Why Sustainable Supply Chains Matter
Globalization has enabled companies to outsource their production processes to external suppliers and to relocate their production sites. As supply chains become increasingly vulnerable to uncertainties, corporations face difficulties in identifying and managing the environmental and social impacts. Among the sectors that are particularly vulnerable to these risks are agriculture, food and beverage processing, manufacturing and construction. In the face of growing public awareness and legal obligations, companies have come to recognize their responsibility in managing risks along their supply chains.
As supply chain awareness gains traction, companies are encouraged to monitor the operations of their suppliers and ensure that they meet certain environmental, social and governance (ESG) standards. Failure to identify sustainability issues in supply chains can pose a risk for companies and for that reason transparency and accountability are increasingly prioritized. Notwithstanding the risks, many companies are still in the early stages of developing the tools and practices needed to identify, engage and manage these issues.
To minimize risk, investors should threrfore ensure that they invest in companies whose supply chains comply with certain ESG standards. How to identify such companies and other valuable insights into supply chain sustainability can be found in our Supply Chain Management Study.