Sustainability was important to organizations and sourcing teams before the global COVID-19 pandemic, and it has now become an even bigger imperative with most companies committing to ambitious 5 to 10 year goals. With consumers, governments and other stakeholders demanding that companies pay more attention to the size of their carbon footprints, the burden has fallen onto sourcing teams to meet those demands and help achieve these sustainability goals. <h3><b>Big Goals, Bigger Challenges</b></h3> In their new “Sustainable Procurement Barometer 2021”report, the Stanford Graduate School of Business and EcoVadis say that as a result of the pandemic, companies now realize that their sustainability practices contributed to the “resilience of their value chains” and helped them endure the COVID-19 crisis. This has increased the emphasis on sustainability. “Their focus is shifting more and more toward issues related to the environment, labor and human rights and diversity,” according to the report. “However, while supply chain objectives may be clear, achieving them remains a significant challenge for many companies.” A study of more than 210 buying organizations and nearly 400 supplier organizations revealed that 81 percent have increased their commitment to sustainable procurement in the last year and that just 13 percent list "executive support" as a challenge to implementing such policies, according to New York University Stern Center for Sustainable Business. <h3><b>Sustainability More Important than Low Cost</b></h3> Delivering on corporate sustainability goals has become a key focus for executive teams, with 63% saying it is now “very important” for them, compared with 25% two years ago, according to the survey. At the same time, reducing costs is now of lesser importance, with 36% of respondents to a Stanford survey saying this is critically important (versus 56% in 2019). Recently, companies have been linking executive compensation with the achievement of sustainability targets, incentivizing sourcing teams to find cleaner and greener solutions. The somewhat unexpected payoff for companies has been greater supply chain stability. Being more sustainable has caused the focus to begin shifting from a "price first" strategy that sometimes caused brands and manufacturers to take short cuts, opt for cheaper but lower quality raw materials and overlook some of the practices of their lower tier suppliers. Often it takes a crisis to show us the cracks in the chain. Too often, it's too late. When the pandemic hit everyone was thrown off guard. The ones who best survived were those who had invested in a better supply chain, rather than a cheaper one. From good vendor relationships to more stable factories and better adoption of new technologies, those brands and factories that had adopted more sustainable, compliant and socially responsible practices all along, fared better when faced with a crisis. <h3><b>Where the Risks Still Remain</b></h3> Sustainable procurement has grown exponentially in strategic importance, according to Stanford and EcoVadis. “Across regions and industries, leaders have increasingly come to recognize that the adoption of sustainable procurement practices yields a tangible competitive advantage,” they write, “enabling organizations to more effectively mitigate risk and build resilient supply chains.” On the other hand, Harvard Business Review points out that many companies are pledging to source the materials and services they need from companies committed to fair labor practices and environmental protections. But the reality is that they frequently place orders that exceed suppliers’ capacity or impose unrealistic deadlines, leading supplier factories to demand heavy overtime from their workers. When faced with pushing workers to do overtime or missing a deadline, factories are left with little choice. “We didn’t want to tell our customer that we can’t produce its products on time, because otherwise it’s going to try to find someone else that can. But our customer didn’t give us enough notice to hire enough skilled people to do the job,” said one supplier. <h3><b>Watch Out for Weak Links</b></h3> This not only is a sustainability issue, but weakens the supply chain since unrealistic deadlines can result in delays, even with workers putting in excessive overtime. Often large brands don’t even know who their lower-tier suppliers are, let alone where they’re located or what capabilities they have (or don’t have). Brands have the least control over those suppliers who potentially are the highest risk. “Lower-tier suppliers are unquestionably the riskiest members of a supply network. If they have poor or dubious sustainability performance, then a brand that does business with them can endanger its reputation and suffer profound repercussions - losing customers, being forced to find new suppliers, or having its supply chain disrupted. To reduce such risks, brands need to include both first-tier and lower-tier suppliers in their sustainability programs,” according to Harvard Business Review. <h3><b>Linking Accountability</b></h3> One way some leading brands are managing this risk is by delegating elements of lower-tier-supplier sustainability management to their first-tier suppliers. This approach requires brands to be hands on - offering training to suppliers and providing some incentives for implementing sustainability practices. According to the Harvard research, such training had led them to make substantial changes in their manufacturing processes and to begin asking their suppliers to adopt similar sustainability standards. Ultimately, the expansion of sustainable sourcing practices seems set to continue to integrate sustainability into sourcing strategies to mitigate risk and navigate crises. “Having endured the once-in-a-generation stress test of the COVID-19 crises, sustainable companies will be better prepared for the looming climate crisis,” according to Stanford.