Survey: Most Companies Can’t Fulfill Sustainability Commitments

March 27, 2007

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While a majority of North American firms in the survey (almost 60 percent) have a documented corporate-level sustainability strategy, just over one-third (36 percent) have adopted a formal sustainability strategy for the supply management organization -? a crucial step in ultimately being able to deliver on their sustainability promises, according to a study (PDF) by consulting firm A.T. Kearney, in conjunction with the Institute for Supply Management.

The research revealed that most firms have recognized the value of adopting sustainable practices, whether to strengthen their brand or to differentiate products. Companies understand that sustainability management is a top-line growth opportunity, rather than just a compliance issue. Embracing sustainability provides companies with an opportunity to improve their corporate image and differentiate their products.

Just over half of the companies in the survey provide written guidelines to help supply management staff address sustainability questions, and just over 40 percent provide training on sustainability management.

The study showed that today 50 percent of companies will deselect suppliers for not meeting sustainability criteria. Five years ago it was rare that a company deselected a supplier because the partner failed to meet formal criteria of being “green and ethical.” More than half the companies in the survey include sustainability metrics in the evaluation criteria of supply management executives. Examples of sustainability metrics include eco-efficiency of materials and packaging, fair labor practices throughout the supply chain, a quantification of the carbon footprint, and accounting for full lifecycle costing.

Although a majority of companies still do not have robust supplier relationship management practices for sustainability, this will change significantly over the next year as the number of companies rewarding supplier sustainability practices will increase by 50 percent and almost two-thirds of firms will either engage in joint process improvement with their suppliers or track a robust set of sustainability metrics for their major suppliers.

Some of the companies in the survey indicated that they are already beginning to see the financial benefits of focusing on sustainability including increased customer demand for sustainable products, improved employee morale, greater brand strength and enhanced marketing opportunities for environmentally friendly products.

The study indicated that over the next 12 months there will be a dramatic shift as corporate supply management departments play catch-up across all aspects of sustainability.

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