Ecovadis: The Sustainable Value Chains Podcast series features senior sustainability experts and executives who explore a wide range of environmental, labor and human rights, ethics, and sustainable procurement issues and looks at how companies can develop more sustainable value chains.
In this episode of the Sustainable Value Chains Podcast, Divya Demato, CEO and co-founder of of GoodOps outlines a clear perspective on what sustainable leadership means today – and how it has changed since the pandemic.
Sustainability Leadership Today: Going Beyond the Basics
In our rapidly changing world definitions and expectations are also subject to major shifts. Gone are the days when merely announcing a commitment to reducing water usage or ensuring fair wages made a company a leader in sustainability. Today, true sustainability leadership demands more. It’s about embedding environmental and social initiatives deeply within the core business, moving beyond CSR to integrate these values across the entire value chain.
So, how exactly has sustainability leadership changed over the past few years? Divya explains that before the pandemic we saw a deluge of corporate sustainability reports, but the post-pandemic world demands these environmental and social commitments be deeply woven into the business fabric, going beyond mere Corporate Social Responsibility (CSR). As a result, companies that were once at the forefront, those who made early commitments to reduce water use, pledge net zero, or ensure fair wages, now blend into the mainstream. Today’s sustainability leaders are reimagining business strategies. This includes innovations in product packaging, responsible raw material sourcing, transitioning to renewable energy, and committing to policies that protect society’s most vulnerable. The cornerstone? Building trusted supplier relationships. The shift is not just about ticking boxes for the upcoming 2030 and 2050 milestones; it’s about establishing businesses that can thrive amidst rapidly changing global conditions.
Divya further categorizes leadership tiers in sustainability. The first involves those companies that quickly adapt to new sustainable technologies and practices. The second, the “leaders of leaders,” invest in novel solutions, sometimes in collaboration with competitors. The third are pioneers, those who challenge and shift industry paradigms. Examples include Unilever’s living wage commitment and Patagonia’s unwavering environmental pledge. However, the current urgency around sustainability isn’t just driven by foresight; for many industries, it’s about immediate survival. With predictions like the potential depletion of seafood by 2048, some sectors face existential threats. The path forward requires not just innovation, but also deep introspection about the legacies companies wish to leave behind.
The Role of C-Suite in Sustainability
For successful sustainability initiatives, a top-down approach is paramount. While sustainability teams lay the groundwork by identifying environmental and societal challenges, real momentum is generated when the C-suite, especially CEOs and CFOs, offer their support. This leadership involvement ensures sustainability permeates throughout every facet of the organization – from product design and innovation to procurement and energy infrastructure. CEOs, in particular, play a critical role. Their foresight into future challenges allows the company to pivot, innovate, and remain relevant in an ever-changing landscape. This isn’t solely about addressing current consumer needs or navigating impending regulations; it’s about ensuring a viable business future in the face of existential threats such as climate change or resource scarcity.
Challenges in Transitioning to Sustainability and Sustainable Value Chains
Leadership in sustainability isn’t without challenges, however. Some initiatives, like promoting living wages, might not always translate to immediate profits. Yet, even if a company isn’t leading the charge, inaction isn’t an option. Every business, due to its reliance on natural resources, faces potential disruptions. To navigate these disruptions, firms need to be proactive about sustainable sourcing and adopt regenerative practices. But one of the biggest mistakes companies make is viewing sustainability only as a marketing or CALMS exercise. This perspective often leads them to grapple with whether their supply chain practices truly warrant the sustainable labels they claim. Strategically, businesses should evaluate their sustainability claims and align them with genuine practices. Financially, these initiatives demand significant investments, especially in areas like R&D. Adopting sustainable practices could involve using biodegradable packaging, transitioning to regenerative agriculture, or ensuring fair wages for workers. Successful sustainability transition requires cross-departmental collaboration, involving heads of procurement, logistics, marketing, and finance, to ensure a coherent and integrated approach.
Tools like materiality assessments can guide businesses in prioritizing their sustainability efforts, pinpointing high-risk areas that might impact both consumers and the larger world. Such evaluations can forecast potential challenges, as demonstrated during the pandemic, and aid in future-proofing business strategies. While prioritizing is vital, it’s equally crucial not to overlook any sustainability aspect, as lesser concerns can swiftly become significant risks. On the communication front, if a company has a genuine sustainability story, marketing becomes straightforward. Yet, issues arise when businesses prioritize branding before actual sustainable actions. With the supply chain’s increasing visibility, especially during crises like the pandemic, consumers now seek transparency and authenticity in sustainability stories, underscoring the need for marketing and operations to work collaboratively.
Divya stresses, however, that sustainability efforts are about progress, not perfection. The key is transparency about where a company stands in its sustainability journey.
Best Practices for Sustainability Leadership
Leaders in sustainability aren’t merely setting long-term goals; they’re taking transformative steps toward tangible impacts. The most proactive businesses have their sights on 2030 and 2050 emissions targets, considering their Scope 1, 2, and 3 impacts. Since roughly 80% of a company’s emissions often fall within Scope 3, there’s an emphasis on reimagining the business model. This involves genuinely investing in their suppliers, helping them modernize with tools like solar panels and other renewables. These leaders recognize that without adequate support for frontline workers, achieving sustainability is a pipedream. Successful strategies prioritize efficient operations and community programs, like migrant education and improving the health conditions of workers, acknowledging that protecting these communities ensures long-term business viability.
It’s also noteworthy the role of procurement has emerged as pivotal. The Chief Procurement Officer (CPO) should ideally sit alongside other C-suite executives, bridging the gap between suppliers and business objectives. This redefined role sees procurement not just as a cost-saving function but as an innovative hub that balances affordability with sustainability. In the past, the procurement department often operated in the shadows, but as businesses realize its central role in driving sustainable solutions, it’s gaining the respect and voice it deserves. The new-age procurement team returns to the drawing board with solutions and options, working closely with suppliers to highlight new sustainable methods unknown to upstream departments, positioning them as central figures in the journey towards a more sustainable future.
