A value chain refers to the ‘full lifecycle of a product or process, including material sourcing, production, consumption, and disposal processes’[1]. Measuring value chain sustainability can be tricky due to some value chains being long, untraceable, and spanning across multiple geographical locations. However, doing so can lead to many business advantages and protect your business from scrutiny. In this article, we share our advice on how to ensure your value chain is as sustainable as possible.
A good place to start making your value chain more sustainable is understanding your value chain and its remit for becoming more sustainable. Identify the different activities that take place and the different organisations involved. Are there areas where the quality of human rights can be improved? Can more environmentally friendly organisations be used to manufacture certain components of the product?
The next step is to evaluate your suppliers for social and environmental criteria. Screening suppliers will help to amplify your positive impact as a business by creating a ripple effect through your supply chain. The exact screening processes will vary from company to company, but there are a few key elements to bear in mind:
- Make your screening criteria align with your company’s values. Your value chain is a fundamental part of your business, and you can leverage this to build your brand transparency and embed accountability into the business.
- Be transparent with prospective and existing suppliers on what you expect from them. Create externally facing documents to show suppliers which sustainability criteria they should meet and why.
- Make screening continuous. This should not be a one-off exercise, but instead something to continuously monitor and track, to help you manage ongoing risks in your supply chain.
Finally, it is important to work with organisations in your value chain to help them to help you reach your sustainability goals. It can sometimes be costly and impractical to source new, more sustainable suppliers. If this is the case, the next best option could be to engage existing suppliers and invest in helping them meet the sustainability requirements you are setting. Value chain sustainability should not be a one-way signal, it should be an ongoing collaboration. Stakeholder engagement, materiality assessments, and supply chain engagement are all tools you can use to engage your value chain and work together to become more sustainable.
If you would like any help with communicating your sustainability approach to your value chain, please get in touch: Anokhi.Kalayil@Luminous.co.uk
[1} Source: WBCSD (2011) Collaboration, innovation, transformation: Ideas and inspiration to accelerate sustainability growth - A value chain approach, pp.3 and 5.(accessed 19.05.23).