Sustainable Supply: Transforming the Global Supply Chain with Green Practices
People can already feel the effect of global warming, making them ask what they can do to combat the crisis. Riding a bike to work and recycling are excellent starting points.
Still, the world needs more significant changes to ensure future generations have opportunities to succeed. How can humanity achieve a better planet? It starts with a sustainable supply chain.
Here’s a guide on why it’s the next step in solving the climate crisis.
How to Achieve a Sustainable Supply Chain
Actions speak louder than words, and they’re how the Earth will achieve long-lasting change. These six strategies demonstrate creating a sustainable supply chain this decade and beyond.
1. Switch to Renewable Energy Sources
Sustainability starts with switching to renewable energy sources. Solar, wind, nuclear and geothermal power are only some of the options available. Renewable energy sources are better for the environment because they don’t release greenhouse gases (GHGs), such as carbon dioxide (CO2). They’re also better for the supply chain because you can produce renewable energy locally instead of depending on a far-away supplier.
Renewable energy has increased in the past few decades, with experts seeing consumption triple since 2013. These sources have become more commonplace as governments and companies see the benefits of installing solar panels, wind turbines and other technologies.
2. Reduce Fossil Fuel Consumption
Increasing renewable energy consumption needs to happen simultaneously with reducing fossil fuel utilization. According to the United Nations, fossil fuels are the largest contributor to climate change. Coal, oil and gas constitute about 90% of CO2 and 75% of GHG emissions. Ocean temperatures are rising, glaciers are melting, and natural disasters are worsening daily. It’s hard not to look at fossil fuel as the primary suspect.
The supply chain would benefit from reducing its fossil fuel consumption because of how volatile prices can be. Gas prices fluctuate with supply and demand, so even minor disruptions in production can significantly increase costs. For example, severe weather increases natural gas demand and leads to suppliers raising rates. Relying on renewable resources removes the uncertainty for many companies.
3. Electrify the Fleets
Removing fossil fuels from the supply chain means scrutinizing which industries use them the most. A good place to start is the automotive industry, considering the millions of cars and trucks driving on the streets daily. Most automobiles you pass have tailpipes emitting GHGs. The European Union (EU) says road transportation contributed nearly 72% of total emissions from member nations.
Electrifying fleets is the fastest way to reduce emissions from the transportation industry. Electric vehicles (EVs), trains and other forms of transport are slowly electrifying as manufacturers see the benefits of using this technology. The global supply chain would become more sustainable and secure because you can produce electricity at home. In contrast, oil and gas often come from international suppliers. Plus, EV research, manufacturing and production create thousands of job opportunities worldwide.
Integrating EVs into the supply chain requires more widespread adoption. Unfortunately, EVs cost more than petrol cars due to higher production costs. Manufacturing should become less expensive in the next decade to make these vehicles more accessible and affordable.
4. Change the Packaging
E-commerce is another sector worth scrutinizing due to its environmental impact. The world has relied more on e-commerce since the pandemic, with online retailers making shopping more accessible for consumers. Experts foresee a 14.7% compound annual growth rate (CAGR) until 2027 in the e-commerce market, demonstrating how the world has shifted in its buying preferences.
Reducing the environmental impact of e-commerce entails switching to EVs and changing the packaging. Many sites use non-recyclable materials for their packages, and the environmental cost adds up quickly. The Environmental Protection Agency (EPA) says packaging and containers significantly contribute to municipal solid waste, adding to landfills worldwide.
The supply chain would become more sustainable if e-commerce companies switched to more sustainable packaging. Some businesses have changed to mushroom, seaweed, cornstarch and other more environmentally friendly materials for their packages. These options are more sustainable because they’re biodegradable and compostable. The end user can dispose of the container and feel better about their carbon footprint.
5. Emphasize ESG Scores
How will the planet get large companies on board with a sustainable supply chain? The leading motivator for multinational corporations is environmental, social and governance (ESG) scores. This metric tracks how a company promotes environmental policies, social justice and governing equity.
How many women and people of color are on the board? What were a corporation’s emissions last year? ESG scores determine these statistics on a 0 to 100 scale, with a score below 50 indicating poor performance.
Why do ESG scores matter? Investors are talking with their wallets. Shareholders are more likely to invest in companies demonstrating care for the environment and people within the organization. Businesses with minimal or no concern for the planet are more likely to fall behind because they’re less sustainable and profitable.
6. Push for Government Action
Ultimately, it’s up to governmental bodies worldwide to enforce environmental policies and hold companies accountable. Corporations can release statements supporting eco-friendly ideas, but some find themselves greenwashing and doing more harm than good. Environmental lobbyists and activist groups push the government to push businesses to do the right thing and enact favorable policies.
Why a Sustainable Supply Chain Is Necessary
Companies have touted making a sustainable supply chain this decade, so it’s worth asking why it’s necessary. Here are a few reasons why improving the supply chain is vital.
Stabilizing Economies
The supply chain disruptions from 2020 to 2022 demonstrate global economies’ vulnerability. A sustainable supply chain means increasing regional domestic solutions instead of relying on international suppliers. Ports can close due to infectious diseases and other issues, so making an efficient supply chain is essential moving forward.
Curbing Global Warming
The top reason for making a sustainable supply chain is to curb global warming. The National Aeronautics and Space Administration (NASA) says summer 2023 was the hottest on record, with information dating back to 1880. Scientists attribute the rise in global temperatures to human activity worldwide. Reducing this rise requires making the supply chain more sustainable. s
GHGs are a significant factor in climate change, with countries like the U.S., China and India contributing the most each year. Reducing emissions is essential to prevent climate change’s worst environmental and human health impacts. Research shows a positive correlation between CO2 emissions and disability-adjusted life years, meaning reducing emissions leads to longer and healthier lives.
Lowering Costs
A sustainable supply chain makes sense for the environment and a company’s bottom line. Sustainable supply chains lead to reduced costs associated with energy production and consumption. Relying on solar and wind power at home is less expensive and more reliable in the long run than depending on foreign oil.
Ensuring a Sustainable Supply Chain for the Future
Time is running out to stop the worst effects of climate change. Fortunately, the planet still has a few years left to control rising temperatures and set humanity on a better path. Creating a better Earth starts with building a more sustainable supply chain. These six ways demonstrate what needs to happen.
Source – Happy Eco News
