Assessing sustainability in the supply chain
Companies are coming under increasing social pressure to reduce the adverse impact of their operating activities. Professor Céline Louche, whose area of expertise is sustainability and related fields, and Professor Ann Vereecke, specialising in Supply Chain Management and manufacturing strategy, set out to develop a tool to help assess to what extent a company has integrated sustainability into its supply chain.
Sustainability, or corporate responsibility (CR), is a complex, multifaceted concept, touching on multiple issues such as the environment, human rights, health and safety. Yet while it has gained recognition, its integration into the supply chain remains a huge challenge, not least due to supply chain globalisation, involving numerous parties from different countries with different regulations, norms and values.
Is what they Say what they Do?
In order to alleviate some of the social pressure, companies may undertake symbolic acts, i.e. they use the rhetoric of sustainability without necessarily committing to real operational initiatives. Céline Louche: “One of the challenges for our assessment was to be able to distinguish between the symbolic and the substantive approach, i.e. between companies that just talk about it and companies that have truly integrated sustainability.”
The framework that was developed compares the organisational level and the operational or process level and divides companies into four categories, depending on their level of maturity on the two levels. The organisational assessment was based on publicly available information using 22 criteria to evaluate transparency, policies and principles, and management systems and monitoring. The operational level was evaluated by going directly to supply chain managers and purchasing managers and asking them how their processes take into account aspects of sustainability.
High Face Validity
Ann Vereecke: “The tool was tested at three large international companies operating in different sectors. One company showed a high degree of integration on both levels, organisational and operational, another scored very poorly on both levels, and the third integrated sustainability at the operational level but didn’t communicate about it.”
The results have shown that the tool allows different levels of maturity to be determined and that it clearly distinguishes between a symbolic and a substantive approach. Celine Louche: “I used to work as a sustainability analyst, screening publicly available information. I would have unjustly classified the third case as ‘non-sustainable’, whereas our tool picked up on a misalignment between the two levels.” Ann Vereecke: “The workshops we organised to discuss the findings of our analysis with the companies in question showed that the tool also has high face validity: it measures what it’s supposed to measure.”
The logical next step is to implement the tool on a larger scale.