commit to the following actions to kick-start supply chain sustainability initiatives in their enterprises:
1. Focus on strategies that create long-term value
Sustainable business practices aren’t just about protecting the environment or the people of the world. They’re about protecting your organization as well. Businesses that fail to commit to sustainability on a global level risk harming themselves on an organizational level.
Industry-specific issues may vary, but all business leaders should develop a purpose-led growth strategy centered on long-term sustainability. They should consider consumer trust, trade challenges, and technology in ways that create sustainable value for all their organization’s stakeholders.
For example, when Tiffany’s decided to stop using coral, the company looked past the effect of coral sales on its bottom line. Instead, it realized that it needed to take a more critical look at the impact of using a living animal, imperative to a healthy ecosystem, as if they were merely rocks.
When making this decision, the company looked at the effect of this decision on its overall image. Although it may have sacrificed sales in the short term, it created long-term value by taking a stand and encouraging the entire industry to protect this vital lifeform in the marine ecosystem.
2. Conceptualize sustainability as a competitive advantage rather than a cost
Sustainable business practices can be expensive, but effective leaders look beyond the cost of these initiatives and recognize them as investments into their organizations’ competitive stance.
A company that wants to make spectacular wine, for example, needs spectacular grapes. But simply planting the best grapes isn’t enough. You need to ensure that you’re taking measures to keep the soil fertile so you can continue to achieve excellence for years to come.
Of course, this creates additional costs, but it also creates a long-term competitive advantage. You must expand your view of sustainability if you want to be successful. To position sustainability as an imperative in your organization, you may even want to link sustainability initiatives to executive compensation packages.
3. Be aware of consumer preferences
Purpose-led organizations are better positioned to attract and retain customers than businesses exclusively focused on their bottom line. Although it’s a simple concept, it cannot be overemphasized that consumers are people. They want relationships with the businesses they patronize.
Consumers want to feel as if the businesses they patronize care about them and their world. They research the products they buy, where they come from, and how they’re made. If they sense their money is the only thing an organization wants, they will take their business elsewhere.
Your customers want to be confident that they are making a positive impact on the world when they buy from your brand. You need to instill them with that confidence when they buy your products.
Know what your consumers want today and make sure you’re providing that, including their CSR expectations. Even more importantly, anticipate what they will want tomorrow and actively seek partners, suppliers, and supply chain management processes that can provide a sustainable base to provide these things in the future.
4. Reconsider your approach to corporate reporting
Your balance sheet alone cannot communicate your organization’s commitment to sustainability. Your ability to create long-term value is not just reflected in your assets and liabilities, it’s also created by non-tangible elements, such as your culture, intellectual assets, and ability to use technology.
Traditional financial reporting excludes these elements and hampers your ability to highlight strategic priorities. This increases the trust gap between your financial reports and stakeholders’ expectations.
To increase the trust of your stakeholders, communicate cohesively about your sustainability initiatives and other long-term, value-building strategies. Consider bringing in robust metrics that show your organization’s sustainability initiatives and year-over-year improvements. Tie them back into your bottom line and make data-driven projections about how these initiatives will pay off in the future.
5. Take a collaborative approach when creating sustainability initiatives
A sustainable supply chain involves many moving parts both inside and outside your organization. When creating sustainability initiatives, work with research and development, design, and manufacturing teams as well as representatives from multiple tiers of your supply chain. Leverage each other’s unique knowledge and experience to become more innovative and sustainable. Work together to identify challenges in trade flows and patterns. Find ways to build resilience into your organization and into your relationships with suppliers and vendors.
Identify risks from a holistic perspective and find sustainable ways to mitigate them. Then, revisit your decisions dynamically on a regular basis. Yearly reviews aren’t enough; you need to do this routinely.
To bring your sustainability efforts together, you need to harness the right technology. Homegrown supply chain solutions cannot provide the support you need. You need a technology partner who can help accelerate your journey to sustainability by improving transparency and giving you oversight into every tier of your supply chain.
Contact Logility to talk about improving the sustainability of your supply chain
At Logility, we offer solutions that help businesses improve operations through enhanced supply chain management and sustainability. We can help you improve sustainability at every tier of your supply chain. Ready to learn more about how your leadership team can improve its commitment to sustainability? Then let’s talk.
