Supply chain sustainability at the crossroads

Corporate Sustainability appears at a crossroads. Having moved through a phase of wide-ranging sustainability commitments and pledges, this agenda finds itself in its delivery period. But as delivery is pursued, real-world challenges are emerging.

It was against this backdrop that climate policy experts, entrepreneurs, non-governmental organisation (NGO) representatives, financiers and consultants gathered in Zurich, in July 2024 at the Point Zero Forum. To discuss what concerted action is needed to help business manage the practical challenges their early actions, in pursuit of greater sustainability, have generated.

This report attempts to capture the salient points from a dedicated roundtable focused on supply chain sustainability, hosted at the Point Zero Forum, in which PwC Singapore took part. In the first instance, three broad trends were explored that might suggest business is – or will be soon – moving in a more sustainable direction. These are:

• Changing consumer sentiment – customers are now demanding sustainable products and services and are willing to pay for them.
  
• A more holistic approach to investor valuation – where supply chain sustainability risks and a company's ability to manage them are important considerations for investors.
• New and emerging regulations and standards - Businesses that remain unconvinced of the upside risk potential and downside risk mitigation arising from sustainable supply chain management may be compelled to act in any event by (EU) legislation.

Left alone, however, these trends are unlikely to be sufficient to deliver widespread, long-term corporate sustainability. For one, many of the small and medium-sized enterprises (SMEs) that populate large corporate supply chains simply do not have the time or inclination to embrace sustainability on a practical level. Even if doing so might help ensure their long-term competitiveness. The reasons for this have been explored in research published following the Japan Fintech Festival – see here.

The final section of the report seeks to articulate what might be done as per discussants at the Point Zero Forum, along three core dimensions (a so-called ‘3D approach’ – duty, data, dialogue) to help enhance corporate sustainability, with a particular emphasis on supply chains. In sum:

• Larger market players should embrace the notion of a corporate anchor duty, genuinely supporting their supply chain participants embrace sustainability. Not just demanding it of them.
• Data is critical and its collection and processing need not be as complex as often presented. However, sectoral differences remain, and these cannot be ignored.
  
• Effective dialogue is an essential pre-requisite to progress. But it must be targeted, not open-ended. A sectoral pilot programme lends itself to providing focus, in support of actioning an effective duty of care and identifying the crucial data points needed to measure and manage sectoral sustainability.