Sustainable supply chains and operations
What is sustainable supply chain?
A sustainable supply chain embodies the integration of environmental, social and governance (ESG) factors across all facets of the supply chain, including extraction, manufacturing, procurement and distribution. Such supply chains are efficient, resilient, equitable, circular, transparent and climate positive.
Why is it important?
Enhancing business resilience ❯
The increasing prevalence of geopolitical risks and economic volatilities is reshaping globally supply chains, requiring increased resilience to ensure business longevity and viability.
Risk management ❯
Supply chains today are exposed to a myriad of risks, including human rights concerns, physical climate risks and governance-related risks.
Addressing emissions impact ❯
Supply chain emissions are approximately 11.4 times greater than operational emissions, underscoring the critical need for organisations to focus on reducing their environmental footprint throughout the supply chain.
Navigating regulatory changes and pressures ❯
Legislative and regulatory reporting standards are evolving, increasingly incorporating sustainability considerations. Non-compliance with these standards may pose significant legal and operational risks, making adherence essential.
Supporting national ESG agendas ❯
Supply chains transcend borders, making aligning with national sustainability initiatives, net zero objectives and sustainable reporting standards imperative to support broader ESG agendas.
Key challenges
Studies reveal that only a minority of companies effectively achieve sustainable supply chains, highlighting the substantial challenges that the majority of the organisations continue to face in this domain.
1
Malaysia Top 100 PLCs scored an average of
8/60
on the maturity of supply chain sustainability
PwC research, Oct 2022
2
Global supply chains scored an average of
32/100
on sustainability
KnowTheChain 2020/ 2021 assessment
3
Consistent gap between supply chain sustainability goals and corresponding investments from 2019 to 2021
MIT’s State of Supply Chain Sustainability Report
On top of that, companies face the following challenges:
- Navigating regulatory landscapes as legislative and regulatory requirements evolve across jurisdictions
- Gathering accurate and reliable data to meet robust sustainability reporting obligations
- The lack of access to the necessary infrastructure and technological tools for effective carbon emission monitoring throughout the value chain
- The lack of financing solutions when accounting for climate-related risks such as flooding
- Ensuring a just transition amid the implementation of a sustainable supply chain
Here’s how we can help
- Maturity diagnostic and benchmarking
- Sustainable supply chain framework and policy
- Sustainable supply chain risk monitoring framework
- Supply chain decarbonisation
- Circular economy
- Grievance mechanism
- Supply chain tax and legal strategy and planning
Maturity diagnostic and benchmarking
- Conduct a high-level assessment of your existing supply chain initiatives, capabilities, policies and procedures against PwC’s Sustainable Supply Chain Framework to understand your organisation’s current maturity in sustainable supply chain practices.
- Conduct a benchmarking exercise to evaluate your sustainable supply chain practices and maturity against local and global market standards.
Sustainable supply chain framework and policy
- Develop a tailored sustainable supply chain framework for your organisation, encompassing key ESG areas relevant to your operations.
- Develop policies and procedures to support your sustainable supply chain focus areas, such as human rights policy, supplier sustainability surveys and supplier environmental expectations.
Sustainable supply chain risk monitoring framework
- Design a framework and risk matrix to categorise and evaluate sustainability risks within your supply chain and among your suppliers.
- Develop potential mitigation activities and response plans to address sustainability risks, particularly for supply chains involving high-risk suppliers.
Supply chain decarbonisation
- Establish a Scope 3 emissions baseline across relevant categories to determine the overall contribution of emissions by suppliers.
- Leverage on existing processes and new technological systems to gather the necessary data for Scope 3 emissions baselining.
- Develop a roadmap to decarbonise supplier emissions across short, medium and long-term horizons to support your organisation’s emissions reduction targets.
Circular economy
- Conduct a maturity diagnostic to identity areas for improvement in your organisation’s existing circular economy practices, focusing on eliminating waste and pollution, circulating products and materials at their highest value and regenerating nature.
- Develop a strategy and action plan to implement circular economy principles in your key business activities and processes.
Grievance mechanism
Develop an operational grievance mechanism and process to collate grievances from your organisation’s workforce, accompanied by procedures to rectify and address these issues.
Supply chain tax and legal strategy and planning
Provide insights and recommendations to navigate potential upcoming tax and legal developments related to supply chains, allowing you to mitigate risks, optimise costs and pursue growth opportunities.
Explore related case studies
- Global aerospace company
- Leading regional Southeast Asian airlines company
- Leading regional Southeast Asian bank
- Malaysian asset management and infrastructure solutions company
Global aerospace company
Challenge: The client aimed to align their operations with net zero plans by switching to biofuels as a renewable energy source. They needed a thorough analysis of energy markets across multiple countries to ensure the transition was financially viable and environmentally sound over the long term.
Solution: We assessed relevant energy markets by evaluating the availability of alternative fuels, analysing current fuel prices and developing forecasts while accounting for potential fluctuations due to market and regulatory changes in different regions, as well as examining evolving incentives and tax regimes.
Results: The client gained a clear understanding of the current market fundamentals, including real-world fuel performance, regulatory requirements and the capabilities of potential suppliers. This enabled them to engage with suitable fuel technologies and determine the appropriate duration for contracts.
Leading regional Southeast Asian airlines company
Challenge: The client’s operations and supply chain departments, along with their suppliers, lacked the appropriate understanding of ESG issues necessary to effectively manage potential supplier sustainability risks.
Solution: We conducted training programmes and knowledge sharing sessions, engaging their leadership and stakeholders to ensure a unified understanding of sustainability and its implications for supply chains.
This was complemented by an assessment of the client’s supply chain practices, against PwC’s Sustainable Supply Chain Framework.
Results: The client received an assessment of their sustainable supply chain practices, which identified operational gaps. The assessment included benchmarking against peers to illustrate best practices and culminated in a strategic roadmap outlining initiatives over several years to improve their sustainability efforts.
Leading regional Southeast Asian bank
Challenge: The client’s limited capabilities and understanding of Scope 3 emissions, coupled with their vendors’ insufficient net zero maturity and lack of data, hindered their ability to identify appropriate focus areas and set meaningful emissions reduction targets.
Solution: We conducted a maturity assessment of the client’s Scope 3 emissions data and reporting, after which we established a net zero target for their supply chain emissions.
Through working with global category managers and contract owners, we developed a framework to prioritise engagement with top vendors in high-emission spend categories.
We then developed emissions reduction strategies for spend categories and vendors to achieve the net zero target.
Results: The client established a net zero target for their supply chains, allowing them to engage suppliers effectively to communicate expectations and strategies aimed at reducing emissions throughout their supply chain.
Malaysian asset management and infrastructure solutions company
Challenge: The client sought to enhance their sustainable supply chain practices and strategies as well as develop a framework to evaluate sustainability risks within their suppliers and supply chains.
Solution: We conducted a maturity diagnostic to assess the client’s current and future sustainability strategies and processes, identifying areas for improvement.
We carried out benchmarking against local and global peers to evaluate the client’s position in the market, which aided in the development of an action plan aligned with their organisational ambitions.
We analysed existing risk assessment and procurement processes to identify opportunities for integrating sustainability assessments.
Results: We developed a roadmap outlining key focus areas and initiatives to be implemented over a five-year period to achieve their sustainable supply chain objectives, as well as a framework and supporting processes to conduct sustainability risk assessments on both existing and new suppliers.
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