Lastly, Divya reaffirmed that while sustainability is not just about communication, the narrative becomes more straightforward when businesses have a genuine story to share. If companies work towards sustainability in their supply chains and value chains, their marketing narrative will naturally resonate with consumers.
As the fashion industry continues to grapple with the far-reaching impacts of the pandemic and new global challenges, it has become clear that the ability to swiftly respond to changes in the supply chain is a defining factor for companies to achieve success. Industry stakeholders from ultra-fast fashion player Shein, sustainability strategy and operations consultancy GoodOps and management consulting firm Boston Consulting Group (BCG) discussed the challenges and opportunities of an agile supply chain in the recent webinar “Agile Supply Chain and the Future of the Fashion Industry”.
When are supply chains agile?
In the fashion industry, supply chains are considered agile when they can move products from the design phase to retailer shelves in two to eight months (or less), replenish inventory in season based on demand, and keep end-of-season remainders to a minimum. Some of the key challenges are cost management, end-to-end collaboration and quality control.
“In other words, companies with supply chain agility are able to respond quickly to short-term changes in demand by building a customer-oriented, end-to-end product-supply mechanism. This requires close collaboration and the quick coordination of merchandising, design, production, and channel needs,” states the BCG report “Agility Is Fashion’s New Source of Competitive Advantage”.
Challenge 1: changing customer behaviour
Veronique Yang, managing director and senior partner at Boston Consulting Group started the discussion by explaining how customers’ behaviour has changed: “They are expecting more diverse and ample products that come to them faster through faster deliveries and with free returns and exchanges. All the while expecting quality and a competitive price, which adds pressure on brands.” That is the customer-driven business model and according to Yang, ultra-fast fashion exists because of that need of consumers.
“It’s a tall order and we’re trying to meet it,” agreed Shein’s executive vice chairman Donald Tang. “Nobody has the answer of what the new normal is but consumers have become quite demanding and the battle has intensified and moved online,” he added. That is the battle for their attention, business and best deals: While inflation and economic uncertainties have pushed prices up, consumers are looking for ever more affordable prices. Tang stated that a survey among 25 percent of Shein’s customers revealed that while 13 percent are looking for more responsible choices in the current scenario, 87 percent have changed to more affordable brands.
“Those changes were happening already before the pandemic but the pandemic accelerated it,” explained GoodOps’s CEO and co-founder Divya Demato. “While there is no denying of the climate crisis and different industries having a role in that, companies are often at odds with that reality and consumers are at different levels of understanding this; they align themselves to brands according to that.”
Challenge 2: linear business models
For her, a linear business model does not work any more, especially in fashion. “The pandemic caught many off guard; the ones that managed had close relationships with their suppliers but there were still a lot of unknowns,” she said. “Brands are challenged with inventory management. They need to identify a supply chain eco system and build resilience,” she advised.
“Everybody would like to satisfy responsible consumer choices,” said Tang. A transformation that worked for Shein was to digitise small and medium size factories. “A few years ago in China, you saw small factories disappear. We digitised everything and connected small factories so that together, they could become one big company and compete,” recounted Tang. “This has increased their visibility, they can now see their own capacity and we can pay them fast, which leads to better liquidity.”
Opportunity 1: digitisation and transparency
For the Shein executive, sustainability comes back to technology and the platform. “We have to use technology for the planet and to improve working conditions,” he said. In this respect, Tang sees Shein as an “empowerment company”.
For Yang, it is not only technology that has made a difference: “Companies have realised that a supply chain can be really valuable and they started checking how it can be more stable while holding on to quality and competitive prices.”
For her, there have been three major changes: globally, the emergence of redesigned supply chain networks and even models; more openness and transparency across the supply chain, which includes new technology and digitisation; and finally, a high awareness of sustainability. All this, according to her, leads to resilience, responsiveness and responsibility, which is all very important as Demato pointed out “more is coming as the pandemic showed”.
Opportunity 2: on-demand
In terms of the tools to make all of this happen, Yang who manages different kinds of product categories, admitted that the fashion supply chain is the longest and most complex. “It involves many internal and external stakeholders and is quite fragmented,” she said. It requires the coordination of a large group of parties of different complexities, sophistication levels and digitisation levels and managing all that is challenging, which is why the complexity of the fashion supply chain can be a bit overwhelming. “Everybody needs to learn from the best but carefully select what fits their own business model,” she advised.
“Agility is the new source of competitive advantage, even before the pandemic,” emphasised Tang. Through its on-demand model – which Tang calls ‘a game-changer’, Shein also makes sure there is no waste, manages its inventory well and focuses on consumers’ needs, which for him is crucial for growth. “We want to be more inclusive; colour of skin, location, orientation, etc. does not matter but you have to reimagine the supply chain. At the end of the day, the consumer wins and you have to find a way to do go good while you’re doing well and do well while you’re doing good,” he summarised.
Demato agreed and compared Shein’s on-demand model for retail to how Walmart revolutionised prices through its wholesale model and how Amazon revolutionised e-commerce. “There could be less wast upstream but what about downstream? What can technology do? Consumers are still going to buy.” For her, it will be about more sustainable materials and innovations in textile recycling as only one percent of garments are recycled today because the technology is not there yet.
Opportunity and challenge: sustainability
“The infrastructure is there and many elements are in place but from a circularity perspective, we have to think of the whole life cycle. Consumers will ask ‘is it worth it to buy this? Or will this go to landfill?’. This is an opportunity for brands to get ahead of that,” Demato said.
“This moment has probably come already,” chimed in Tang, adding that “we have to figure out the preferred materials.” He also pointed out that “so far, we are only getting the half life here, not the full life cycle”. For him, it all comes down to cooperation: “Nobody is going to be big enough to sustain it and figure out the end-of-lifetime approach on their own.”
Yang agreed that industry players have to come together and use their power, scale and know-how collectively. “Fashion is a discretionary category that has a social and environmental impact. The supply chain needs to be of service to build a future of fashion and consumers. Technology helps us to reduce products, maximise resources and select more eco-friendly choices when it comes to dyeing, washing and other processes,” she concluded.
