In the wake of Hurricanes Irma and Harvey, climate change and the effects of global warming are once again topping the agenda in both political and business forums. Far from being merely an environmental issue for policy makers and environmentalists to grapple with, endeavouring to minimise climate change though managing environmental footprint is fast becoming a business imperative that every forward-thinking leader has to consider and plan for.
“Rising global average temperature is associated with widespread changes in weather patterns,” notes the U.S. Environmental Protection Agency (EPA). “Scientific studies indicate that extreme weather events such as heat waves and large storms are likely to become more frequent or more intense with human-induced climate change.”
Arguably, environmental sustainability is a hot-button issue. Leaders are recognising that geopolitical stability and economic growth are intrinsically linked to sound environmental practices – and that ignoring scary statistics is grossly irresponsible. From an industry and private sector point of view, business leaders are under increasing pressure to ensure that they follow sound environmental best practices – or risk severe reputational and financial damage in the long term.
Yet there is a hugely positive side to the environmental sustainability question for businesses, argues Liesl De Wet, Sustainability Champion at supply chain specialist Barloworld Logistics.
“Sustainable business practices are going to become as important as the creation of shareholder returns, and whilst this may impact operations in the short term, the implementation of environmentally sound processes will provide incalculable benefits in the long-term”, explains De Wet. “As a result, [environmental] sustainability is moving from a nice-to-have to a core strategy.”
Indeed, as both local and international businesses begin to recognise the importance of putting sustainability strategies in place, opportunities are emerging for businesses to achieve cost savings, spur innovation, gain consumer support and boost bottom line growth.
Locally, in an initiative to reduce carbon emissions and road congestion, for example, Transnet Freight Rail and Barloworld Logistics have partnered to shift cargo from road to rail. This will ultimately lead to reduced carbon emissions as well as greater efficiencies for all the supply chain stakeholders.
“Without doubt, local companies are increasingly looking closely at how they can put sustainability practices in place that now go beyond the factory gate,” says De Wet. “They are understanding that they need to look at their impact across the supply chain, and that rigorous measurements should be put in place to drive the process.”
As awareness grows, however, companies will need guidance around which measurements to put in place, how to benchmark progress, and how to ensure that sustainability becomes woven into the fabric of everyday business operations.
“You cannot manage or measure what you don’t know or understand,” notes De Wet. “Businesses need to physically measure their footprint, and the tools and best practices are certainly available to do so right now.”
Collaboration is Key
The first step, says De Wet, is to begin to benchmark your entire supply chain. As a business, it’s critical to really understand what your key energy drivers are and where the hot spots lie. In most cases, transportation is a huge element and leaves the greatest footprint.
“It’s important that businesses work with their partners to look at the entire supply chain, and not just sections of it,” she advises. “There are so many players and stakeholders within a supply chain, so it is imperative that everyone is aligned and working towards a single goal.”
The major challenge, she notes, is that sustainability is not a ‘cut and paste’ exercise, and one needs to work with supply chain specialists that can innovate and tailor make solutions to specific scenarios.
Admittedly, the volatile and uncertain economic environment is making it very difficult for businesses to invest in new technology and expertise to drive the sustainability agenda – yet there are many ‘small wins’ that can translate into cost savings. Simply using LED lighting in a warehouse, for example, can immediately reduce overhead costs.
Looking ahead, De Wet says that putting in place a Sustainability Scorecard will be instrumental in helping local businesses achieve sustainability and to spur internal innovation.
“We really need such a scorecard – with clear targets in place that businesses can work towards with suppliers in a collaborative manner,” she argues. “Supply chain managers themselves need to innovate around key solutions, and it all has to be put down in writing.”
Notably, sustainability is already becoming a feature in integrated reports, which South African companies are beginning to embrace and use as a key benchmark for overall progress.
“We cannot move into the future without incorporating this into our businesses,” says De Wet. “There are massive opportunities here to innovate within businesses, supply chains, and even to establish entirely new industries connected to sustainability.”