B2B Suppliers - B2B Portal News | MarketPlace | Directory | Products | Trade

Climate change, sustainability and corporate social responsibility have risen inexorably in the public and corporate minds over the last decade, says Ernst & Young. They go on to state that while businesses and consumers are vying to out do each other’s green claims, the scientific community is issuing increasingly stark warnings about the urgency and depth of cuts required to avoid the most dangerous impacts of climate change.

A survey carried out by Ernst & Young in conjunction with the Economist Intelligence Unit among executives from US$ 1 billion plus corporations to see how organizations view the impact of sustainability on its supply chain and sourcing, indicates a high level of awareness of sustainability, with an appreciation of opportunities it offers within the supply chain. More than half of the respondents to the survey indicated reputation, cost reduction, and revenue growth as the top three opportunities that arise from sustainability. An increased cost base was highlighted as the greatest risk, inferring operational and energy savings will be offset by capital costs and increase in prices from suppliers.

The survey also indicates that a company’s approach to emissions and accountability for its supply chain activity could make or break corporate reputation. 71% of the respondents to the survey view the impact of sustainability on the supply chain as a brand / reputation opportunity allowing to secure competitive advantage. It is thought that supply chains are key to enhancing reputation, both through avoiding risks such as unfair labour practices and using unsustainable material, and in ensuring businesses live up to their carbon reduction promises.

The survey further states that in addition to corporate reputation, cost saving and revenue inducing factors contribute to the business case for sustainability. These include operational and energy efficiency, energy and carbon trading, and new product development and green marketing. The survey findings also indicate that operational and energy efficiency has become key factors in the review of sustainability, since soaring energy and raw material prices has become significant corporate issues. 50% of organizations in the survey see sustainability as a cost saving issue and significant opportunities exist for this throughout the supply chain.

Energy and carbon trading is a factor that strengthens the business case by creating revenue opportunities. 63% of the organizations in the survey clearly identify sustainability as opportunity for revenue growth with carbon trading schemes and investments in renewable energy generation. To combat rising energy prices and reduce in-house emissions, 40% of firms have invested in on-site renewable energy generation such as onshore wind on telecom sites and biomass combined heat and power at factories. This offers greater control over energy costs, enhances corporate reputations and promises profits from the sale of surplus renewable electricity. Similarly, an increasing number of firms are creating revenue from carbon trading. Under the EU Emissions Trading Scheme, participating firms must operate within an annual emissions cap. Operating outside a designated carbon cap could mean paying for excess emissions. Developing countries that do not have emission caps provide finance for greenhouse gas reduction projects through Clean Development Mechanism in return for Certified Emissions Reduction permits which are sold on the open market to firms with emission caps. Multinational businesses could use this scheme to finance energy efficiency and renewable projects for their developing world sites and suppliers.

Revenue through new product development and green marketing is another opportunity. Energy efficiency legislation promises to phase out energy-intensive products replacing them with more ‘greener’ ones, while consumer campaigns and an abundance of product labels aim to increase demand for more sustainable products and services. Businesses are competing to launch sustainable products and services to increase their market share. While many firms limit innovation to certain products, enhancing their reputations as a result, the real challenge is to mainstream them across existing product ranges.

Further, 65% of the respondents to the survey have taken measures to implement labour standard improvements as action on corporate responsibility aspects of sustainability.

Despite indications that the impact of sustainability results in such a varied range of opportunity and threats, organizations seem to be taking a back-seat when it comes to dealing with it. Only 12% of firms rated sustainability among their top three supply chain priorities. This maybe an indication of the mixed messages businesses receive from governments, regulators and consumers – their three key stakeholders as indicated by the survey. Consumer pressure and PR spin has resulted in some very challenging public commitments resulting in businesses over-promising and under-delivering their commitments. Many large global companies have yet to realize the full potential of the savings and benefits that can be achieved by integrating sustainability issues into their supply chain management. With growing legislation, dwindling resources and increasingly vocal consumers, sustainability will continue to grow in importance as an opportunity for forward thinking firms and a threat to their competitors that fail to act.

Source-dailymirror.lk