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What is sustainable supply chain?
Sustainable supply chains involve integrating environmental, social and governance (ESG) factors into all areas of the supply chain, including extraction, manufacturing, procurement and distribution. Sustainable supply chains are efficient, resilient, equitable, circular, transparent and climate positive.
Why is it important?
Improve business resilience ❯
Improve business resilience
Growing disruptions from geopolitical risks and economic volatilities are reshaping global supply chains requiring increased resilience to ensure business longevity.
Risk management ❯
Risk management
Supply chains are increasingly subject to various risks, including human rights risks, physical climate risks and governance-related risks.
Potential focus area of emissions ❯
Potential focus area of emissions
Supply chain emissions are 11.4% times higher than operational emissions, highlighting the urgent need to reduce emissions.
Regulatory changes and pressure ❯
Regulatory changes and pressure:
Evolving legislative and regulatory reporting standards, which are incorporating more sustainable considerations, pose potential legal and operational risks for non-compliance.
Support national ESG agendas ❯
Support national ESG agendas
Supply chains connect companies across borders. Alignment with various national sustainable plans, net zero targets and sustainable reporting standards is thus vital.
Key challenges
Studies find high-performing companies are an exception rather than the rule in their journey towards sustainable supply chains.
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 evolving legislative and regulatory requirements across all relevant jurisdictions
Gathering accurate and reliable reporting data in compliance with elaborate sustainability reporting requirements
Lack of access to necessary infrastructure and technological tools for effective carbon emission monitoring across the entire value chain
Lack of financing solutions when accounting for potential climate-related risks such as flooding
Ensuring just transition amid implementation of a sustainable supply chain
How can PwC help?
- Maturity diagnostic
- Inclusive sourcing
- Embed due diligence controls
- Salience assessment
- Grievance mechanism
- Decarbonisation levers
- Supply chain tax and legal strategy and planning
Maturity diagnostic
Conduct a high-level assessment of existing supply chain initiatives and capabilities to understand the implications of transitioning to a sustainable supply chain for your organisation’s growth strategy and operating model.
Inclusive sourcing
Develop a framework considering key areas required for inclusive resourcing implementation
Embed due diligence controls
Develop a robust due diligence framework and controls to effectively identify issues within your organisation’s supply chain.
Salience assessment
Identify salient human rights risks throughout your organisation’s supply chain through stakeholder engagement and landscape analysis.
Grievance mechanism
Develop an operational grievance mechanism framework and process to collate grievances within your organisation’s workforce, along with procedures to rectify and address these grievances.
Decarbonisation levers
Develop a strategy to arrive at net zero and consider low carbon products within a supply chain.
Supply chain tax and legal strategy and planning
Provide insights and recommendations to navigate potential upcoming tax and legal developments related to supply chains to mitigate risk, optimise cost and seek growth opportunities.
Global Aerospace Company
Project description
Sourcing renewable fuels for company operations.
Challenge
The client’s net zero ambitions plans included switching to biofuels as a renewable energy source. They needed a comprehensive understanding and long term view of the markets across multiple countries to ensure the switch to biofuels was a sustainable business plan, both financially and environmentally.
Solution
We assessed and ranked individual energy markets in relevant countries in terms of alternative fuel availability, current and forecast prices accounting for the different regulatory environment in different regions, changing incentives and tax regimes.
Results
The client developed a clear understanding of the current market fundamentals including real-world fuel performance, regulatory requirements, and the capabilities of potential suppliers enabling them to engage with the appropriate fuel technologies and establish the necessary duration of contracts needed.
Leading Regional Southeast Asian Airlines Company
Project description
Sustainable supply chain assessment and gap analysis to increase client’s corporate sustainability scoring.
Challenge
The clients operations and supply chain departments along with their suppliers did not have the appropriate understanding of ESG in order to effectively manage potential supplier sustainability risks.
Solution
Training and knowledge sharing with leadership and all stakeholders to ensure the same understanding of sustainability and what it means for Supply Chains, along with an assessment of the clients current supply chain practices against PwC’s sustainable supply chain framework.
Results
The client obtained sustainable supply chain assessment findings identifying existing gaps in operations, benchmarking against peers to show best practices along with a roadmap highlighting initiatives across several years to improve sustainability supply chain practices.
Leading Regional Southeast Asian Bank
Project description
Supply chain decarbonisation to meet climate ambitions.
Challenge
Skills and capabilities across the client were limited with regards to knowledge and understanding of scope 3 emissions and limited vendor Net Zero maturity and emissions data made it difficult to assess where to focus our efforts and what type of targets to set.
Solution
An assessment of scope 3 supply chain emissions data and reporting maturity was conducted, after which a Net Zero ambition for supply chain emissions was set. A framework was developed through engagement with global category managers and contract owners to prioritise top vendors in high emission spend categories for engagement. Spend category and vendor specific emissions reduction strategies were then developed to achieve the defined ambition.
Results
The client obtained an overarching Net Zero ambition for supply chains, engagement with suppliers to pass on expectations of Net Zero and strategies to reduce emissions within supply chain.
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