As the fashion industry continues to grapple with the far-reaching impacts of the pandemic, it has become clear that the ability to swiftly respond to changes in the supply chain is a defining factor in achieving success.
On 6 June, 2023, SHEIN hosted a webinar that discussed how digitalization and agile supply chain models are helping fashion industry players gain a competitive edge in today’s market.
Panelists:
Donald Tang, Executive Vice Chairman, SHEIN
Divya Demato, CEO & Co-founder, GoodOps
Veronique Yang, Managing Director and Senior Partner, BCG
As the world recovers from the standstill that was the pandemic, the customer purchase decision process has changed, as have the products being prioritized. Customers are demanding greater product variety, including more responsible options and faster product fulfillment to feed their desire for almost instant gratification. Veronique Yang, Managing Director and Senior Partner, BCG, said consumers are demanding more inclusive products with speedier delivery. She added that the growth of ecommerce channels during the pandemic has also driven customer demand for speedier delivery times – while holding expectations on quality and price.
“Consumers are becoming quite demanding and less forgiving, and the battle for those hearts and minds has intensified. And the battle has moved online,” added Donald Tang, Executive Vice Chairman from SHEIN. He further referenced results of a recent survey of over 2,500 SHEIN customers, where 87% reported shifting to more affordable fashion choices as a result of inflationary pressures.
With increasing global economic pressures, there has been a notable shift in supply chains, with companies increasingly having to adapt their models to survive. Said Divya Demato, Co-Founder and CEO of GoodOps, “These changes were happening before the pandemic, but the pandemic exacerbated it.” This was echoed by Donald Tang, who shared SHEIN’s business model of on-demand production. Veronique Yang further explained that companies are rethinking their global supply chain network – diversifying their supply bases “and sometimes even changing their supply chain models to prevent disruption.”
This drove the conversation towards the topic of resilience, which all speakers agreed was fundamental for the advancement of the fashion industry. While Donald Tang further shared how SHEIN had made it its mission to empower the supply chain since the start of SHEIN’s business, whether it was by funding their adoption of new tools and technology, or providing training and up-skilling to their workers, or even offering flexible settlement terms that are much shorter than the 90-days standard of the industry. Veronique Yang also added that resilience required creating more openness and transparency across the entire value chain – from suppliers to retailers. “They have to work together to problem solve the potential frictions… and digitization is a big part of that.”
Speaking to the recent report, Creating Agile Supply Chains in the Fashion Industry | BCG, Veronique Yang shared key learnings from BCG’s research:
Digital technology can help improve performance across three measured commercial areas: balancing cost, speed to market and quality
Digitalization helps streamline supply chain tasks and save time for suppliers. For example, an online fabric ordering database and order system makes it effortless for suppliers to carry out material preparation ahead of production
People think it’s hard to control quality while keeping cost down. In reality, a digital system can predict and pre-empt potential quality issues, containing them from the very start of the value chain.
Donald Tang agreed, adding how on-demand fashion enables a brand to minimize waste while addressing the “fashion trilemma” – offering the broadest amount of choices, with frequent refresh while addressing inventory management. In this way, bespoke production can actually cost less than mass production.
Divya Demato countered that while there could be fewer articles of clothing upstream, fashion brands still need to consider downstream and post-consumption. She raised a call to innovation and investments in technologies and materials to support more sustainable fabrics for upstream.
In closing, speaking to forward looking change, Veronique Yang added: “Fashion industry companies – you have the responsibility and power and influence and to shape this together.”
In the short Q&A segment, there was much interest in SHEIN’s ability to replicate its business model in other markets. Donald Tang invited Marcelo Claure, Chairman of SHEIN Latin America, who was in the audience, to share about his plans and experience in rolling out manufacturing for SHEIN in Brazil.
If there’s one takeaway from the pandemic, it’s that an agile supply chain can make or break a company.
The pandemic exposed supply chain vulnerabilities that caught many fashion brands and retailers by surprise. Companies that didn’t have the agilities to pivot around isolated problems, solid supplier relationships to gain access to limited resources, or supply chain visibility beyond Tier 1 to appease an increasingly demanding consumer, were left out in the cold. Shifting consumer priorities also put pressure on fashion brands to produce faster, more broadly, more sustainably and without added cost—a four-way challenge if there ever was one.
The webinar “Agile Supply Chains: The Future of the Fashion Industry,” outlined how nimble supply chains offer a major competitive advantage, including improved customer responsiveness, faster time-to-market, reduced inventory holding costs and enhanced collaboration with suppliers. The discussion tapped into the knowledge of Donald Tang, executive vice chairman of global fashion and lifestyle e-retailer SHEIN; Veronique Yang, managing director and senior partner, Boston Consulting Group (a recent study outlined SHEIN’s supply chain advantages); and Divya Demato, CEO and co-founder of sustainable supply chain consultancy GoodOps.
Achieving supply chain agility is not easy, but digitization that empowers suppliers along the value chain to be more efficient, self-sufficient and make smarter choices is a sure path. It also requires a cultural shift and revolutionary rethink on the scale of Henry Ford’s auto assembly line, Walmart’s everyday low prices or Amazon’s overnight shipping.
And with consumers wanting more, more, more—from endless trend options to more inclusive sizing—brands must strike the delicate balance of creating more while keeping production waste to a minimum. This can only be achieved by really knowing what the customer wants, then using shared information and services, material economies of scale, and sharp manufacturing technology to do it efficiently.
“We reimagined the supply chain, which is a daunting task, and we have done it by digitizing the small- and medium-sized factories to give them visibility to see their own capacity, continued order flow and seamless efficiency. [We also] give them better liquidity because we pay them very fast and give them volume discounts on the raw materials,” said Shein’s Donald Tang. “All these benefits help them make better choices in terms of investments and how they run their factories.”
It comes down to collaboration and shared goals, so all stakeholders are on the same page. “The pandemic also drove the different parties of the ecosystem—suppliers, manufacturers, brands and retailers—to work together to solve frictions and problems,” said BCG’s Yang. “And digitalization is a very important foundation to enable that.”
