4.1 Introduction to Sustainable Supply Chains

Patagonia, a renowned outdoor clothing company, serves as a compelling example of a business that has successfully integrated sustainability into its supply chain. Patagonia’s Supply Chain Environmental Responsibility Program is designed to measure, reduce, and eliminate the environmental impacts of manufacturing its products and materials. The program is implemented at supplier facilities worldwide and covers a broad range of impact areas, including environmental management systems, chemicals, water use, water emissions, energy use, greenhouse gases, other air emissions, and waste.

Patagonia’s mission statement, as displayed prominently on its website, is clear: “We’re in business to save our home planet.” This mission is reflected in their efforts to make their supply chain carbon-neutral by 2025. This involves working with recycled cotton, polyester, and down, among other materials, and pushing suppliers to adopt more sustainable practices. Patagonia’s CEO, Rose Marcario, emphasizes that “we are not going to have virgin supply chains forever because we are running out of resources,” highlighting the need for innovation in sustainable practices.

Before diving deeper, it’s crucial to understand what we mean by ‘sustainability.’ Sustainability is defined as meeting the needs of the present without compromising the ability of future generations to meet their own needs. In the context of supply chains, this means creating systems that are not only efficient but also minimize environmental impact and are socially responsible. This holistic approach ensures that we are not depleting resources or causing harm that will affect future generations. It aligns well with the existing concept of a sustainable supply chain, which aims to minimize environmental impact while also improving social and economic conditions.

The importance of sustainable supply chains has grown in recent years for several reasons. Firstly, consumers are becoming more environmentally conscious and prefer to buy from companies that demonstrate a commitment to sustainability. Secondly, sustainable practices can lead to cost savings in the long run, for example, through reduced energy consumption or waste disposal costs. Lastly, companies may face regulatory pressures to reduce their environmental impact.

4.1.1: Key Components of a Sustainable Supply Chain

Sustainable supply chains are characterized by several key components:

Sustainable Sourcing: This involves obtaining materials and services in a way that respects environmental, social, and governance factors. For example, a company might choose to source materials that are renewable or that have a lower carbon footprint.

Green Manufacturing: This refers to the process of producing goods in a way that minimizes environmental impact. This could involve reducing energy consumption, minimizing waste, or using safer processes and materials.

Eco-friendly Packaging: Sustainable supply chains often use packaging that is recyclable, reusable, or made from renewable resources.

Energy-Efficient Logistics: This involves optimizing transportation and distribution to minimize energy consumption and reduce carbon emissions.

End-of-Life Management: This refers to how products are disposed of or recycled at the end of their life cycle. A sustainable supply chain will have processes in place to ensure products are disposed of in an environmentally friendly way.

Social Responsibility: Besides environmental considerations, a sustainable supply chain also takes into account social factors, such as fair labor practices and community involvement.

By implementing sustainable supply chain practices, businesses like Patagonia can not only reduce their environmental impact but also improve their brand image, achieve cost savings, and meet regulatory requirements. As we move forward in this chapter, we will delve deeper into each of these components, providing a comprehensive understanding of sustainable supply chains.

4.1.2: Greenwashing in Sustainable Supply Chains

While the importance of sustainable supply chains is increasingly recognized, there is still a significant amount of resistance among businesses to fully implement sustainable practices. This resistance can stem from several factors. Firstly, transitioning to sustainable practices often involves upfront costs and investments, which can be a deterrent for businesses focused on short-term profits. Secondly, there may be a lack of knowledge or understanding about sustainable practices and how to implement them effectively. Lastly, in some cases, businesses may face challenges in aligning their sustainability goals with their existing business models or operational processes.

In the face of these challenges, some companies resort to pseudo-sustainable processes, a practice known as greenwashing. Greenwashing is the process of companies putting more financial efforts into the marketing of looking green, rather than actually being green. This then makes it simply an unsupported claim. The demand for products and services to be environmentally responsible is rapidly growing. Companies want to cash in on this demand, and not all companies have great morals. More demand for sustainable products often helps companies to charge more for their products. However, some companies just claim they help the environment when they do not actually take sustainable actions – this leads to customers being overcharged. Not only this, it also seriously damages the reputations of companies who are genuine in their environmental responsibilities as customers find it difficult to know which claims are genuine or which companies to trust.

Here are a few examples of greenwashing:

• IKEA: The company is the largest consumer of wood in the world. An investigation found that IKEA has been making beechwood chairs using illegally sourced wood from the forests of Ukraine’s Carpathian region, an area home to endangered species such as bears, lynxes, wolves, and bison. The illegal timber was certified by the Forest Stewardship Council (FSC), raising serious questions about the ethics and transparency of the FSC accreditation.
• Unilever: Unilever’s cleaning brand Persil was scrutinized by the UK’s advertising watchdog. In an advert, they claimed Persil was “kinder to our planet”, and featured children picking up litter on a beach. The Advertising Standards Authority (ASA) said the advert’s claim was unsubstantiated. Unilever had to change its recyclable claims and the packaging of the Persil products.
• HSBC: HSBC ranks 13th for the top banks financing fossil fuels in the UK. And still finances carbon-heavy industries like thermal coal mining. This year, the UK advertising watchdog banned a series of misleading adverts and said any future campaigns must disclose the bank’s contribution to the climate crisis. The ruling by the Advertising Standards Authority (ASA) followed dozens of complaints over posters that highlighted how the bank had invested $1tn in climate-friendly initiatives such as tree-planting and helping clients hit climate targets, but failed to acknowledge HSBC’s own contribution to emissions.
• Volkswagen: In September 2015, the Environmental Protection Agency (EPA) found that many VW cars being sold in America had a “defeat device” – or software – in diesel engines that could detect when they were being tested, changing the performance accordingly to improve results. The German car giant has since admitted cheating emissions tests in the US. This was going on while to the public the company was touting the low-emissions and eco-friendly features of its vehicles in marketing campaigns. In actuality, these engines were emitting up to 40 times the allowed limit for nitrogen oxide pollutants.

• Major U.S. company faces backlash after allegedly lying to its customers: ‘They cannot be believed’

These examples illustrate the deceptive practices that some companies resort to in order to appear more sustainable than they actually are. It is crucial for consumers and businesses alike to be aware of greenwashing and to demand transparency and accountability in sustainable practices.