Risk, power and impending doom: Sustainability in the global supply chain
Since 1947, the board of directors of the Bulletin of the Atomic Scientists has maintained the Doomsday Clock – a symbolic estimate of the world’s proximity to global disaster. Originally a measure of the threat of global nuclear war, since 2007, it has also reflected risks of climate-changing and life-sciences technologies that could inflict irrevocable harm.
Alarmist? Of course, and by design – which is why a recent article appearing in the Bulletin of Atomic Scientists, “Climate Change: Corporate Sustainability in the Supply Chain,” by Dr. Timothy Smith, Director of the Institute on the Environment’s NorthStar Initiative at the University of Minnesota, is garnering attention.
Most of the attention paid to climate change, and the technologies associated with its causes and solutions, are focused on the megatrends of food (e.g. land-use change and high-input agriculture) and energy (e.g. dependence on carbon intensive fossil resources). However, these megatrends are only part of the story. In fact, agriculture, mining, transportation, and gas and electric utilities account for only about 30 percent of environmental ills in the US. The other 70 percent of the economy’s environmental impacts are the result of complex supply chains, strung together to produce value-added products and services.
Neither public policy nor corporate sustainability is effectively addressing these massive “indirect” effects. While most of the world’s attention has been focused on (largely failed) global policy attempts to reign in greenhouse gas emissions, private sector voluntary efforts operating under the umbrella of corporate sustainability have increasingly gained favor as means for progress. Unfortunately, to date, corporate sustainability programs have focused on firms’ responsibility for their direct impacts on land, air and water, and on communities – they rarely address indirect impacts that occur within a company’s value chain (interlinked activities performed to deliver a valuable product or service) but outside its immediate control.
But the rules of the corporate sustainability game are changing, slowly. A growing number of companies have become aware that changes in Earth’s climate – an increased risk of intense storms or prolonged droughts, for example – can make supply chains more vulnerable to disruptions that increase costs and damage reputations. The impending “doom” of a changing climate, particularly impacting to upstream supply, is becoming much more urgent and real than ever before – driving corporate sustainability out of the backroom and into the boardroom of many global manufacturers and retailers.
Investors and other stakeholders are responding by pressuring companies to disclose and quantify emissions and other supply chain environmental impacts. But it is imperative that public policy institutions respond and support these efforts. Leveraging the power of large global brands at the end of global value chains holds significant promise in speeding up the implementation of sustainability strategies in upstream operations – perhaps buying society critical seconds, or even minutes, on the clock of global disaster. Averting disaster – or at least significantly reducing the costs of responding to increasing and more intense catastrophes – on the other hand, must be a society-wide effort. After all, the lion share of these costs is, and will likely continue to be, placed on the shoulders individuals and governments.
Photo Credit: Suman Park, Some Rights Reserved