Lecture 9: Sustainability

Social and Ecological Issues in Selected Supply Chains

Supply Chains in the Textile Industry

Supply Chains in the Food Industry

Supply Chains in the Electronics Industry

Supply Chain of the iPhone

Maplecroft’s
Working Conditions Index

Main Export Markets of
Bangladesh’s Textile Industry

Selected Disasters in the
Global Fashion Industry

Rana Placa (Slide 6)

Alternatives (Slide 7)

Campaigns promoting sustainability (Slide 8)

Scheme of a Supply
Chain in the Food Industry

Peak Phosphorus

Phosphorus is one of the main ingredients of fertilizers.

Maximum reached in 2023

CO2-equivalent Emissions from Producing Different Types of Food

Total Water Footprint

Dimensions of Corporate Social
Responsibility in the Food Supply Chain
(Slide 14) Source: Maloni & Brown (2006)

Animal Welfare

Biotechnology

Health and Security

Labor and Human Rights

Fairtrade

Environment

Community

Procurement

Global Sourcing of
Food Ingredients
Roth et al. (2008); Carey (2007)

The Cocoa Supply Chain

2013 Horsemeat Scandal

Supply Chain of a Computer

Raw Material (Slide 20)

Consumption (Slide 22)

Production (Slide 21)

Disposal (Slide 23)

Raw Material Extraction:

Scarce
Resources

Toxic
Chemicals

Global “Race to
the Bottom”

Young, Flexible,
Female

“Union-Free”
ones

Digital Divide - Technology infrastructure

Energy
Consumption

Mountains of
Rubbish

Illegal
Exports

Scrapping in
the South

How Electronic Waste is Dumped (VIDEO)

Supply Chain of a Iphone

Raw Material HealthyStuff.org (2012)

Production
CNET (2012)

Consumption
iFixit (2012)

Disposal
CNET (2012)

Level of Toxic Chemicals in the iPhone 5

Riots, Suicides, other Issues in Foxconn’s iPhone Factories

The Environmental
Pitfalls at the End of an iPhone’s Life

Complex design makes it impossible to replacing components in the Iphone

Fairphone: A Fair Alternative?

Sustainability in the Supply Chain

What is Sustainability?

Ecological Footprint

Greenhouse Gas Emissions (Slide 46)

Corporate Social Responsibility

Sustainability:
“Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

Tripple Bottom Line:

  • Ecological Sustainability
  • Social Sustainability
  • Economic Sustainability

Synergies and Conflicts between the
Pillars of the Triple Bottom Line
(Slide 34)

The Sustainability Rule-of-Thumb:
“A rule-of-thumb I give managers is that if your sustainability
performance indicators only improve when customers use your
product less often, it means you’re in trouble.”
Unruh (2015)


A business model that meets ever-higher standards of sustainability only when customers reduce consumption of the product is by definition unsustainable.

Strategies for Supply Chain Management
Searcy (2016), (Slide 36 find link)
According to Searcy, one can identify four broad strategies for supply chain management: legal, ethical, responsible, and sustainable. These strategies are hierarchical. A responsible supply chain, for example, must also be legal and ethical. However, a responsible supply chain is not necessarily sustainable.

Legal: First, there are supply chains that operate within legal limits and comply with agreed-upon contractual requirements. All partners in these supply chains must follow, for example, established legal, building, and environmental standards. These supply chains focus on doing what is legally required. Legal requirements for supply chains continue to evolve.

Ethical: Next come ethical supply chains. These focus on how organization ought to behave. All supply chain partners might be expected to exceed legal minimums through, for example, compliance with a code of conduct or adhering to broader voluntary principles, such as fighting corruption. Ethical supply chains expect all partners to honorable conduct their business.

Responsible: Third, there are supply chains that operate responsibly. Partners in these supply chains are committed to continual improvement, considering stakeholder interests, and making positive contributions in their communities. This could, for example, include implementing efficiency-oriented improvements or investing in capacity-building initiatives in local communities. Responsible supply chains focus on making things better. Supplier-assessment questionnaires often focus on what suppliers are doing with respect to these issues.

Sustainable: Last are sustainable supply chains. These require that all partners behave legally, ethically, and responsibly. However, they must also consider how their actions are situated in the broader sustainability context. A supply chain is sustainable only if its activities can be supported by nature and society over the long term. This is what the other strategies miss. Sustainable supply chains focus on doing what lasts by operating within established thresholds that recognize the limits of environmental and social resources in varying contexts.

Instrumental Logic vs.
Ecologically Dominant Logic

Instrumental Logic:

  • How can a supply chain benefit from addressing environmental
    or social issues?
  • One construct, sustainability, influences another, economic
    performance, e.g. profits.
  • Economic performance is the goal, not sustainability!
  • What can existing firms do to reduce their harm while
    increasing their profits?
  • Research usually conducted from the perspective of a focal
    firm, not supply chain.