Digitization links the chain
To get the best commercial performance out of the supply chain, companies must balance cost, speed to market and quality, said Yang, who noted SHEIN’s accurate demand forecasting, digital sampling to reduce inefficiencies, and new DTC approaches.
As fabrics account for approximately 65 percent of a garment’s costs, SHEIN takes steps to help all its suppliers, no matter their size, optimize their textile buys. Based on market forecasts, SHEIN consolidates the fabric early on, then digitizes fabrics so its suppliers can instantly and easily place orders. Digital analysis then looks at which factory is optimized for an order, reducing redundancy and wait time.
On speed to market, digitalization streamlines production and orders, removing admin and coordination time, while preset criteria creates alignment with all players. On quality, a digital feedback system helps “identify and contain” quality issues.
“People think it’s very hard to control quality when you’re trying to control a call center, but with the digital system, you can feed all the quality issues back into the system. And then this can lock into the average crux of the supply chain,” Yang said. “So starting from the design, you are already pre-answering the potential quality issues.”
Sustainability must drive end of life
As most of fashion’s impact happens upstream, it’s up to the brands to cut production waste and harmful emissions—without passing along the costs to consumers who say they are willing to pay more for sustainable goods but don’t always demonstrate that with their wallets. SHEIN’s on-demand agile supply chain facilitates sustainability by effectively addressing over-production through the alignment of production with customer demand, responsive order fulfillment, reduction of excess inventory and waste, and enhancement of overall supply chain efficiency.
But there’s also an urgency to explore what is happening downstream, especially since fashion demand isn’t going away. And more fashion merchandise coming into the world means more must be dealt with on the other end.
“Sustainability is very challenging. Yes, there can be less waste upstream, but how many articles of clothing downstream are going into the world?” said GoodOps’ Demato, noting that only a miniscule percentage of fashion is recycled, and even garments made from recycled bottles don’t remove fashion waste from landfill. “What can we do upstream with more sustainable materials to help what happens downstream? From a circularity perspective, we have to think about the entire system. That’s a very critical piece in this entire conversation.”
As a major fashion retailer, SHEIN is taking this seriously, but concedes it must be a global effort.
“It’s all going to come down to whether we work together or not, because if we tried to do these things separately, then everybody will fail,” said Tang.
One sustainability action SHEIN recently took was to partner with Queen of Raw, a company that sources existing materials from brands and retailers looking to responsibly clear out their excess fabric inventory rather than have it go to waste in landfills. The company says that diverting 1 million yards of fabrics from excess inventory would set SHEIN on the trajectory to become one of the global leaders in repurposing deadstock materials, helping conserve water and preventing the creation of carbon dioxide equivalents that would have been generated through conventional production methods.
“We have to take bigger steps to really address that through a point of view,” Tang added. “If you can find a way to do well while doing good, and do good while doing well, that’s a great resource.”
The global pandemic has pushed many companies worldwide to improve the sustainability within their supply chains. GoodOps CEO Divya Demato is leading the charge, as they consult with some of the world’s largest companies, exploring new ways to improve their sustainability practices and gain competitive advantages by going green.
Whoever said “leave well enough alone,” was surely not a small business owner in growth mode. Change is not only a product of, but often a prerequisite to, breaking through to the next phase of business growth.
“That surprises some business owners,” says Divya Demato, CEO and co-founder of GoodOps, a supply chain and sustainability consultancy that advises companies on their business strategy. “They think, ‘We had success with this strategy, why change?’ But what you realize is you may have to modify your products or services, or vendors or partners, to be able to scale.”
Growing businesses—and all businesses in today’s ever-evolving business environment—must embrace agility. Whether that means adapting to changing conditions, like a global pandemic, or making strategic adjustments to reach the next level, the key is knowing what to change. Read on for four ways small business leaders must evolve their companies to enable growth.
1. Reshape Your Team For Growth
“Many times, the core entrepreneurial team that got you to this point, some of them may not be able to go on that journey of scale with you,” Demato says.
This can be a tough one—especially for close-knit companies. But it’s a matter of evolving roles and the skills needed for those roles. Small companies often require generalists rather than specialists and operations talent rather than managerial. Larger companies need more specialists and managers. And businesses in growth mode? They require a unique blend of both.
“You’re looking for people who have both entrepreneurial and operational strengths, and it’s a very potent combination,” says Demato. “It’s an interesting time in your business. You’re not so big yet, but you’re not a startup either.”
Small business leaders looking to grow should evaluate their team’s strengths and skill sets to ensure they have the right folks in the right roles and to determine what, if any, gaps in talent exist. This analysis will help leaders strategically recruit or retrain the talent needed to position their company for growth. While the talent market may be tight, offering recruits what they’re looking for now—including flexible work options and diverse teams, according to a 2021 study—can help attract the right candidates.
2. Leverage Customer Data
To grow your business, you have to know your business. Nothing can tell you more about your company, products and—most importantly—your customers, than data.
“If you’re not collecting customer data, you need to begin immediately,” Demato says. “Your business data will tell you the health of your business, but the consumer data lets you know how your consumers behave.” Understanding that behavior will allow you to adjust your sales, products, and marketing as needed to grow.
Many startups, and retailers in particular, choose the visibility and reach of third-party marketplaces to find and grow their customer base. The trade-off is often that the third party ends up owning the customer data.
In order to understand who is buying the product, what they’re willing to pay, what other products they’re interested in and where they’re located, some businesses may need to refresh their ecommerce strategy. If they’re selling through a third-party marketplace, based on the resources available, it may be time to move to their own retail site.
And, of course, they’ll need to learn how to interpret and leverage that data, too.
“You have to have the right people on your team that can make sense of that data,” says Demato.
3. Diversify Your Supply Chain
Growing companies should learn from the struggle that businesses of all sizes grappled with in a pandemic-impacted world. Dealing with uncertainty has pushed businesses to adapt, allowing them to be more agile, adopting new strategies and processes based on what they’ve learned. Small businesses with an eye on growth should do the same by building out their supply chain networks with the potential for disruption in mind.
“Make sure that whenever unforeseen situations happen, you can pull the right levers that keep you in business,” Demato says.
