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November / December 2020

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Sustainability

November 10, 2020

Practitioners Preparing for Climate Challenges

At Institute for Supply Management® (ISM®), we’re fortunate to have the opportunity to speak with top supply management leaders from around the world. Recently, one wrote to me, “Climate change, as a root cause, is an unbeatable foe.”

This wasn’t an expression of despair; it was an acknowledgement of a new reality. You might be highly skilled in the art and science of supplier relationship management, but you can’t negotiate with Mother Nature. Climate change is now the X-factor in long-term supply continuity.

Extreme weather disrupts supply chains with relatively short notice. Wildfires shut down trucking and rail routes, and droughts create commodity shortages. Waterways and ports are impacted by shifts in climate. In companies’ extended supply chains, quality of life for workers has been negatively impacted by the stress on the environment, and thousands of species necessary for raw materials are threatened by extremes in temperatures and disruptive weather events.

ISM introduced its Principles of Sustainability and Social Responsibility in 2008, recognizing that vision and leadership from our members is essential to mitigate risks from environmental threats and to create strategies that will allow companies to thrive in a world of diminishing resources. Twelve years later, it’s not just about mitigation and competitive advantage. Supply managers are positioned to positively impact the planet and humanity through their leadership.

Today’s world is challenging, but it’s not all gloom and doom. At ISM, our conversations aren’t only with seasoned executives; we’re also fortunate to meet students and young professionals. The next generation of supply management leaders is expressing a deep commitment to sustainability and desire to  use their careers to make a difference in  the world.

Research Spotlight

ESG Spotlight

World Economic Forum Sets  ESG Metrics Framework

The process of environmental, social and governance (ESG) principles becoming part of companies’ financial DNA got one of its biggest pushes in September. The World Economic Forum (WEF), in conjunction with the Big Four financial firms and Bank of America, released a set of sustainability metrics to serve as a framework for organizations to detail ESG impacts in their financial reports.

In the white paper Measuring Stakeholder Capitalism Towards Common Metrics and Consistent Reporting of Sustainable Value Creation, the WEF presented 21 metrics divided into four categories — governance, people, planet and prosperity. Among the analytics: monetary losses form unethical behavior, greenhouse-gas emissions, pay-equality and living-wage percentages, and percentage of revenue from products and services designed for social benefit.

“These are the (metrics) that we truly believe as a business community are the right measures to start with,” Bob Moritz, global chairman of London-based professional-services giant PricewaterhouseCoopers (PwC) said at the WEF’s virtual Sustainable Development Impact Summit in September. “We’re not looking for perfection, we’re looking for progress.”

Moritz said he hopes the WEF metrics can help bring global consistency to companies’ ESG reporting, with disclosure requirements varying among countries. In the U.S., the Securities and Exchange Commission adopted a framework for ESG disclosures, but those standards don’t include specific metrics.

 

Sustainability Stat

136 Million

Metric tons (MT) of avoided emissions throughout Walmart’s value chain in 2019, according to the retail behemoth’s most recent environmental, social and governance report. The company has avoided 230 million MT since 2017, and those efforts will accelerate as more suppliers sign on to Walmart’s Project Gigaton, a program designed to prevent 1 billion MT of greenhouse gases from its supply chain by the end of the decade. More than 2,300 suppliers  are participating in the project.

“There is no one-size-fits-all approach to addressing social and environmental issues in supply chains,” Walmart’s ESG report states. “We tailor our engagement by evaluating our sourcing footprint, determining the most relevant issues for each commodity and identifying where Walmart is best positioned to accelerate positive action forward.” 

 

Global Spotlight

Flavorful Goal of Sustainable Vanilla Reached

In 2016, the vanilla industry — facing concerns about diminishing quality, questionable labor practices, financial hardships among bean farmers and insufficient supply chain traceability — launched a sustainability initiative. The mission’s objective has been realized in one segment of the industry, as the Kellogg Company and Symrise, a German flavors and fragrances company, announced they have met a goal of 100 percent responsibly sourced vanilla from Madagascar.

The companies formed a partnership in 2019 to sustainably source from Madagascar — which grows more than 80 percent of the world’s vanilla beans — with a three-year project target date. “Responsibly sourcing our ingredients means making a difference from the very start. That’s why we’re working closely with the farmers who grow them,” Kellogg chief sustainability officer Amy Senter said in a press release. “Farmers like those in Madagascar aren’t just growing vanilla for people around the world, they’re cultivating healthy soils, diverse ecosystems and strong communities.”

Based on their “closest to the source” philosophy, the companies provide training on sustainable farming, ethical labor practice and budget/cash flow management for more than 1,000 vanilla farmers in Madagascar. Symrise states on its website that it purchases vanilla from about 7,000 farmers in 84 villages in the country.