Markets Will Reward Brands That Are De-Risking Their Supply Chains

While the volatility of economic change around us can be distracting, one thing remains clear: A new generation of expectations is shifting business for good.

Sponsored Content | / This article is sponsored by Worldly | By Del Hudson | Published 1 year ago | About a 3 minute read

Image: Sam Lion

There has been a rapid recent shift from Scope 3 emissions measurement and management as a “nice-to-have” to a requirement for doing business responsibly. If your brand intends to lead in the markets of tomorrow, you must understand your supply chain and be reducing impacts now. It is no longer tenable to not know the environmental and social implications across the production lifecycle. With disclosure regulations at play across the globe, ESG reporting is increasingly being legally mandated. Examples include the EU’s recently adopted Corporate Sustainability Reporting Directive, the global International Sustainability Standards Board; and the SEC’s proposed ESG disclosure mandate in the US.

Government regulators are playing a key role in shaping how we address climate change; however, influential businesses have a chance to ensure these requirements speak to the metrics that make a true impact. Policy is a catalytic vehicle for change. As a business community, we should be embracing it as a means to address the existential threat of the climate crisis — to not do so would be irresponsible and dangerous. Recognizing the tension in the system among trade organizations, policymakers and corporations doesn’t mean it can’t be done right. For businesses and brands, creating incentives around impact reduction that tie clearly to company goals is a key opportunity for transformative action.

It’s no secret that multiple industries have reaped the rewards of a broken economic model that relies on extractive and exploitative practices that continue to harm people and the planet. Consumer goods is one of those industries; and responsible leaders recognize it is time for a new system — one that transforms design and consumption and imagines a new way of doing profitable business. Over two-thirds of US consumers are willing to pay more for sustainable products. Globally, that number is just over a third — though that number rises to 39 percent for Gen Z and 42 percent for millennials. Capital markets will reward those that are de-risking their supply chains; and employees want to work where purpose and responsibility matters.

The argument that without perfect data we can’t do this work ignores the reality that science is always evolving. We must move forward with urgency, using the significant directional data that already exist and show where the key issues and intervention opportunities lie. Taking accountability for the full product lifecycle and impacts up and down the value chain is the only way to achieve meaningful ESG performance. It’s not about marketing single environmental or social attributes of a product. It’s not just reducing impact in owned operations while ignoring the manufacturing impact or material inputs of the end product. It’s believing that tomorrow’s customers will want (and deserve) something different than they get today.

This is hard, complex work; it won’t be completed in my lifetime. But we must move rapidly to accurately understand impact and take action with urgency. And we must be ready to learn and change as we know more. The tools to begin this work already exist. Smart businesses already see their futures. And while the volatility of economic change around us can be distracting, one thing remains clear: A new generation of expectations is shifting business for good.