She recommends a two-pronged approach, beginning with a diversified supply base. Having multiple vendors allows businesses to keep operating, even when unexpected events disrupt one supplier’s operations. She also emphasizes the importance of developing strong relationships with suppliers.
“They’re truly your partners. You need them to buy into your vision. Think about their needs, and help them stabilize and be sustainable,” she says. “You want them to grow with you.”
4. Embrace Sustainability
Entrepreneurs have a breadth of options when it comes to sustainable sourcing. Though environmentally friendly suppliers and practices may have been a cost burden in the past, based on her experiences helping companies build sustainable supply chains, Demato has observed a change.
“There are great and very affordable options now,” she says. “The assumption that sustainable operations are more expensive, it’s just not the case anymore.”
At the same time, the costs of not operating sustainably are going up. Consumers, talent and investors all have sustainability top of mind—70% of consumers in a 2021 survey said they buy from brands that share their values. This reveals a clear market opportunity for small businesses. In another 2021 study, 85% of consumers said they have become greener in their purchasing, and more than a third of Gen Z and Millennial buyers say they’re willing to pay a premium for sustainable products.
For many small business owners, maintaining sustainable operations and choosing environmentally conscious suppliers—like Office Depot, whose Office Depot’s GreenerOffice™ line offers products with environmental attributes and ecolabels like cleaning supplies made with less harsh chemicals and paper with recycled content—is an easy first step. Your existing resources and partners are an extension of your team. Tapping into their sustainability opportunities is an efficient way to begin your sustainability journey.
Companies that can authentically communicate their environmental efforts to consumers have a competitive advantage when it comes to attracting and retaining customers. Establishing that rapport allows you to demonstrate that your brand has similar values as your customers and that you care about making a difference.
For small companies, growing does not mean running the same business on a larger scale. With the right people, processes and partners, small businesses can position themselves to reach their growth goals.
PARIS & NEW YORK–(BUSINESS WIRE)–EcoVadis, the world’s most trusted provider of business sustainability ratings, today announces the winners of its sixth annual Sustainable Procurement Leadership Awards program. Winners were announced at the EcoVadis Sustain 2022 virtual conference.
The EcoVadis Sustainable Procurement Leadership Awards recognize companies who are leading the charge in engaging and integrating sustainability into their relationships with trading partners around the globe.
“Each year our nominees exemplify what it means to drive positive environmental and social change through their sustainable procurement initiatives,” said Pierre-François Thaler, Co-CEO, EcoVadis. “While every nominee is making great strides within their sustainability journeys, this year’s program winners stand out for the exceptional progress they are making to create a more sustainable future for our planet and its people.”
Winners were selected based on their EcoVadis scorecards published in 2021. This year’s nominees were evaluated on strategy and approach, procurement integration, scale and coverage, and program results across three main categories:
This award was given to two companies. It acknowledges excellence in engaging trading partners in sustainability initiatives and honors best-in-class examples of driving internal engagement to roll out global sustainable procurement programs.
The jury panel noted key attributes leading to Schneider Electric’s winning selection, including an integrated Supplier Sustainability Program (SSP) strategy and engagement, contribution to the United Nations’ Sustainable Development Goals (SDGs), a focus on working conditions and human rights, strong and sustainable supplier relationships, and more.
Dan Bartel, Chief Procurement Officer, Schneider Electric
“Sustainability is at the core of our mission and purpose, and our global supply chain plays a central role in Schneider Electric’s decarbonization strategy. The Zero Carbon Project is how we are engaging our top 1,000 suppliers to enable climate action. By creating this community of suppliers, they can benefit from best practice sharing as well as get access to our energy management and sustainability expertise. Our suppliers are able to reduce their carbon emissions and we in turn reduce our Tier 3 emissions — it’s a win-win. We are delighted and humbled with this recognition from EcoVadis.”
The jury panel also recognized W.R. Grace for its ambitious goals aligned with the United Nations’ SDGs, top management support and program leadership to cascade sustainability criteria into functions, processes and performance, creation of a Global Responsible Sourcing Committee, alignment with the Grace Responsible Mineral Approach with OECD Due Diligence standards, and more.
Chris Schult, VP of Strategic Sourcing, W.R. Grace
“Responsible Sourcing is a key pillar advancing Grace’s global sustainability objectives. Working with EcoVadis enables us to engage with our global value chain in ways that were simply not possible before. This engagement allows Grace to ensure that our raw materials are sourced responsibly and that our suppliers meet the highest standards of transparency thereby building both a responsible and resilient supply chain.”
Read the full profiles of the expert jury members and details on the key attributes of these winning programs here.
This award recognizes individuals with outstanding contribution to driving a sustainable procurement initiative forward within their company. The award is nominated and selected by the EcoVadis team based on sustainable procurement program results and demonstrated excellence in program strategy and execution.
Regarding Brad Adams, Compliance and Sustainability Manager, John Deere
“We are honored to accept the Outstanding Program Leadership award from EcoVadis, recognizing the outstanding efforts of Brad Adams and our Supply Chain Sustainability team. John Deere is committed to delivering outcomes to all stakeholders that are both more economic and more sustainable through our Smart Industrial strategy and recently launched business and sustainability goals. Our suppliers are a critical part of our journey to unlocking the innovation necessary to provide more sustainable solutions and technologies to our customers.” Jill Sanchez, Director of Sustainability, Deere & Company. Learn more about their goals and program here.
“On behalf of the whole Indirect Purchasing team of Auchan Retail, it’s a great honor to receive this award from Ecovadis. This award is a recognition for all the hard work that has been done already, and clearly demonstrates the positive impact of our Global sustainable procurement program. A warm thank you to all our purchasing and CSR teams worldwide, which all contributed to that success. Also, thank you to EcoVadis for your dedication in improving sustainability in our supply chain, and beyond, to our wide community of trusted suppliers and partners.”
This award is granted to companies who demonstrate the highest percentage of rated companies improving their sustainability performance. This category was not open for submissions and was instead granted based on the EcoVadis data.
