It’s time to rethink sustainable supply chains and the role of technology

Trust in today’s business world is built through transparency and traceability. As corporate citizens, most of us have signed up to some version of ESG goals, but the momentum for achieving these goals collectively is not fast enough according to governments and consumers alike. With an avalanche of global legislation upon us and rising consumer demand, businesses need to disclose more information than ever. But with technology, there are actions businesses can take today – to not only tick a compliance box – but also to gain a competitive advantage that builds trust through transparency.?

Across industries, supply chains have systematically been designed around one thing: cost optimization. And this is where sustainability data and technology solutions can play an enabling role protecting the environment, as well as optimizing supply chains for business benefit and positively impacting the community.

As co-chair of the American Chamber of Commerce Hong Kong ’s Apparel, Footwear and Supply Chain Committee, I had the honor of moderating an engaging panel discussion at ReThink HK 2023 called "Traceability and Transparency: The Tech Opportunity for Supply Chain Sustainability" . The event addressed the pressing need for businesses to adopt sustainable practices within their supply chains, highlighting the increasing demand for data-backed information from consumers and governments worldwide. This panel, featuring a diverse group of experts, explored the transformative potential of technology in advancing supply chain sustainability.?

Meet the panel

• Ellen Wu , General Manager of RESET Carbon Ltd. 锐思碳管理 , contributed her insights into reaching carbon reduction and sustainability goals, emphasizing the role of technology in tracking the carbon footprint of supply chains.

• Gabriel Amouyal , Audit Services Director at QIMA , brought his wealth of experience in auditing services to the conversation. QIMA is a prominent player in quality control and compliance solutions.

• Johanna Levy , VP of ESG at the GIA (Gemological Institute of America) , provided valuable insights into the gemstone and jewelry industry, highlighting the importance of sustainability in an often-undisclosed supply chain. Johanna previously worked in the flavor and fragrance industry, where she shared her experience tracing palm oil supply chains.

• michelle mak , Head of ESG and Enterprise Learning at Dun & Bradstreet , offered expertise in data and analytics, shedding light on how data-driven decision-making can enhance supply chain sustainability to achieve Scope 3 emissions reporting.

The insights shared by the panelists serve as a valuable roadmap for achieving sustainable supply chain practices in today's interconnected world. Here are a few of my takeaways on how to rethink sustainable supply chains and the role of technology…?

A sustainable supply chain starts with a transparent and traceable supply chain

The COVID-19 pandemic served as a stark reminder that, as businesses, we are intrinsically linked to our supply chains and we have limited visibility into the upstream supply chain with the relationships within our control (e.g. Tier 1, sometimes Tier 2 if nominated). Supply chains operate within a complex and interwoven global ecosystem, making it a formidable task to integrate sustainable practices. However, the emergence of technologies such as blockchain and the Internet of Things (IoT) offers new avenues for enhancing supply chain transparency and traceability, ultimately enabling businesses to monitor and track every facet of their operations.?

A sustainable supply chain strategy starts with people and data, not tech solutions

I’ve worked in digital transformation and enterprise technology for the last 20 years of my career, and spent the last five years working on supply chain traceability and transparency platforms for HSBC and Avery Dennison, where I’ve worked with global supply chains in a range of industries. What do my clients across industries have in common that resonated at ReThink? Their initial tendency is to skip to the solution before aligning on the objective, the data sources and structures, the processes and the people required to meet a goal. “It’s easy to get distracted by a slick supply chain map feature,” as Gabriel acknowledged, but his advice on mitigating risk in selecting a solution is clear. He says, “the first step is to know your supply chain and to work with your supplier [on due diligence].”?

Johanna agreed, citing “plenty of solutions on the market”, saying “selecting one is a bit like driving stick shift,” where a tech solution can be “the coolest thing in your garage that you don’t use because you don't know how to use it.” The real challenge is identifying what data is needed to achieve an output, and where/who can provide that data, the process around capturing it consistently, and then finding the tech solution that fits the bill.?

The sustainable tech solution revolution is just beginning??

Blockchain and IoT were highlighted as game-changing technologies that empower businesses to attain previously unreachable levels of transparency. By securely recording all transactions and movements of goods, tech solutions can engender trust and accountability in supply chains. To blockchain or not blockchain, that is the question. In Johanna’s experience, “securing the data is not the problem, but accessing the data is the real challenge.”?

Ellen explained this new “Green Gold Rush” and how Reset is tracking 80 solutions that have emerged in the last three years with their new tech advisory practice . Out of those 80 sustainability tech solutions, only nine have a supply chain management feature. “The average Scope 3 emissions total more than 11 times the Scope 1 and 2 volumes combined, ” and Ellen emphasized the gap in funding of solutions to enable traceability of Scope 3 emissions, citing “there’s only $840m funding [for these new players] in the last five years.” Seeing as supply chain management software is projected to reach $72.1bn by 2032 , it goes without saying this is an underfunded space.?

Implementing technologies in supply chains comes with challenges and risks

Environmental, Social, and Governance (ESG) compliance is pivotal to sustainability. The panelists discussed key metrics that companies should monitor to demonstrate their commitment to ESG compliance and sustainability. Implementing these technologies in supply chains does come with challenges, including initial costs and resource requirements. However, the panelists emphasized that the long-term benefits and competitive advantages more than justify these investments.

#ESG and sustainability are linked in the social aspects of data and technology, too, as Michelle highlighted. She explained D&B’s role in tracking payments between companies and how much of a social impact that has on the sustainability and resilience of a supply chain. Not only multinational corporations can take advantage of such data sources, she shared that “SMEs are conscious of ESG because they want to know how it can help in terms of money” when they have limited resources. Payment tracking is another form of supply chain traceability and sustainability.?

As Gabriel noted, “you have to do the [supplier] engagement and capacity building in order to know how to get the data.” There is no easy button when it comes to supply chain engagement because suppliers are globally distributed, speak multiple languages, do not follow consistent data capture procedures, vary in terms of technical capabilities, and are not vertically integrated. They are also not incentivized (yet) to share some of the data that is being asked of them (see note above on cost optimization).?

So what can we do about building sustainable supply chains??

Develop standard ESG metrics: Take an active role in developing a clear set of ESG metrics relevant to your industry and business goals to track progress toward sustainability. This can mean getting involved in industry organizations and regional/global working groups shaping the future of legislation and regulation that will impact your business.?

Dedicate appropriate resources: While there are costs associated with implementing these technologies, the panelists underscored that the long-term benefits and competitive advantages make these investments worthwhile. Ensuring literal buy-in from decision makers through appropriate budgeting and team allocation makes the difference between sustainability goals being someone’s part-time job they never have time for or the driver of impact-oriented and purposeful work. Getting the right resources in place can drive the right strategy and then infrastructure.?

Explore multiple technology solutions: Businesses should consider the adoption of a range of solutions, from IoT and connected platforms, to enhance supply chain transparency and traceability. The pace of innovation is fast and furious in sustainability solutions, so select technology with the understanding that, as regulation and consumer behavior evolve, so will your tech strategy and tech stack. There is a crucial role that technology plays in transforming supply chains into sustainable, accountable, and transparent systems.?

The time to rethink sustainable supply chains and the role of technology is now. The insights shared by the panelists serve as a valuable roadmap for achieving sustainable supply chain practices in today's interconnected world.?

A big thanks to the panelists for their contributions and the ReThink HK organizers for driving this agenda. By the way, it’s also time to rethink the circular economy …