S131146 CBS Full-time MBA 2020

SOCIALLY AND
ECOLOGICALLY
RESPONSIBLE SUPPLY
CHAINS

Student No: S131146

Program: CBS Full-time MBA 2020
Course: MMBAV2010D Governance and Sustainability –
Part 2
Hand-in date: 8th June 2020
Professors: Andreas Wieland and Leonardo Santiago
S131146 CBS Full-time MBA 2020

INTRODUCTION

For more than a decade, corporations have been donating huge amounts of money for CSR
while also receiving tax rebates for it in an attempt to divert attention from the real issues that
mire the society. Several industries, from extractive to manufacturing, apparel to technology
have been greenwashing or SDG-washing their acts through CSR, marketing campaigns,
global alliances and selections/ omissions by cherry-picking. In the last couple of years
conversations around sustainability have taken a different turn, and definitely for the better.
More awareness, more conversations and accountability is visible across the corporate sector.
But it is still short of action, mainly because corporations are not able to wrap their head
around how can they become truly sustainable across the value chain both socially and
environmentally, without discounting profits in the triple bottom line. For the sake of paper, I
will use environment and ecology interchangeably. This paper will first list the various
challenges that companies face in making their supply chains sustainable. It will then talk
about the solutions and the various actors connected the solution and finally it will conclude
with the impact on profits.

CHALLENGES

Companies shirk responsibility of sub-contractors being sustainable stating the reason of non-
visibility down the supply chain. The Brundtland Commission’s definition of sustainability as
“Development that meets the needs of the present without compromising the ability of future
generations to meet their own needs” (World Commission on Environment and Development,
1987) is a good starting point for developing a new logic.1
The key issues that plague corporations are:
• Going beyond planetary boundaries
• Putting society behind ecology due to media and external pressure
• No visibility of third tier suppliers down the value chain
• Short term vs long term gains tussle
• Regional and geographical boundaries
• Start lobbying – advocacy at the national, regional and global level
But there is a need for Ecologically Dominant (Figure 1) logic which is outside in.

1
making sustainability sustainable (frank montabon, mark pagell, zhaohui wu, April 2016)
S131146 CBS Full-time MBA 2020

HOW CAN WE TACKLE THESE CHALLENGES?

The process need can be expedited if technology, data and regulations play a dominant role in
enabling a change:

• Using of technology2
o blockchain to drive supply chain transparency
o Using robotic process automation and self-guiding vehicles powered by
artificial intelligence to drive efficiency and avoid labour abuse for human
errors or time efficiency during deadlines
o Using 3D scanning to achieve higher precision in the manufacturing process
and 3D printing during the design stage to avoid wastage
o Using augmented and virtual reality tools for heavy as well as consumer
industries to accelerate the sales cycle by avoiding laborious product
prototyping and testing
• Using renewable energy for greenifying the production processes and reducing CO2
emissions from fossil fuels
• Standardising measurement tools
• Regulations across industries
• Reward and penalize mechanism set up by multi-stakeholder initiatives (MSIs)
• Integrated thinking – integrated reporting

For this to be possible, governments, agencies, corporations need to work together. Also the
main game changer would be consumer behavior which can be changed through nudging in
the right direction.

HOW DOES IT IMPACT THE PROFITS?

Companies need to draw balance between profit and being ecologically responsible.
Shareholder value which is the business objective also poses as the issue. The fact that
success of companies is measured by how fast and bigger they grow. Profit motives impaired

2
https://www2.deloitte.com/us/en/pages/operations/articles/technologies-for-supply-chain-innovation.html
S131146 CBS Full-time MBA 2020

the judgment of managers and leaders who drive growth. In an attempt to increase revenue
and profits, companies keep expanding their customer base by reducing costs. The main
objective is for companies to sell more, so that customers can buy more if it is not a
necessity. But companies don’t think that there might be an alternate way. Looking at capital
from a three-pronged approach is necessary. Financial, Social and Natural capital should be
looked at as the investment made by companies. The accounting books should start
incorporating this approach and automatically the outlook on profit impact will shift.
Initiatives like the Natural Capital Coalition3 can be instrumental in enabling this mindset
change.

CONCLUSION
For companies to make their supply chains truly socially and ecologically sustainable, new
and emerging views have to be incorporated. Circular design, intersectional
environmentalism, integrated thinking are some novel concepts that have potential to bridge
the current gap within sustainability. We need to stop oversimplifying wicked problems4
especially that involve social and public policy linkages and accept the complexity that
comes with the interrelatedness of issues. Issues that are so deep-rooted and systemic,
uncovering of several layers and collaboration of numerous actors is required to move the
needle. And this can’t be delayed because of research anymore. Academia and practitioners
need to come together to use data and technology to fast-track evidence in order to provide
impetus for change. While technology is neither a silver bullet nor a one size fits all solution,
but it could help to make meaning out of the wicked problems society and businesses face
today for increasing the life of our ecology for a better future!

3
https://naturalcapitalcoalition.org/projects/combining-forces-on-natural-capital/
4
https://urbanpolicy.net/wp-content/uploads/2012/11/Rittel+Webber_1973_PolicySciences4-2.pdf
S131146 CBS Full-time MBA 2020

APPENDICES
Figure 1

Figure 2