Dave Ingram, Chief Procurement Officer, Unilever
“Unilever is pleased to share this award and achievement with both EcoVadis and our suppliers, in recognition of the partnership and collaboration required to make improvements to our supply chain. Our Responsible Sourcing Policy is the fundamental starting point for Unilever’s ambition to make sustainable living commonplace, and Ecovadis supports this journey by helping to identify where our partners can improve and progress on environmental and social commitments. Ultimately this award is the result of the hard work of our partners, so a big thank you, and congratulations to all our suppliers for your efforts.”
Sandro Avila, Operational Planning, Logistics and Supply Chain Director, Klabin
“It is an honor to be granted the Best Portfolio Performance Improvement award by EcoVadis, which has become a key partner in advancing the sustainability agenda. This award demonstrates the Company’s investments for a renewable future, such as the implementation of the Sustainable Supply Chain Management Program, which helps and fosters our suppliers in advancing with responsible socio-environmental practices. To EcoVadis, thank you very much for your support in improving sustainability in our supply chain.”
In addition to these awards, EcoVadis also recognizes a selection of small- and medium-sized rated companies (i.e., suppliers and trading partners) across the globe who achieved exceptionally high performance in their EcoVadis rating in the past year. Learn more on the EcoVadis 2022 Sustainability Leadership Awards page.
About EcoVadis
EcoVadis is the world’s most trusted provider of business sustainability ratings. Global supply chains, financial institutions and public organizations rely on EcoVadis to monitor and improve the sustainability performance of their business and trading partners. Backed by a powerful technology platform, EcoVadis’ evidence-based ratings are validated by a global team of experts, and are adapted to more than 200 industry categories, 160 countries, and companies of all sizes. Its actionable scorecards provide benchmarks, insights, and a guided improvement journey for environmental, social and ethical practices. Industry leaders such as Amazon, Johnson & Johnson, L’Oréal, Unilever, LVMH, Salesforce, Bridgestone, BASF, and ING Group are among the 90,000 businesses that collaborate with EcoVadis to drive resilience, sustainable growth and positive impact worldwide. Learn more on ecovadis.com, Twitter or LinkedIn.
Supply chain and logistics are by definition multinational, but are they inclusive and diverse enough? Supply Chain Digital speaks to those in the know
In 2021, many businesses made popularist vows to become more diverse. As an international industry, supply chain is one sector that offers great potential for change.
Supply Chain Digital spoke to two prominent women in business. Here, they explain their roles, their experiences and their hopes for a diverse and inclusive future in the sector.
Sarah Barnes-Humphrey, who is based in Ontario, Canada, has been in supply chain and logistics her whole career. She is the co-founder of Shipz, a company that brings shippers and forwarders together and streamlines the quoting, booking, and shipment process.
She is also the co-founder of Blended, a non-profit organization whose mission is further diversity, equity and inclusion (DEI) goals. As well as this, she hosts two popular podcasts – one for Blended and another called Let’s Talk Supply Chain.
“The Blended podcast started after the success of our Women in Supply Chain series,” says Barnes-Humphries. “I knew the conversation needed to be bigger but I didn’t want to just be another podcast.”
Divya Demato, meanwhile, is the CEO and co-founder of supply chain and sustainability consultancy, GoodOps.
“With three children, I am my own supply chain”, jokes Demato. “I have 18 years’ experience in the supply chain stratosphere, across food, fashion, and home goods. I’ve worked as a buyer, so I understand procurement and sourcing very well.”
Supply chain challenges on diversity
With decades of experience, both women have seen the consequences of a lack of diversity and resistance to inclusion.
“There are a number of challenges,” says Barnes-Humphrey, “and to be fair it’s not just in the supply chain industry.”
She adds: “One is that DEI is not only gender based – it is about accepting all and being open to all perspectives, Second is that we really need to see representation of everyone at all levels of the supply chain. One way we can do that is by sponsoring diverse speakers and audience members, as well as sponsoring minority-owned business to have the same access to promotional activities.”
Supply chain jobs ‘often gender specific’
She continues: “Speaking as a woman of colour, there’s very few such women in the sector”, says Demato. “When I started, there were gender-specific positions. You saw a lot of female buyers, but not necessarily a lot of females in logistics, transportation or in the warehouse.
“The head of the team or the department was usually a man. In terms of diversity, I think women have an opportunity to innovate and bring their knowledge into the supply chain space.”
Barnes-Humphreys says she is not suggesting it’s only women who care about sustainability “because that’s not true”. But she does feel the way women think can benefit the supply chain.
“Women are more likely to ask about the impact of the work they are doing beyond just time and transit and the cost of moving products. They are more likely to ask how their work is connected to the entire supply chain.”
Demato believes there can never be enough diversification in any work environment.
“We know that more-diverse workforces perform better,” she says. “I think that in terms of inclusion it’s really about power, right? Do you have the ability to make the changes that you want? I was very fortunate to have amazing mentors and bosses that really shepherded me along the way.”
Supply workers ‘surprised I’m Indian’
Demato can remember instances in the pre-LinkedIn business world where her presence as an Indian woman surprised people.
“I definitely know that it was sometimes shocking for people to meet me, because we might communicate over email and then we’d meet in person and they would be surprised that I was an Indian woman. Nowadays, you can search online and have a sense of who you’re talking to.”
So in 2022, what hurdles does Demato feel people of colour deal with in the supply chain?
“To begin with,” she says, “the phrase ‘people of colour’ – that’s a massive group of people, so who are we talking about exactly?”
She adds: “There’s racism and bias in general but I would bring it down to education. That’s something I think is really interesting about supply chain. For example, do you need a college degree to work in the supply chain? Not necessarily. So much is based on experience. And this isn’t just about people of colour. There are a lot of socio-economic challenges.”
Women in supply: the barriers
“It depends on the environment,” says Barnes-Humphrey. “Women have many more allies than we used to – allies who stand up to conference organisers and refuse to be on a panel that is not diverse. I am hoping this will expand into not just being gender focused. Women do still face very male-dominated thinking in some aspects of the industry. It is very frustrating that we are still dealing with this kind of thinking.”
As for Demato, she feels the brand of workplace opposition many women face is people doubting their ability. She says she has had colleagues and associates questioning her position, and asking how much experience she really has.
