Sustainability is the new buzzword with focus on the supply chain

Pick up any newspaper, electronic or otherwise and the headlines are about water conflicts -water sharing between countries, states and neighbours. It is common to see the cost of sand and aggregate spiralling on a year-on-year basis, leading to the purchase of such resources with a so called ‘black and white’ rate. Singapore, at one time, used to procure sand from Malaysia and Indonesia, but both these countries have since refused to sell sand to Singapore. 

We live in an interconnected world. Hence it is imperative that big businesses engage with sustainability, and look beyond organisational boundaries, at the sustainability of its entire value chain - the top most priority being focus on the supply chain. 

Greening of the supply chain (GSC) gives companies direction on how to train and sensitise suppliers on key issues and to mitigate the risk of supply chain disruptions in the near future on account of declining resources. In India, many companies have still not embarked on the sustainability journey with greater rigour. Unless companies begin to confront resource challenges in their own systems, they will not have the insights to add value to their supply chain. 

GSC entails the following:

• Apply common environmental and related standards and programmes across the parent company and its suppliers, taking into consideration local legal requirements and cultural characteristics of the region where one is operating.
  
  
• Share management system implementation to ensure greater accountability of supplier performance on health, environment, safety, resource consumption and social factors.
  
  
• Seek opportunities for business process redesign or innovation, materials substitution or product design.
  
  
• Set specific performance goals and metrics to evaluate the performance of specific suppliers over time.
  
  
• Practice greater transparency in reporting performance results.
  
  
• Develop partnerships with government agencies, non-government organisations and other institutions to improve specific aspects of performance beyond a company’s specific capabilities or to leverage access to technical, managerial or financial resources.

The above guiding principles are illustrative and can be simplified. The supply chain in India has still not matured and lacks the financial resources to upgrade itself. They can therefore be assisted by the organisations they work with, with assistance from sustainability experts, who can continuously assist in cleaner production practices and in mitigating business risks.

The values derived from GSC are:

• Mitigating business risks - by helping suppliers understand water management techniques to their advantage
  
  
• Reducing costs - upgrading their knowledge on new technologies to help them reduce life cycle costs
  
  
• Motivating better performing suppliers by giving them preferential treatment
  
  
• Preserving business continuity by responsible use of finite resources of any kind
  
  
• Enhancing market access and degrees of business strategy freedom
  
  

Factors to success in GSC initiatives:

• Obtaining senior management commitment
  
  
• Providing direct, on-the-ground support to suppliers
  
  
• Acknowledging the wide range of supplier competencies
  
  
• Creating benefits for suppliers
  
  
• Recognising external incentives for greener supplier performance
  
  
• Working within the national culture with local people

A Brief checklist on inputs that can be given to Suppliers:

Water- Are water meters installed? Does everyone know the cost of water? Are taps leaking? Is there knowledge on the leak rate? Is water used carefully? Is it recycled with simple design intent or with low flow rated devices?

Energy - Has an energy audit been conducted? Is daylight being used where possible, or by design in a new facility? Are light sensors deployed in 24/7 areas? While purchasing equipment is energy efficiency taken into account?

Waste- Is waste being banished by process efficiency, or reduced, recovered or converted to better use so that it does not go to a land fill site? Is the organisation moving from a linear production process to a circular green economic system, so that the World does not have land fill sites in the next 8 years?

Fire safety- are suitable firefighting equipment installed? Expiry dates written on the extinguishers? Are all staff trained in firefighting techniques? Do they know the difference between the ABC type fires? Are fire prevention system protocols robustly in place?  

Health- Do staff undergo regular health check-ups? Are they aware of basic hygiene standards? Not coming to work if they have symptoms of any communicable illness?

Human rights policy - No child labour, work life balance, gender equity, one pay for all, the law on sexual harassment?

Disaster management (DM) - Does the organisation have a checklist to handle DM? Depending on the region-specific threat, are the trainings repeated at predefined intervals and documented?

Finance- Enhancing financial literacy of the small suppliers, giving them inputs on using legal means of tax savings which they might not be aware of?

Internal organisation events - Are Suppliers invited so that they are treated like partners and given the respect a partner deserves?

Payment – Do large organisations pay their suppliers on time?

Bribery and corruption policy- Is the policy displayed transparently?

The government of India (GOI) has taken a very giant stride in implementing National voluntary guidelines (NVG), for the large industry. It has set up the IICA (Indian Institute of Corporate Affairs) which has developed online training modules to get a feel of the scope of work on the large canvas of sustainability. In the '90's, to give an impetus to the IT industry and demystify the subject of Information technology, many franchises were opened like NIIT APTECH which imparted training to millions of youth on IT hardware and software. 

In a similar vein, GOI has an opportunity to drive Transformational change to embed sustainability in the current young generation to quickly understand the various hues of sustainability by opening clones of IICA across the vast country. The GOI must also quickly roll out the policy of Green Procurement, considering that GOI is a big buyer of products and services. Moving away from L1 purchase practices will spur greener and cleaner production processes across different industry sectors. 

The following quote of Pavan Sukhdev, the Indian Environmental Economist and sustainability thought leader, underscores the thoughts expressed in the article above. "Many or most of our problems lie in combination of market failure and irresponsible and short-term behaviour. We have it in our hands to overcome these problems through sound policy, collaborative behaviour and a more far-sighted approach to the consequences of our action, and the processes of discovery about technology, organisation and policy.”

Science tells us that dramatic changes must be made to “business-as-usual” within the next decade if we are to maintain hope of building a sustainable economy. Macro-level changes can only be constructed through the cumulative efforts of many micro-level entities.  As such, the private sector must become the primary agent of innovation and problem-solving on which governments and other stakeholders depend, if we are going to make real strides towards a green economy."

In conclusion, we must not forget, according to TERI, that India loses 6 per cent of its GDP due to different kinds of environment related challenges. Imagine reducing this by 3 per cent, what will it do to the bottom line of the country in the next few years? Considering the onset of Covid-19 has damaged our economic growth, it is of paramount importance that we leverage every opportunity to scale up the economy by optimising the use of all resources, by engaging actively with the supply chain of all industries.