Operationalizing Climate and Social Goals in Supply Chain Operations

BRIEFING PAPEROperationalizing Climate and Social Goals in Supply Chain OperationsSponsored by SPONSOR PERSPECTIVESustainability Is an Admirable Goal, but How Do You Operationalize It? Today, supply chain and procurement leaders are accountable for delivering on sustainability targets, in addition to their traditional roles. This expanded scope requires a shift in mindset supported by innovative tools and strategies. Supply chain processes must be aligned with the company’s environmental, social, and governance (ESG) mission. Once you establish those targets, you can create a sustainable culture. The challenge is operationalizing it. ESG can’t be an afterthought. It needs to be in the organization’s bloodstream.To that end, it is essential to have a strong data foundation across internal functions and external partners. You can’t claim to have net-zero emissions, for example, if you don’t have data about your suppliers’ performance. What targets have suppliers set in terms of emissions reductions? Have your partners committed to science-based targets? Greater collaboration is needed within the organization and beyond to achieve ESG goals. For instance, you cannot shy away if you suspect your supplier is exploiting workers. You must launch a case-handling procedure and report the matter to authorities. If you decide to stop working with this supplier but do not take further action, the exploitation will continue.Having the right tools in place across the entire source-to-pay process is critical, but technology isn’t a panacea. Organizations need to effectively communicate their ESG vision across the organization and their extended network.I encourage readers to use this report, sponsored by GEP, to learn how leading companies such as Unilever and Xylem have operationalized their sustainability journeys.Jille LuijckxVice President, Global DeliveryGEPABOUT GEP GEP delivers transformative supply chain solutions that help global enterprises become more agile and resilient, operate more efficiently and effectively, gain competitive advantage, boost profitability, and increase shareholder value. Fresh thinking, innovative products, unrivaled domain expertise, and smart, passionate people—this is how GEP Software™, GEP Strategy™, and GEP Managed Services™ together deliver supply chain solutions of unprecedented scale, power, and effectiveness. Headquartered in Clark, N.J., GEP has offices and operations centers across Europe, Asia, Africa, and the Americas. To learn more, visit www.gep.com. 1Briefing Paper | Operationalizing Climate and Social Goals in Supply Chain OperationsOperationalizing Climate and Social Goals in Supply Chain Operations HIGHLIGHTSThe hard reality is that operationalizing sustainability in supply chain operations is an unprecedented undertaking for any manufacturer or supplier, regardless of its size or industry. Because the big emission targets are out in the value chain, a sustainable supply chain baseline exercise quickly turns from an internal to an externally focused exercise. Organizations are looking to the procurement and sourcing functions to lead and drive their sustainability effort and social agenda. Organizations are transforming their operations, including their supply chains, to meet climate and social goals, a complex and extensive undertaking that is placing social responsibility in the same conversation as profitability. Consider chocolate ice cream. Magnum, a Unilever PLC ice cream brand, sources its cocoa beans from the Ivory Coast. The West African country, with a mean income of roughly $2,000, is perhaps the largest exporter of cocoa beans in the world. As its agricultural ambitions grow, the region’s forests are under perpetual strain. A threat to the forest destabilizes cocoa bean production. So, Magnum has committed to replanting almost a half-million trees in the Ivory Coast, part of Unilever’s wider cocoa strategy, which includes reducing poverty, eliminating child labor, and protecting forests. It will also ensure a reliable supply of cocoa beans for chocolate ice cream. As businesses attempt to gain a post-pandemic footing, they’re also finding themselves in a position similar to Magnum’s when it comes to increasing pressure to behave in a more socially responsible manner. Shareholders, consumers, and corporate stakeholders are looking to organizations to change how they operate in order to alter their current trajectory on climate change and champion socioeconomic issues such as wages and working conditions. In addition to becoming a core principle for business, sustainability is increasingly being used as a means for companies to mitigate risk, comply with regulations, and deliver on their stated social imperatives, including diversity goals. Momentum for environmental, social, and governance (ESG) adherence is increasing, with 632 out of the 2,000 largest publicly traded companies in the world by revenue having made net-zero commitments, according to