“I was lucky to join such big-name companies early in my career,” she admits. “That gave me a lot of credibility.”
Demato also points out that just because hers is a numbers-driven type of job – “performance metrics, KPIs and so on” – that does not mean the job is not for women. Quite the reverse, she insists. “I’d say it’s an exciting space to get into, if you’re someone who likes direct assessment of your performance.”
Learning life lessons in supply chain
Anyone who has earned a degree and been fortunate enough to go straight into that career field knows that workplace reality rarely follows textbook theory. Most of what we learn in our careers is on the job. So what have Demato and Barnes-Humphrey learned?
“I think it’s understanding there is an impact to everything we create and make. The reason I’m focusing on the sustainability side of supply chain is based on that lesson. These things all come at a cost, whether it’s to the people or to the planet”, says Demato.
She adds: “The supply chain gives jobs; it is a livelihood. It is a current that runs around the world and it can give life to communities. The supply chain actually has a lot of power.
“And we western countries – how much waste are we creating? What are we buying? What is actually happening to the communities where all this landfill is going?”
Barnes-Humphreys reveals the most important lesson she’s learned is that it’s only with mutual respect “that the magic happens”.
“When we come together, work together, and understand and respect each other’s roles, that’s where the magic happens. Communication and data are the other big components, because the more we know the better we can be.”
Both Demato and Barnes-Humphreys want to see diversity reign – from head office to warehouse floor, especially after two years of social distancing as a result of the pandemic.
“In the global supply chain you will interact with people from all over the world,” says Demato. “If you want to work with a diverse group of people what could be better than this?”
COVID-19 is reshaping how society functions and how businesses operate.
Our altered global reality came quickly and in the chaos, stark contrasts emerged into what communities would value as essential or nonessential, and demand fluctuated accordingly. Companies who were well positioned to support growing needs had strong product offerings, robust supply chains, and in particular, a history of sustainable procurement practices. As CPG portfolios underwent the ultimate stress test, supplier relationships came to the forefront. “Procurement leaders from Danone, PepsiCo, L’Oreal and more see the practices and tools gained through sustainability work as assets in the battle against pandemic supply chain disruptions” (Supply Chain Dive). Brands who were already partnering closely with their suppliers on sustainability initiatives were able to respond in an agile way, and rise above their competitors with innovative solutions that kept sales going and business running.
According to EcoVadis’ fourth annual edition of its Business Sustainability Risk & Performance Index, “Supply chains were extremely vulnerable leading up to the COVID-19 crisis. Assessments of 35,000 supplier ratings revealed that for every industry, more than a quarter of suppliers have no measures in place to protect employee health and safety and proper working conditions, nor are they monitoring these and other key due diligence indicators of their own suppliers.” Businesses that had not already prioritized sustainability fundamentals found it hard to shift to business continuity plans. Most were left scrambling in the dark suffering ongoing out of stocks, continuous delays, and ultimately consumer disappointment.
The aftermath of COVID revealed clearly that when transparency is enabled by strong sustainability partnerships, and supported by technology, companies can respond to supply chain disruptions, support suppliers better, and expand their sustainability footprints instead of retreating. Sustainability practices leveraged during the pandemic were heavily concentrated on transparency into supplier operations, safer working conditions at the factory level, and an ongoing commitment to sustainable procurement practices.
A closer look at brand resilience through transparency, safety, and sustainability.
The following examples highlight brand responses during COVID that sets them apart from most CPGs and shows a resilience strategy rooted in sustainability fundamentals:
Henkel
Henkel, a leader in adhesive technologies, beauty care and laundry & home care, has a long history of sustainability practices. Although not all product lines were deemed essential in 2020, the laundry and home care division showed strong performance as demand for cleaning products surged. In order to “mitigate potential shortages and delivery delays,” Henkel took “rapid and comprehensive measures to ensure the safety of employees, customers, partners and suppliers” (Henkel). Through their supplier partnership approach, Henkel was also able to shift some of their production facilities to produce much needed disinfectants, further helping critical organizations fight the virus (Henkel). In addition, due to Henkel’s strong infrastructure, they “did not introduce short-time working, apply for government aid or reduce (their) workforce due to the pandemic” (Henkel). Given their work in “driving internal engagement to roll out sustainable procurement programs in key dimensions including coverage (geographic, category, size or other diversity criteria),” Henkel was awarded the Sustainable Procurement: Best Internal Stakeholder Engagement award by EcoVadis in 2020. Henkel plans to continue their bold sustainability efforts and has set a target of 100 percent responsible sourcing by 2025 (EcoVadis).
Clorox
Clorox, maker of bleach, disinfecting wipes, and other cleaning supplies, is an example of a brand that met multiple COVID challenges head-on. First, Clorox products were in super-sonic-demand, with reports showing demand surged 500% for some products – and ultimately sales overall increased by 22% (EHSToday). Clorox also immediately prioritized safety measures at their factories in order to continue producing essential products that were helping to fight the spread of the virus, this included “temperature scanning, cleaning, staggered meals and breaks, social distancing, and masks” (SF Chronicle). Clorox audits of 21,000 suppliers by 2010, allowed for deeper insights into manufacturing practices (Clorox) and helped them to weather the storm. Their ongoing commitment to sustainability was already well established at this point, particularly in their efforts to reduce greenhouse-gas emissions, decrease energy use and a phase-out of harmful substances. It is no surprise that Barron ranked them #9 in their 2020 100 Most Sustainable Companies list. Their ongoing ESG goals include a commitment to 50% reduction in virgin packaging by 2030, 100% recyclable, reusable or compostable packaging by 2025, double plastic PCR in packaging by 2030, and 100% of plants achieving zero-waste-to-landfill by 2025 (Sustainability Consortium).
