Part 2: How to Account for a Sustainable Supply Chain as Part of Your Business Plan

June 22nd, 2021 - Author: Melina Corvaglia-Charrey

Building a sustainable business plan is vital to the long-term success of any business, as we learned in Part One of this article. It is also only the first step however on the path towards a more sustainable future, for businesses and for our planet. Another necessary component that needs to be factored into the overall sustainability equation in business is a ‘sustainable supply chain’. 

In this Part Two of our Two-Part ‘Sustainability As Part of your Business Plan’ discussion with Paolo Taticchi, Professor in Strategy and Sustainability and Deputy Director (MBA and Global Engagement) of University College London, we explore the topic of a sustainable supply chain & governance.

According to Professor Taticchi, ensuring a sustainable supply chain is very difficult for businesses to manage. For the most part, the sustainability challenges that businesses are confronted with are happening at the supplier level, rather than at headquarters. Many large corporations today have suppliers that are spread out globally, and oftentimes in parts of the world that are already troubled with social, economic and environmental issues. When it comes to implementing sustainable business practices throughout a supply chain, Professor Taticchi points out, “While challenging to manage, large corporations do have the ability to influence suppliers.” Referring to an article Taticchi co-wrote on the subject in 2016, titled ‘Corporate Sustainability Approaches and Governance Mechanisms in Sustainable Supply Chain Management’, Taticchi underscores the importance of governance options, various levels of collaboration and formal mechanisms that need to be applied throughout the supply chain. 

A recent example of governance in the area of sustainability was seen in a legislative proposal put forward by Members of the European Parliament in March 2021. The move paves the way for an EU law that will require companies to address human rights and environmental standards across their supply chains. If passed, the law will apply to companies within the EU, as well as companies outside that want to do business within the market. In a statement about the proposed legislation, Lara Wolters, a MEP from the Netherlands said, “This new law on corporate due diligence will set the standard for responsible business conduct in Europe and beyond. Companies will need to avoid and address harm done to people and planet in their supply chains”. The proposal is a welcome step forward for the global sustainability movement and effort.

When it comes to the issue of accountability as it relates to sustainable business practices, Professor Taticchi believes ultimately it rests with businesses. “Everyone plays a role in this transformation of industry (all stakeholders). Ultimately, I believe accountability is most likely with business. If you take sustainability seriously, it’s at the center of your business planning and agenda. Companies need to rethink decision-making practices, incentive for executives and their bonuses. Pushing organizations to become more transparent. More and more companies are open to this idea”.

Image by jcomp

Surely, governing a sustainable supply chain is an approach that requires due diligence and collaboration on the part of all stakeholders, and it’s one that takes time. To use a sports analogy, the process can be likened to a marathon, not a sprint. Although establishing a sustainable supply chain takes time, it will prove to be time well spent. It is no surprise to Professor Taticchi that the businesses that are leading the way in the area of sustainability today are positioned well ahead of their competitors. Referring to the likes of Patagonia in the US, and Brunello Cucinelli in Italy, Professor Taticchi is quick to point out that these companies have embraced and implemented sustainable business practices since the very beginning. Overtime, their sustainability and competitive strategies have, and are continuing to pay off.

Patagonia, well known for its sustainability stewardship, has been walking the talk since the company was founded in 1957. Sustainability has been and continues to be at the core of it’s business framework, as is clearly stated in the company’s mission statement, “We’re in business to save our home planet.” The company has made it their business to ensure the planet is at the top of not only their own agenda, but that of their supply chain partners as well. They do this through an approach they refer to as ‘4-fold Pre-Screening’. Before a supplier is brought on board, they must meet and adhere to business, quality, environmental and social standards. More than this, Patagonia lists each one of their factory, farm, and mill partners on the company’s website, knowing full well that the highest standard for accountability, by any measure, is transparency. 

Another example of a business that puts sustainability at the forefront of it’s practices is Italian fashion company Brunello Cucinelli. Founded on a humanistic capitalist approach to business, Brunello Cucinelli also holds it’s partners to the same high sustainability standards that have guided the family company from the very beginning. In the same spirit of transparency that we saw with Patagonia, Brunello Cucinelli has published a declaration of sorts on the company’s website titled ‘Our Ideals for Life and Work – 10 Rules’. The declaration lists the company’s shared commitment with the planet, their co-workers and their partners. It is this mutual respect for humanity and nature that has shaped the business into the exemplary sustainable fashion entity that it is today.

In addition to these long-standing sustainable business pioneers, Professor Taticchi is encouraged by new and emerging players that are hitting the ground running, pointing to Formula E as an example. Professor Taticchi explains that Formula E is a great case study for businesses looking to create shared value ecosystems. Through technological innovations, Formula E seeks to address the big climate challenges facing the motorsport industry as a whole. What started off as a technology lab for the sport has grown into a sport that is attracting the attention of big auto-manufacturers, essentially influencing other industries to park conventional methods and gear-up efforts towards sustainable technological advancements. In an interview with Green Sports Blog, Formula E’s Sustainability Director and SandSI President Julia Pallé spoke about Formula E’s sustainability platform and initiatives, “Formula E innovates to make the world a better place. Our new Positively Charged campaign reflects this. It is a program that emphasizes all three phases of ESG – environment, social and governance”.

It has become clear that whether a business is seasoned or new, it’s never too late
to successfully develop and adopt a sustainable business plan. No doubt that if done well, a sustainable business strategy will deliver positive results to a business’s Triple Bottom Line, setting it up for long-term success. Professor Taticchi explains, “I believe there is an understanding that this is the decade for action, and if you do not take sustainability seriously now, your competitiveness is at risk in the future”. Going back to one of Professor Taticchi’s earlier points, marketing & communications alone is not going to make a business sustainable, at least not for any sustained period of time. 

For more guidance on how to best approach establishing a sustainable business plan and supply chain, Professor Paolo Taticchi recently published a book in 2021 titled “Corporate Sustainability in Practice: A Guide for Strategy Development and Implementation.

Visit paolotaticchi.com to learn more.

In Part Two of our discussion with Paolo Taticchi, Professor of Strategy & Sustainability at The School of Management, University College London, we learn how to account for a sustainable supply chain as part of your business plan.

Watch here to learn more →