Ecologically Dominant Logic:

  • How can a supply chain become sustainable?
  • When trade-offs are inevitably encountered, the priority is the
    environment, then society and only then profits.

The Circular Economy
(= Closed-Loop Supply Chain)
Ellem MacArthur Foundation from Braungart & McDonough and Cradle to Cradle (C2C)
A circular economy is a regenerative system in which resource input and waste, emission, and energy leakage are minimised by slowing, closing, and narrowing material and energy loops. This can be achieved through long-lasting design, maintenance, repair, reuse, remanufacturing, refurbishing, and recycling.[1] This is contrast to a linear economy which is a 'take, make, dispose' model of production (From wiki)

Defining Ecological Footprint:
“A measure of how much area of biologically productive land and
water an individual, population or activity requires to produce all the resources it consumes and to absorb the waste it generates, using prevailing technology and resource management practices.” Global Footprint Network (2012)

  • The Ecological Footprint is usually measured in global hectares (gha).
  • Because trade is global, an individual or country’s Footprint includes land or sea from all over the world.

Denmark Has One of the Largest
Ecological Footprints Worldwide

Meat Consumption

Deaths Attributable to Antimicrobial
Resistance (AMR) Every Year

Annual Loss and Gain of Forest

1.5 Earths Would Be Required to Meet the
Demands Humanity Currently Makes on Nature

Venus and Earth: Worlds Apart

Atmospheric CO2 at Mauna Loa Observatory in April 2013

Decadal Land-Surface
Average Temperature

Global Sea Ice Has
Reached a Record Low

Retreat of the Pedersen Glacier

Arctic Sea Ice Volume

Global Warming is Real!
And It Is Caused by Humans!

Carbon Footprint of a
Sport Bag Supply Chain (1.436 kg) (Slide 54)

Carbon Footprint of Butter
vs. Margarine Supply Chains

Substitutable products carry very different amounts of CO2.

It is not the product itself, but its supply chain that has a negative
environmental impact (“CO 2 rucksack” of the product).

Note: Margarine can be much worse than butter, if it is made from
rainforest-killing palm oil rather than from sun flowers.

Overview of GHG Protocol Scopes
and Emissions across the Value Chain
(GHG Protocol)

Definition “Corporate Social Responsibility”, European Commission (2011)

  • “a process to integrate social, environmental, ethical, human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders, with the aim of:
  • maximising the creation of shared value for their owners/shareholders and for their other stakeholders and society at large;
  • identifying, preventing and mitigating their possible adverse impacts.”

Definition “Social Responsibility”, ISO 26000

Responsibility of an organisation for the impacts of its decisions and activities on the environment and society that...through transparent and ethical behaviors (ISO (2010))

...contributes to sustainable development including health and the welfare of society

....takes into account the expectations of the stakeholders

...is in compliance with law and consistent with international norms of behaviour

...is integrated throughout the organisation and practiced in its relationship.

Social Responsibility Core Subjects, ISO 26000
Holistic and interdependence approach

Human Rights

Labour Practices

The Environment

Fair Operating Practices

Consumer Issues

Community involvement and development

Organisational Governance

Good Practices

Building a Socially
Responsible Supply Chain

Auditing

Visibility

Collaboration

Tier 1
Suppliers

Tier 2
Suppliers

Products

Upstream
Suppliers to
Your Enterprise

Downstream
Supply Chain
to Customers

Activities Using
Electronic
and Smart Technologies

Across Your
Industry

With Local
Partners

With
Universities

Auditing Products instead of Suppliers: Questionnaire sent to suppliers usually contain questions like:

  • “Does your organisation have an environmental policy in place?”
  • “Does your organisation have an environmental management system (EMS) in place?”

It has been criticized that such questions lead to bureaucracy, as they are taking a lot of time from both parts while adding little transformative value to the real environmental impacts of the products.


An alternative question for suppliers could be about the product:
“Send me the environmental product declaration (EPD) of your product and your plan to radically improve it”.

Conceptual Framework for Quality
Management in Food Supply Chains (6T)
Roth et al. (2008)

Robustness

Complicating

Enablers

Labels Can Help Increasing
Visibility in the Supply Chain

The Fairtrade Mark certifies that
international Fairtrade standards have been met.

The label is available on thousands of
products in more than 100 countries.

Tools and Methods

Using the “Respect Code” for
Supply Chain Transparency

Close Collaboration to Improve
Labour Conditions in an Industry

Fair Wear Foundation
“Fair Wear Foundation (FWF) is an independent, non-profit
organisation that works with companies and factories to improve
labour conditions for garment workers..”
Slide 69