L’Oreal
L’Oreal, the world’s largest beauty brand, suffered losses at the beginning of the pandemic; however, their primary goal was for business continuity with their existing suppliers. “Keeping those suppliers in business was important not just to maintain operations continuity, but because suppliers play a large part in L’Oreal’s emissions goals. Losing suppliers to the pandemic would mean starting over with new players,” (Supply Chain Dive). L’Oreal’s long term commitment to sustainable procurement meant they would have to invest in their partners during the downturn, regardless of how well the brand was performing in sales. For their most “exposed suppliers,” they shortened lead time for payments for close to 9000 suppliers – putting more cash in the hand to their partners who needed it most (L’Oreal). In addition to this, L’Oreal was able to work closely with their manufacturing partners and began producing alcohol based sanitizer to be distributed within their network (Cosmetic Design). L’Oreal’s track record in sustainability earned them EcoVadis’ Sustainable Procurement: Best Value Chain Engagement award in 2020, which recognizes “excellence in engaging suppliers in sustainable procurement programs, such as training programs, as well as development program plans and efforts to train and reward suppliers for sustainability and CSR performance.”
Future Proofing.
By most accounts, industry volatility will continue well into 2021. As the pandemic continues to rage on around the world, different countries and regions will respond in different ways – leading to more unexpected shutdowns, outbreaks, and quarantines. Supply chains need to take the lessons learned from 2020, and embrace a new approach, rather than wait for a return to pre-pandemic times. Three key areas will be:
Regular scenario planning as a best practice and risk mitigation strategy.
Supply chain teams need to develop a new muscle that rests on their ability to respond quickly to dynamic changes during unprecedented times. The ability to be truly agile will require great supplier management technology and a “war room” mindset. Similar to holiday preparation teams at large retailers, companies will need to create a task-force and “control tower” that manages all potential scenarios and solutions that may arise in 2021 (McKinsey). This includes cross-functional representation, daily/weekly meetings to address critical bottlenecks, and top-down participation to ensure decisions happen quickly. A network and data approach with supply partners will also be key for integration in the planning process so they are well-prepared for any scenario that needs to be implemented immediately. The key for 2021 will be a robust and flexible operation that can handle any crisis that springs up from COVID or potentially a climate event.
Deepening supplier relationships to ensure partners are adequately prepared.
Suppliers are the key to a resilient operation. Brands need to see not just their owned suppliers, but their contracted suppliers as critical extensions of their brand operations. “Sustainable procurement continues to lag. While companies are addressing social and labor impacts within their own operations, they are neglecting the risks that exist among their suppliers – representing a missed opportunity to drive value and create resilience in the next tier of the supply chain” (EcoVadis 2020 Index). During these trying times, it will be important to strengthen relationships, honor contracts and terms, and support safety measures and the factory level whenever possible. In addition to strengthening existing partners, brands must also diversify key suppliers based on potential supply disruptions. Contingency plans will be critical in order to optimize capacity shifts, leverage backups, and offer alternatives if necessary. Developing plans with supplier buy-in is essential.
Transparency into supply chains as a marketing tool to build consumer trust.
Responsible manufacturing will be a new and potent loyalty driver as consumers become more determined to take control of their impact on climate change. “Ninety percent of consumer respondents said they were equally or more concerned about these [environmental] issues after the COVID-19 outbreak, and nearly 95% said they believed their personal actions could help reduce unsustainable waste, tackle climate change, and protect wildlife and biodiversity, with 27% to 30% noting that this belief had strengthened as a result of the crisis,” (BCG). Brands that continue to invest in their sustainability practices will reap the rewards as consumers become more savvy and demand evidence against marketing claims. Companies who have truly incorporated sustainable procurement practices into their product lines will be far ahead of the curve, not only in terms of risk mitigation, but in building consumer confidence.
Sustainability technology and consulting partners are key to long-term success.
As COVID-19 continues to wreak havoc on our world, with unknown disruptions lurking ahead, the imperative for brands is clear – establish and deepen their sustainable business practices. “In some cases, sustainability efforts made supply chains more resilient as pandemic stresses began to mount,” (Supply Chain Dive). Close supplier relationships rooted in a shared commitment to positive social and environmental impact, enabled by technology and agile working methods, is the key to success. “Companies that commit to sustainability during the Covid crisis will come out stronger, with more solid customer and supplier relationships, enhanced corporate reputations, and improved employee loyalty and productivity,” (Bain).
As companies navigate their sustainable procurement agendas, technology and external partners will be key to their success. EcoVadis offers a unique solution to drive supplier engagement through robust scorecard assessments that improve transparency and mitigate risk. GoodOps, a sustainable supply chain consultancy, works with leadership teams to benchmark, prioritize, and implement the right processes and teams to address their most pressing challenges. Together, teams will be well positioned for a resilient future.
Article modified. Previously published on EcoVadis.
The advantages of building sustainability in your supply chain
Increasing awareness worldwide of the impact of climate change and preserving the environment has thrust sustainability to the forefront. More and more companies are now implementing sustainable practices and innovation into their business. In this Buyer Fireside Chat, learn everything you need to know about sustainable sourcing – from the challenges and opportunities to the advantages of building sustainability in your supply chain and what lies ahead.
The panel
Pia Pinkawa
An independent communications and marketing professional and sustainable supply chain expert, Pia works with international organizations and service providers to engage procurement, supply chains and people to strive for and implement a sustainable way of making business.
Pia is part of the steering committee team of the Sustainable Procurement Pledge (SPP), a global initiative and growing procurement community of already more than 5,000 ambassadors.
Aaron Leonard
Sustainability has always been a passion for Aaron, one that he now combines with his years of experience and expertise to drive positive outcomes in corporations’ sustainability journeys. Aaron has more than 20 years of experience in offering innovative, business-changing digital and sustainability solutions to large multinational corporations.
Previously, he was Sales Director and co-founder of the successful startup Simple iD, a leading IT solution and consulting company helping to modernize companies’ collaboration and communication systems across the APAC region and beyond.
Divya Demato
Divya is the CEO and co-founder of GoodOps – a supply chain and sustainability consultancy that partners with high-growth startups and global enterprises to architect, accelerate and scale responsible operations.
Divya is also an advisor to Rethink Food VC and Radiant Ventures, is chairwoman emeritus for Nexus Global, and a mentor for Unreasonable Group. In 2021, she was named one of the Top 100 Women in Supply Chain by Supply Chain Digital.
