Executive Summary
Key Insights: The Path to 2021
Last year, when the impact of the Covid-19 pandemic was still escalating, we expected the crisis to dampen companies’ enthusiasm for investing in supply chain sustainability (SCS). Enterprises would surely divert all their attention to combating the pandemic. Remarkably, the survey results suggest that Covid-19 did not significantly slow the push to make supply chains more sustainable. More than 80% of survey respondents in this year’s report claimed the crisis had no impact or increased their firm’s commitments to SCS. Executives were undeterred by the crisis; 83% of the executives interviewed said that Covid-19 has either accelerated SCS activity or, at the very least, increased awareness and brought urgency to this growing field.
A caveat to the steady progress in SCS between 2019 and 2020 is that the momentum appears to come primarily from large (1,000–10,000 employees) and very large (10,000+ employees) companies. Small- and medium-sized companies were more likely to pull back, with more enterprises in this category indicating they were not engaged before the pandemic and even less so during the crisis likely due to strained financial resources.
Still, the number and range of stakeholders that are compelling companies to pursue SCS has not diminished. A finding in line with last year’s report is that the pressure to support sustainability in supply chains is coming from multiple sources, both internal and external. Between 2019 and 2020, pressure from investors, government, and international bodies grew the most of all sources.
Internally, company executives emerged as critical SCS champions. Executives were the most significant source of pressure behind corporate commitments to supply chain sustainability across all issue areas. Given executives’ central role in setting and steering strategies for growth, this finding suggests that the drive toward supply chain sustainability is not a fad but rather a business trend to watch.
Companies’ overall commitment to social and environmental issues were similar between 2019 and 2020. However, interest in some areas such as human rights protection, worker welfare and safety, and energy savings and renewable energy, increased significantly. The growing interest in social and labor issues is a continuation of a trend we saw in the first report. In 2020, this finding is likely due to, in large part, the reprioritization of corporate goals during the pandemic.
This year’s report sheds light on how companies put their SCS promises into practice. Of the many ways to accomplish this, three common approaches emerged, including supplier development, supply chain visibility, and environmental impact reduction. Supplier development was the most common across all industries; however, visibility proved equally attractive in manufacturing and transportation.
As the supply chain sustainability field advances, so does this report, and this year we introduce a classification of companies based on behaviors related to SCS. The model, called the SCS Firm Typology, yields fresh insights into the state of sustainability in supply chains. Categories of firms range from low-effort enterprises with little engagement in SCS to highly committed leaders. This typology distills the report’s analyses into an interpretable model and enables future exploration of the evolution of SCS across multiple dimensions.
An indication of the typology tool’s potential is this year’s analysis of supply chain professionals’ engagement in SCS activities—a critical determinant of what companies can accomplish in this area. The level of engagement shown by practitioners (from operating as a decision maker to having no engagement at all) was aligned with the commitment shown by different categories of firms. For example, professionals in firms that we identified as “Leaders” exhibited the highest level of engagement.
By MIT Center for Transportation & Logistics Council of Supply Chain Management Professionals
Download the full report here.
