Sustainable Supply Chain Transformation

Supply chains are critical to sustainability: more than 70%¹ of the carbon footprint of many businesses come from scope 3 emissions. Therefore, supply chains are the single most important field of action for a company to become sustainable. Implementing sustainability requires transparency from the very first step of the product value chain – from cradle to grave – to truly have a holistic view on lifecycle emissions and resource usage.

Time to act for a sustainable supply chain is now

As regulatory pressure increases, businesses are gearing up to reap the benefits of greening out their supply chain operations. This includes attracting young talents and green investors, creating business opportunities and resilience both in public tenders and as part of ESG-oriented value chains, and identifying savings opportunities in raw material and energy costs. For decades, sustainability has been somewhat unpopular and championed by a minority. This has changed, and the sooner companies figure out how to transition to a green supply chain, the faster they can win in the marketplace.

According to the latest Deloitte CxO survey, more than 60% of global executives state that climate change will have a significant impact on their company's strategy and operations over the next three years. And at 84%, the great majority believe that economic growth and climate goals can go hand in hand. However, too many companies are still dealing with sustainability by pursuing haphazard, high visibility initiatives instead of formulating and implementing a holistic, full-scale sustainability strategy that spans the entire supply chain. We have identified three universal themes that companies must address to define and implement successful sustainable supply chain programs:

Successful sustainable supply-chain transformation is not about pursuing haphazard, high visibility initiatives. It requires a holistic, full-scale supply-chain-sustainability strategy that not only addresses your company’s carbon footprint, but its transition towards closed value loops and elevating personal wellbeing.

Tomas Henninger, Partner, Sustainable Supply Chain & Circularity 

Each function must contribute to the three themes of sustainable supply chain transformation – not as a stand-alone endeavor, but in an orchestrated approach characterized by close cross-functional alignment in pursuit of an overarching sustainable supply chain transformation north star derived from the corporate strategy. Functional efforts then need to be underpinned by truly horizontal activities and considerations that include a green cultural mindset shift and transparent efforts to ensure, track and report on regulatory compliance (in particular with the Supply Chain Due Diligence Act: Supply Chain Due Dilligence Act (SCDDA)). In this whitepaper and other articles of our Sustainable Supply Chain series, we provide a deeper dive into selected functional levers to drive progress across the three sustainable supply chain themes, and how companies are putting them into action.

To embark on a successful sustainable value chain transformation that addresses all three transformation themes, companies should take a step back and look at their performance in all material environmental, social, and governance (ESG) areas along the key value chain functions. They should then focus on the areas that matter most to stakeholders, and not just to investors, today and in the future, and where outperformance can contribute most to long-term business success. Prioritization is critical to help companies avoid the common pitfall of siloed initiatives that ultimately have little impact.

Our support regarding sustainable supply chains

Deloitte has practical experience in designing and implementing successful ESG programs across a wide range of industries and is determined to provide companies with the knowledge and tools to turn sustainability into action. We have launched our Deloitte Sustainable Value Chain Competency Lab with the goal of helping all industry sectors transform to green supply chains. We help our clients build the green supply chain of tomorrow, decommission and repurpose high carbon-intensity assets, drive green transition of their installed base, and scale nature-based solutions. In a pragmatic two-day workshop series, we help clients assess their status quo and derive sustainable supply chain transformation measures that really move the needle.

Sustainable value chains are the backbone of our future wealth.

Jürgen Sandau, German Lead Supply Chain and Network Operations, Deloitte

For more information on sustainable supply chain transformation, you can download the overarching whitepaper here and refer to our Sustainability in Aftersales and Sustainable Sourcing & Value Capturing article for additional function specific insights. If you want to start climate action with supply chains, get in touch with us.

¹Greenhouse Gas Protocol (2019). You, too, can master value chain emissions. | GHG Protocol