Sustainable Supply Chains and Bottom Lines—The Two Are No Longer Mutually Exclusive

Over the past year, companies such as Unilever, Johnson & Johnson, P&G and Mars publicly committed to implementing zero deforestation policies throughout their supply chains. Sustainability is evolving from a nice-to-have to a business imperative, and businesses are beginning to recognize that what is good for the environment can also be good for revenues and help drive business growth.

When done right and systematically, sustainability and zero-deforestation policies lead to improved brand image, industry differentiation, brand loyalty and, ultimately, stronger relationships with customers. For consumers, in particular, a company’s environmental practices are often defined by its supply chain, which provides a clear picture into how materials are produced and sourced.

According to new survey data from Asia Pulp & Paper (APP), 50 percent of Millennials are willing to pay more for sustainable products and 39 percent do research into the sustainability practices of companies before making a purchase. This interest in sustainability appears to be a growing trend, from Baby Boomers all the way down to Gen Z. And with an increasing desire for sustainability comes higher purchasing power. Millennials, at $200 billion and Gen Z at $44 billion, annually, have strong influence over how brands are perceived in the marketplace, and over time, are likely to be even more socially and environmentally conscious.

All generations of consumers are now looking to reward sustainability with their wallet. Companies need to prioritize consumer sustainability preferences, specifically how product materials are sourced and how comprehensively environmental initiatives are implemented.

While there are obvious long-term benefits to more sustainable practices, a major challenge for corporations—and procurement professionals in particular—is ensuring that the entire supply chain meets established standards.

At APP, we introduced our Forest Conversation Policy (FCP) in February 2013, which ended all natural forest clearance, and committed to supporting the protection and restoration of 1 million hectares of forest in Indonesia. These are complex and extensive initiatives, which require patience, diligence, transparency and collaboration. Although refining a supply chain takes time and dedication, here are three ways to reduce the inherent risks to supply chain management.
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