05/12/2018 – News / Business / Sustainability / Supply Chain / HSBC

Businesses see financial rewards from greening their supply chains

A new HSBC survey of more than 8,500 companies in 34 markets – ‘Navigator: Now, next and how for business’ – reveals that businesses are making sustainability changes in their supply chains to improve their bottom lines.

 

Almost a third (31 per cent) of companies globally plan to make sustainability-related changes to their supply chains over the next three years. Of those making ethical or environmentally sustainable changes to their supply chains, cost efficiencies (84 per cent) and improved revenues and financial performance (also 84 per cent) are the main motivations. 

 

Safeguarding reputation and performance

 

This trend comes as companies face increasing pressure from customers to be more sustainable and transparent about their sourcing. With around 80 per cent of a company’s environmental impact found in its supply chain (according to the CDP Supply Chain Report 2016-2017), the ‘green’ credentials of strategic suppliers and partners are critical factors in a firm’s reputation and performance.

 

“As businesses explore and invest in ways to stay competitive for the future, the most forward thinking are already taking action,” reported Bryan Pascoe, Global Head of Client Coverage, HSBC Global Commercial Banking. “Transitioning to become more sustainable is not only beneficial for the environment and for society, but for the bottom line too.”

 

Transparency is key

 

Transparency is a key criteria for more than a quarter (26 per cent) of companies when seeking new suppliers, according to the survey, as consumers increasingly want to know where the products they buy come from – and how people, animals and the environment have been treated during production.

 

Added to this, regulators and investors are putting more pressure on companies to disclose their sustainability practices, which explains why 85 per cent of businesses surveyed want to achieve a sustainability standard recognised by their sector or market. 

 

Stronger push in emerging markets

 

In response, companies in emerging market countries are particularly keen to increase their ethical and environmental standards. More than one-in-five (21 per cent) businesses based in emerging markets plans to make improvements over the next two years, compared with 15 per cent in developed markets. 

 

As one-in-five (20 per cent) companies say they have taken greater control of their supply chains over the last two years, this presents a timely opportunity for businesses to assess their networks and take action to become more sustainable, which can help them remain competitive in an increasingly demanding trading environment. Some are already getting results, with 17 per cent claiming to have reduced their impact on the environment over the last two years.

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