Trust in supply chains is a tremendous challenge for organizations today. Global supply chains are increasingly more complex and obscure. When products can't be traced back to their origins, measuring their environmental and social impact is impossible.
The lack of transparency and traceability leads to a variety of critical issues, each industry specific.
The food industry, for example, faces the issue of increasing deforestation linked to the complexity of ‘forest risk’ commodity supply chains. Though, soy and palm oil are rarely listed as ingredients, they have found their way to many unexpected destinations. Soy is included in animal products like meat and fish while palm oil is featured in a wide range of products spanning from processed foods to toothpaste.
This set-up hides the production impact from consumers and retaliers at the top of the supply chain- making them unaware of the rainforest damage the products are causing.
Another industry facing fundamental challenges is the fashion industry. The production of fashion apparel relies on complex and opaque supply chains often linked to unsustainable practices. Intense use of chemicals and natural resources leads to local pollution in production countries, but without traceability-no company can be held accountable. Lack of transparency often results in unauthorized subcontracting which goes hand in hand with unfair labor practices, unstable working conditions, often in socially vulnerable communities, and subsequently even human rights violations.
The right approach
According to Trase – a supply chain traceability platform launched by Stockholm Environment Institute:
“There’s little doubt that transparent, traceable supply chains are crucial if people further down the supply chain - consumers, retailers, financiers, importers, processing industries, for example - want to make a positive difference to what happens in the fields, plantations and forests.”
Increased transparency can facilitate better decision making for retailers that can identify risks and ‘hotspots’, as well as check if they are unwittingly sourcing from non-ethical suppliers or deforestation areas. Most importantly, transparency allows them to act upon these challenges – engage with suppliers to address the variety of risks in an informed and efficient manner and seek or create more sustainable options.
Collective & Transparent Information Sharing
Traceability can become the most important tool to improve supply chain sustainability. However, organizations need to do so efficiently – asking the right questions and using the available information effectively. Two important parts need to be in place.
First, mapping out the whole supply chain and discovering information gaps and challenges can help organizations further understand the objectives and prioritize information – what is useful and for whom?
The second step is to publicly and transparently share the mapped-out supply chain. With the current global set-up of interconnected suppliers and retailers, merging the data together can significantly reduce costs for all stakeholders. Thus, it is fair to say that a collective approach is crucial for fast-tracking the development of better practices and sustainable solutions, which can be further shared and scaled-up.
There are already many products and approaches available to use. These include initiatives starting with blockchain powered applications, mapping platforms and collaboration facilitating alliances. Below are some of the most promising projects:
- Trase - A platform that maps out agricultural commodity supply chains. Trase reveals links to environmental and social risks in tropical forest regions, and creates opportunities to improve the sustainability of h
ow these commodities are produced, traded and consumed.
- Provenance - Powered by blockchain, Provenance is an open-data software that enables retailers and producers to track the journey of the goods and open to product data to the customers. Currently Provenance is running “The Blockchain Revolution: Application to Sustainably Certified Supply Chains”- a 9-month pilot project aimed to demonstrate what opportunities blockchain
technology can offer to sustainability standard systems and sustainably certified supply chains.
- Supply Chain Transparency Network (SCTN) An informal alliance convened by Global Canopy and the Stockholm Environment Institute, designed to facilitate collaboration and new strategies for advancing sustainable supply chains, with a focus on supply chain data.
- The Higg Index- A suite of tools for brands, retailers and facilities to measure and score a company or product’s sustainability performance. The Higg Index Transparency tool solely focuses on transparency that allows to use a common language and share sustainability efforts both with stakeholders and consumers.
To act upon current environmental and social issues, traceability and transparency are neccessary. At the end of the day, it is what companies do to transform their supply chains and integrate sustainable practices that matters.
SustainOnline can help take you from mapping out risks in your supply chain to acting upon them.Our extensive range of courses and tools provide the necessary knowledge to further transform. Set up new projects, align them with sustainability and collaborate with your team.