The business case for building sustainability into your operations
- Posted on November 24, 2023
- Estimated reading time 5 minutes
Sustainability has become a political hot button, from accusations of greenwashing to those who see any movement as an overreaction to the climate hoax. With the impact on the brand being uncertain and limited resources in a volatile macroeconomic environment is there any benefit to pursuing sustainability efforts as an organization?
Yes. There are several, and most have everything to do with business performance and not as much to do with brand and reputation. According to Gartner, 80% of business leaders reported that their sustainability programs help to reduce their organization’s costs i , and Forrester reports that 86% of business leaders see sustainability as an investment that protects their organizations from disruption ii. Sustainability is stepping into its own as a driver of value for organizations looking to create a long-term future for themselves.
Sustainability as a business driver
In this third decade of the 21st century, we have seen how easily supply chains can be disrupted at a small scale or globally. Even a small interruption anywhere in the supply chain can cause delays in product launches, resupplies, deliveries and have a negative impact on revenue and reputation.
Being able to weather a storm’s effect on your supply chain requires resilience, and here is where sustainability becomes an important business driver. While resilient supply chains are not more sustainable by default, sustainable supply chains are more resilient. We’ll come back to this idea soon.
There is another imperative driving the need to build sustainability into your organization and supply chain—the finite resources on the planet we all share. SSE Renewables, the world’s leading off-shore wind producer is a great example of bringing sustainable solutions across multiple areas of the business. They took a comprehensive view of the environmental impact of their wind farms looking at species monitoring, operational efficiencies, and circularity with wind turbine parts. We must remain within the planetary limits of consumption of materials and energy. This applies not just to CO2 emissions, but to pollution, land use, water consumption, biodiversity, ocean acidification, and so on. Getting creative around how we use and re-use resources will ensure our ability to participate in a global economy sustainably.
Rethinking the supply chain
We are accustomed to thinking about the supply chain as getting supplies into the hands of consumers and B2B partners as quickly and efficiently as possible. When it comes to sustainable and resilient supply chains, we need to broaden our focus and look at the entire system across a longer time. Sustainable supply chains must grow beyond the individual and consider society as a whole and ultimately the planet with its finite resources. This often includes a change in behavior by everyone involved in the supply chain.
Our colleague Francesca Tassistro shares some thoughts on how this change can be accomplished in her article on “Designing Beyond Today: Collaborative Perspectives for a Sustainable Tomorrow”. There she explores design methods such as systemic design (which thinks holistically), behavioral design (which works interdisciplinary with behavioral scientists), and speculative design (which thinks about possible scenarios in the future and, above all, can uncover undesirable side effects.) Francesca arrives at a concept called “life-centered design” that looks beyond the perspective of the individual person or company and beyond the needs of today.
Using these methods and this idea to rethink the supply chain, we quickly come to the potential of circular economies to provide both sustainability and resilience in a more “life-centered” approach. If you are a manufacturer selling durable goods with parts that can be reused and recycled, consider the options for building a customer relationship that encompasses both product and service across and beyond an item’s lifecycle.
In a recent circular economy feasibility analysis for an energy utility client, we found that using refurbished spare parts for machinery instead of new ones generates 24% lower fleet emissions, 50% lower cost on transport and shorter lead times. Leveraging advanced data analytics capabilities, we can digitally model and simulate such circular supply chains before actually implementing them. Examples like these demonstrate how the circular economy provides predictability, control, better customer service and, ultimately, is a more sustainable approach. It also underlines our earlier claim that sustainable supply chains are more resilient as we see fewer dependencies on virgin material availability and transportation in a refurbished spare parts value chain.
Knowledge is (green) power
Delivering on the promise of a more resilient and sustainable supply chain requires a digital foundation. The power of data and AI, as delivered through Microsoft Azure and the Power Platform, can help model different scenarios so you can see the impact of potential changes before you make them. A helpful first step is working with a platform like Avanade Cloud Impact, which offers visibility into how you are using your cloud, where you are spending money, and how you might gain energy and emissions efficiencies and take advantage of the cloud’s extra processing power for something like generative AI. which offers visibility into how you are using your cloud, where you are spending money, and how you might gain efficiencies and take advantage of the cloud’s extra processing power for something like generative AI.
Once you understand what you can do, you can start modeling and experimenting to identify areas of greatest priority or impact. Collaborating with supply chain partners on this phase can spark new ideas and accelerate change. Digital twin technology allows you to try various scenarios to look at outcomes and side effects in the context of your unique business ecosystem.
Even though your ecosystem is unique—and an important part of a more sustainable economy—you are a single element of the supply chain and of any eventual solution. Everyone needs to work together to take advantage of this opportunity to attain a measurable business advantage while pursuing an essential sustainability agenda. This is a real opportunity for early adopters to do well while also doing good.
Sustainability is undeniably emerging as a pivotal driver of value for organizations, playing an imperative role in reducing costs, rethinking supply chains and building adaptiveness for organizations against disruption.
Explore our Digital Sustainability page to learn how we can accelerate your Environmental, Social and Governance (ESG) goals, while building climate resiliency into your operations.
i Gartner Executive Leadership Primer for Sustainability Tech
ii Forrester State of IT Environmental Sustainability 2023