Supply Chain Executives Prioritize ESG Initiatives Amid Capability Gaps

A recent survey of 525 senior supply chain executives reveals that 80% emphasize Environmental, Social, and Governance (ESG) initiatives. Despite this strong focus, significant capability gaps persist, with 33% lacking a business case for sustainability and 20% without a defined sustainability strategy.

Challenges in Implementing Sustainability

One of the key challenges highlighted by the survey is the lack of tools to measure supplier performance, with 50% of executives noting the absence of an integrated scorecard for sustainability. This gap in measurement tools is compounded by the struggle for supply chain visibility, a concern for many executives.

End-to-end visibility is prioritized by 58% of respondents, yet achieving this remains difficult due to the complex nature of global supply chains. The lack of visibility is not just a logistical challenge but also a barrier to implementing effective sustainability initiatives across all supply chain functions.

Strategies for Improvement

To address these challenges, recommendations include improving visibility and traceability within supply chains. Responsible procurement is highlighted as a key strategy to mitigate supply disruption risks and enhance supplier visibility. Furthermore, collaboration is seen as a critical factor in accelerating sustainable change, with industry collaboration platforms deemed essential for progress.

Tools like EcoVadis assessments, which gauge supplier performance, and guidelines such as the Product Carbon Footprint Guideline aligned with ISO standards, are vital for tracking and improving sustainability metrics. The TfS Academy provides training and resources to support these initiatives, guided by the principles of the UN Global Compact.

Sector-Specific Efforts

In the U.S., chemical companies are particularly committed to sustainability, with engagement in initiatives aimed at fostering responsible procurement and enhancing supplier visibility. About 30% of these companies track Scope 3 emissions, which are indirect emissions occurring in a company’s value chain, highlighting a growing awareness of broader environmental impacts.

Dr. Jennifer Jewson leads the Together for Sustainability (TfS) initiative, which accelerates sustainable chemical supply chains and is recognized for building supplier trust and strengthening transparency. This focus on sustainability is seen as driving both operational resilience and competitiveness in an industry facing geopolitical risks and supply chain instability due to extreme weather.

Future Goals and Considerations

Looking ahead, supply chain resilience remains a priority, with 47% of executives focusing on this aspect. Manufacturers are exploring strategies such as renegotiating supplier agreements and, in some cases, considering reshoring production to mitigate risks. Supply chain reconfiguration is prioritized by 18% of manufacturing CEOs as they navigate ongoing challenges.

The push towards autonomous supply chains represents a future goal, with sustainability linked to operational continuity and efficiency. The role of ESG as a catalyst for innovation is increasingly recognized, driving companies to integrate these considerations into their strategic planning.

As 63% of CEOs cite supply chain challenges, the emphasis on ESG initiatives and the need for improved capabilities in sustainability are expected to remain central to shaping resilient, efficient, and responsible supply chains in the future.