Stakeholder Influence on Sustainable Supply Chain Management in 2022
Sustainability is the new catchphrase in processes around the development of goods or products. The aim is to protect the earth so that future generations can enjoy it. It requires a concerted effort to avoid anything that can damage the environment.
The UN sustainable development goals (SDGs) highlight 17 key areas of concern. These include clean water and sanitation, clean and affordable energy, and reduced inequality.
And, the world is already adopting sustainability. There is, for example, a shift towards using renewable energy sources.
Solar and wind are replacing the need for fossil fuel. Industries must be more stringent about not polluting the environment during manufacturing.
It is without a doubt a process that requires the input of all stakeholders within the supply chain. That is why it is important to understand how they influence supply chain sustainability.
Understanding Supply Chain Sustainability
Supply chain sustainability is any step to reduce negative impacts. It covers both the environment and humans.
It looks at the whole supply chain process. That is, from the raw material stage to the delivery of the final product to customers.
These include manufacturing and production, storage, and transportation. So it is not only about minimizing harm from the process. It should also include the positive impact on the communities.
The advantages of embracing sustainability are many. These include positive brand perceptions amongst customers. Investor relations can also improve because of sustainability efforts. On the other hand, a negative media report on supply chain practices can hurt stock prices.
Some investors would even cut ties with the company. It will depend on how strongly they believe in sustainability. And, of course, there is the aspect of compliance with regulatory guidelines.
The Impact of Sustainability on Stakeholders
The term stakeholders cover a wide variety of people. They may, directly or indirectly, influence a company’s development plans and strategies.
These include employees, customers, shareholders, and the community at large. And within these groups, there are two distinctions. There are the primary stakeholders who have a complex relationship with the company. They do have some similarities in expectations, rights, and responsibilities.
Secondary stakeholders can influence the company. But, they are not essential for its continued existence.
A study on how stakeholders can influence sustainability in the supply chain shared interesting insights.
-Pressure from stakeholders on sustainability can result in greater awareness.
-Stakeholders have a critical role to play in the adoption of sustainable goals.
-The impact of stakeholders is dissimilar in key decision areas.
-The sustainability issue influences the weight of what the stakeholders have to say. It could, for instance, have more impact depending on whether the issue is social or environmental.
Without a doubt, stakeholders have a crucial role to play in sustainability. After all, the organizations depend on them for business success.
And, there is the important role of employee or worker feedback. How do they feel about what the company is doing with regard to sustainability? Are they facing issues around human rights or labor practices they would want to share?
But, a huge challenge remains. Many workers may not be willing to speak up for fear of reprisal. Finding a way to allow them to communicate anonymously can help.
Some companies will use suggestion boxes. But, employees may shy away for fear of watchful eyes. To counter this, tech-forward companies are automating this feedback process by investing in tools like Ulula.
Ulula is a mobile-enabled platform that can help with anonymous surveys. It sends digital questionnaires to the stakeholders’ phones. Thus, it enables real-time data collection, while respecting the respondents’ preference for privacy.
The anonymity helps in collecting more honest feedback. And, the system can identify fraudulent activity, thus ensuring better data quality.
Clarifying The Role of Stakeholders in Influencing Sustainability
The role of stakeholders in influencing sustainability has three characteristics. These are power, legitimacy, and urgency. Stakeholders have the critical role of control and accountability.
Accountability makes the company liable for processes that happen within the supply chain. Control is the ability of the stakeholders to regulate some of the company’s activities.
Let’s explore these by looking at some stakeholders.
The Government or Regulatory Authorities
Take the example of the government as a stakeholder. They have power, legitimacy, and urgency. They can pressure the company into sustainable practices.
Non-adherence to sustainability guidelines can lead to the loss of operating licenses. The company can also find itself facing stiff penalties from the regulatory authorities.
Let’s start by saying that modern customers are very conscious. They know the important role of sustainability and are more demanding of it.
Customers have a great deal of power. Their influence can be the reason for a company adopting sustainable practices. Like the government, they have power, legitimacy and can create a sense of urgency.
Take the example of a community demonstrating against pollution by a company. The resulting pressure can force the company into taking the right sustainable action.
Industry giants like Kellogg’s, Coca-Cola, Unilever, Nestle, and PepsiCo understand this well. Behind the brand’s campaign allowed customers to demand sustainability from companies. These included demanding greater accountability from those within the supply chain.
The customers also wanted the ten drink companies to tackle gender inequality. Other areas of interest were climate change and land grabbing. Many of the companies changed their process due to the campaign.
They established zero tolerance to unethical practices within the supply chain. Others like General Mill and Kellogg’s paid keener attention to reducing emissions.
What about the media as a secondary stakeholder? Well, you may have heard that the pen is mightier than the sword. They have power, legitimacy and can create urgency.
The media are a key driver when it comes to sustainability. Not only can they get the companies to change their practices.
But, the customers look to them for information. Do you know up to 60% of customers consider the company’s sustainability practices when purchasing a product?
One-third of customers have no problem paying premium prices for sustainable items. It could explain why organic products, despite being more expensive, are so popular.
We all want to leave our kids and their kids a healthy environment. And that, in its simplest, is what sustainability demands. In fact, embracing sustainability within the supply chain may no longer be a choice. That is, if you want your company to remain relevant.
You see, modern customers are very demanding of ethical and clean processes. And the same applies to other stakeholders within the supply chain.