Gartner: CSR is table stakes for supply chain leadership

17 July 2017 by EcoVadis

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Sustainability remains core pillar of revenue, risk management and procurement performance

For supply chain leaders, few accolades offer more insight into the state of the industry than Gartner’s Supply Chain Top 25. This comprehensive ranking of global companies that are exemplifying and redefining industry best practices serves as a bellwether of emerging trends such as digitization, automation and sustainability.

When Gartner is compelled to add a new component to its methodology, it’s clear that the component has moved from a trend to a true business driver. Last year, Gartner added corporate social responsibility (CSR) for the first time. That spoke volumes to the performance value of CSR in the supply chain, but what speaks even louder is that this year, 4 of the top 5 companies in the 2017 ranking received a perfect 10 out of 10 score in the CSR category. As Gartner recognized, “Beyond profit, leading companies also focus on people and protecting the planet.”

Unilever, Inditex, Cisco and H&M make up the four companies in the top five to receive a perfect CSR score this year. How did they do it? Here are some of their sustainability initiatives, as outlined in this year’s report from Gartner:

  • Unilever’s Sustainable Living Plan ambitiously aims to cut the environmental footprint of the manufacture and use of its products in half, even as its business grows. “It was the first major CP player to achieve zero hazardous waste to landfill and is focused on sustainable sourcing.”
  • Through partnership with suppliers and the use of digital technologies, Cisco has worked to improve energy efficiency, “focused on turning waste into resources and has set a goal to avoid 1 million metric tons of greenhouse gas (GHG) emissions from its supply chain operations by 2020.”
  • H&M has shifted to digital payments “in an effort to support women’s economic independence as suppliers provide more transparent records in wage management systems.”

The CSR component is measured by a company’s commitment to running socially and environmentally responsible supply chain, recognizing both transparency and performance. Perhaps the most telling portion of this year’s analysis is the following:

“In general, the companies we see as further along in developing mature CSR practices have moved beyond mere regulatory compliance and have figured out how to link these efforts back to support for their underlying corporate strategies.”

This means that the best players in the supply chain industry are seeing so much value from sustainability and CSR, that they’re going beyond compliance to achieve more, and engrain those practices into their overarching business strategy. This echoes the trend uncovered in our 2017 Sustainable Procurement Barometer: In the previous survey conducted in 2013, the biggest obstacle standing in the way of more effective engagement and commitment to supply chain and procurement sustainability was a lack of executive and board support. In 2017, that challenge didn’t crack the top three, signifying C-level buy in as top executives observe the positive impact that sustainability and CSR has on the bottom line.

Another output we’re seeing a lot of urgency around is vendor management and risk mitigation. Going beyond increased revenue, improved brand reputation and supply chain performance – risk management is another core “bottom line” metric where companies continue to see sustainable procurement make a meaningful difference. By investing in CSR and sustainability, supply chain and procurement leaders gain the benefit of truly knowing all their vendors – which in turn, eliminates surprises that could impact their supply, break compliance or leave them reeling from a page-one scandal.

Bottom line: for top-performing supply chains in the world, sustainability and CSR are core components to their revenue, risk management, procurement, and operational strategies.

Find out more about what EcoVadis is doing for other members of the Supply Chain Top 25, including Nestle, Johnson & Johnson, Coca-Cola, Schneider Electric, Nokia, BASF and L’Oreal in our customer stories.