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The rise of supply chain and tech company sustainability

Boats at busy harbour.

Sustainability within the supply chain, and within the tech sector is increasing in visibility. Recognition of the importance of technology in achieving sustainability goals is going hand in hand with sustainability action by the tech companies.

Two recent surveys provide insight into attitudes and behaviours towards sustainability that could shape investment and policy action in the future.

Both showed gaps in perception among c-level executives and employees as to the importance and state of sustainability within their functions or organizations.

Most immediately the gaps identified provide a call to action on key topics for both supply chain and technology company stakeholders.

The results of two surveys, one gauging the sustainability in global supply chains, and the other on the level of sustainability in the global tech sectors, provided interesting insights, and showed some similarities.

Supply chain sustainability is being driven by impending regulation to accelerate a carbon-neutral future. On the other hand, technology companies have long been viewed as champions of climate change and sustainability. Many also have a unique position in that while they may have significant B2B businesses, they are often exposed to consumer trends and concerns.

Supply chain sustainability survey

The annual State of Supply Chain Sustainability (SCS) report showed that the importance of sustainability in supply chains continues to trend upwards, with supply chains themselves becoming increasingly important as a critical factor in corporate sustainability. The pandemic did not arrest the trend, in fact it promoted new thinking, the survey found.

Over the past three years pressure to pursue SCS goals ran across the stakeholder spectrum, but company executives and corporate buyers topped the league of advocates for the first time in 2022. The adoption of technology and practices (policy) to support SCS goals, like supplier audits, supply chain mapping, and codes of conduct, appears to be on the rise regardless of firm size.

Climate change mitigation showed the most positive change, while circularity also gained favour. Geographically North-South differences exist – North shows stronger commitment to climate change mitigation, energy conservation, employee welfare and safety, and fair pay/fair trade. The South prioritized water conservation, supply chain circularity, natural resource conservation, human rights protection and supplier diversity.

The research was undertaken jointly by the MIT Centre for Transportation & Logistics and the Council of Supply Management Professionals, and the current survey is based on 2021 data. The survey defines SCS based on UN SDGs, and comprised 3,300 responses, including those in Spanish and Mandarin.

How sustainable is the tech sector?

In response to an iResearch survey globally, 89% of tech firms said it was important to be viewed as a sustainable and ethical brand, while 91% believe some if not all tech firms are guilty of greenwashing. Yet, only 38% of firms had a formal net zero commitment in place. Australian firms ranked highest, followed by China, the UK and Italy.

Responses by function on the importance and level of sustainability in tech organisations showed a gap in perception from top to bottom:

Function Sustainability is very important Organisation is very sustainable
Directors or board level 88% 52%
CEO 80% 65%
Middle management 73% 48%
Operations 55% 54%
Development 71% 69%
Head of sustainability 59% 57%
Core program managers 56% 59%

The most important values driving commercial benefits from being sustainable were perceived to be internal vision and values, and client and consumer demands. The third most important value of being sustainable varied by geography – competitive pressures were important in China and Spain, being a responsible employer ranked high in India, Japan and Italy, while Russia and Germany prioritised regulatory requirements, and reputational risk dominated concerns in USA, UK and Australia.

The survey of 550 professionals across technology companies in 11 countries included CEOs, directors or board level executives, middle management, administrative heads of sustainability, and core program lead/program manager for a sustainability initiative.

Investment in sustainability

Germany ranked as the highest investor in sustainable initiative, but is likely to be surpassed by the UK in 2023. Investment priorities in the sector were information technology (37%), infrastructure/sustainable technology (30%), staff training (27%), other (7%). Investing in a sustainable/accessible workplace is a major focus in the U.S. (78%), followed by Japan (74%) and India (64%).

Costs represented the biggest challenges to becoming sustainable, as identified by CEOs and operations and development staff. Regulatory requirements, time constraints, and speed to market were identified as the other major challenges.

While diversity and inclusion are driving the sustainability agenda, the above mentioned factors (cost, time constraints, etc.) were also cited as major challenges to addressing challenges in that arena.

Attracting and retaining talent was the main challenge in China, the UK, France and Germany. Analysis from Tech Informed shows that women remain grossly underrepresented in the industry, accounting for only 14% of software engineering jobs, and 25% of the total computer science workforce.

Despite this, accessibility is firmly on the radar – technology is a tool to make business and services more accessible for customers, but concerns remain whether enough is being done for employees.

Surveys highlight importance of sustainability, gaps in perception

Both surveys highlight the importance of sustainability at all levels of the organization, and across the world. Profits and perception remain high on the list of factors driving action on sustainability. Technology companies are key enablers of a lot of the change needed to implement climate change and sustainability action, yet their own sustainability footprints suggest a lot more needs to be done to green the sector.

While cultural differences define which factors receive greater attention globally, with important differences between the global north and south, human rights, and diversity and inclusion were high on the list of priorities in both surveys. This may be unsurprising given a growing awareness of the importance of environmental justice, and how poorly understand the social pillar is, but it’s a positive indicator for the future.

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