Making your company more sustainable ..

With the threat of global warming and climate change looming above our heads, we need to think of making our supply chains more sustainable with each passing day.  We hear of organisations following the circular loop. What is this circular loop ? 

Click here to read the HBR article in this regard by Karolin, Fabian and Richard " A step towards making your company more sustainable", HBR Jan '21. 

The 4 different steps to making your organisation more sustainable is to simply follow these four steps in the circular economy.  What do they mean and how can it be implemented ?

The authors suggest four steps, they are as given below.  

1. Close the loop - move from a take-make use-dispose linear value chain to a take-make-use-recover circular value chain. The recycling is possible with full reuse, part reuse or biodegradability.

2. Improve the loop - the circular offering should contribute to solving environmental problems, reduce the use of resources and slow down the flow of resources within the system. Sensors can help monitor the flow of resources within the system.

3. Monetise the loop - focusing on performance based contracting will ensure that the customer only pays for the performance of the product and not for the product as a whole. This relieves the customer with the botheration of having to dispise the product at end of life of product. Companies should try to make the best revenue model for the customer use of the product.

4. Excite the loop - if the customer can be motivated to think of the larger picture of safe disposal or recycling of the product, as the product enters it's end of life it can be reused or put to other high value use which ensures a longer life for the product at the same time higher value to the customer.

What does it mean actually ? The main focus here is to ensure the extended life of the product and delayed disposal, helping the environment in the long run.

MNCs of late have come to face lot of shame globally when some of their supply chain partners resort to unethical and unsustainable supply chain practices forcing the companies to face global contempt and disdain.

Click here to understand steps for a more sustainable supply chain by Veronica and Dennis, HBR, March '20  where the authors mention of cases where MNCs have been held responsible for unsustainable actions by their first and lower level suppliers. MNCs or large corporations usually find it difficult to monitor their lower level suppliers' environmental and social corporate governance standards and get caught in controversies at the global level, like what happened to Nike in Malaysia and Apple in China with Foxconn.

There are different approaches in which the sustainability standards can be enforced. They are 

1. Direct - the MNCs themselves exercising control over the first level and lower level suppliers infrequently to enforce standards. This is rarely complete and can result in omissions more frequently leading to poor monitoring and enforcment

2. Indirect - first level suppliers monitor their suppliers (second tier to the MNC) and second tier suppliers monitor their suppliers (third tier to the MNC). This is successful to a limited extent but involves extensive education to the suppliers of what constitutes best environmental sustainability practices for the said MNCs.

3. Collective  - MNCs collaborate with their competitors and major suppliers to develop healthy industry standards that are good for everyone and works for the betterment and growth of the industry

4. Global - collaborating with international organisations like UN and NGOs that share their goals. An example is United Nations Global Compact, an international effort to promote CSR. Carbon Disclosure Project's Supply Chain Program is a group where suppliers by being transparent disclose details about their Carbon footprint and MNCs select the suppliers accordingly. This helps them to get investments liberally to help reduce their Carbon footprint. Better engagement and cascading impact of the efforts are seen to be very encouraging across the field on all the suppliers. 

The collective effort has helped the industry as a whole by imparting better education and training to all the suppliers to reduce their adverse impact on the environment and ensure fair labour practices and better environmental sustainability compliance.

George..