Getting Onboard with Supply Chain Sustainability

As the drive to make supply chains more sustainable continues to gain momentum, organizations that ignore this mandate are doing so at their own peril. That’s because the momentum is largely being driven from the bottom-up, meaning it’s the final consumers who have the biggest say in whether they will (or won’t) buy from a particular company based on its sustainability track record. 

This is fairly new territory for a lot of organizations, and namely those that haven’t traditionally put sustainability on the front burner, so to speak. According to one Global Sustainability Study, there have been “significant global paradigm shifts” in how consumers view sustainability and the associated generational differences in willingness to pay for sustainable products and services. 

“This creates both future challenges and opportunities for all companies as the world becomes more sustainable,” say the report’s authors. “Consumers also see themselves as the agents of change, implying that the call to action for companies to adapt has never been more urgent.”

Globally, 85% of survey respondents said they’ve shifted their purchase behavior towards being more sustainable in the past five years.

The Generational Divides

Exactly which generation people are grouped in tends to make a difference in their thinking. Within the Baby Boomer and Generation X, for example, 24% across each group have significantly changed their behavior towards being more sustainable. This figure climbs to 32% percent for Millennials and is likely even higher for Generation Z (no specific percentage was reported for the latter). 

“Millennials and Gen Z are becoming a force to be reckoned with as they continue to represent a larger share of the consumer demographic. Companies that don’t have sustainability as part of their core value proposition need to act now to protect against future reputational impacts and loss of market share,” said Shikha Jain, the study’s author. “We’ve been on this journey for a while, but the clock is ticking and failure to think through the implications could have long-term consequences for traditional firms.” 

On average, more than one-third (34%) of the population is willing to pay more for sustainable products or services, and those willing to pay more would accept a 25% premium on average. Younger generations lead the way as higher shares of Generation Z (39%) and Millennials (42%) are willing to pay for sustainability compared to Gen X (31%) and Baby Boomers (26%).   

These are telling numbers in a world where all organizations are trying to do more with less, and where every penny counts. Losing sales to a competitor that does take sustainability seriously and lets its customers in on what it is doing to make strides in this area is a mistake that most companies simply can’t afford to make.

Sustainability Positively Impacts Performance

The direct connection between sustainability and increased performance is equally as important. In Why Sustainability In Supply Chain Is Need Of The Hour, BusinessWorld points out that, despite the initial outlay, investments in sustainability could potentially yield significant cost savings over time. 

“From tiny, local enterprises to major international corporations, the trend towards a sustainable future can be found everywhere,” the publication states. “While many businesses consider their supply chain to be the most challenging component of their business to sustain, it has been one of the most vital.” 

It’s also important to remember that sustainability is about more than simply being ecologically conscious, and that it also impacts the entire manufacturing process—from the availability of raw materials to the procedures within the facility, the use, and the potential recyclability of the product or service, BusinessWorld adds. 

Pinpointing other benefits of a sustainable supply chain, the publication says some of the key wins include improved innovation, better interactions with customers and  improved cost management. “When an organization transitions to a sustainable business strategy, everyone benefits.”