Alongside ensuring profitability, the value chain across industries must transform as the need to leave enough for posterity has become an existential imperative
Consumer opinions have always centered primarily on a product's quality, price, and branding. But when the drawbacks of the "here and now" become clear, today's consumers are more concerned with more than just receiving their money's worth. Now more than ever, brands' ethical positioning and that of their whole value chain are the subject of much debate.
Surging stakeholder activism has put businesses across sectors at a crossroads today. What should manufacturing and delivering value look like in the future? Alongside ensuring profitability, the value chain across industries must transform as the need to leave enough for posterity has become an existential imperative. Environmental stewardship, community interests, and company practices that put a priority on sustainable product sourcing, manufacture, distribution, and disposal must be taken into account.
Need to adhere to sustainability standards across the value chain
Given the variety of immediate challenges that unrestrained consumption poses to the survival of humanity, the demand is not unfounded. For instance, in a world battling overwhelming climatic odds, the value chain constitutes a mammoth proportion of a business’ carbon footprint. Value chains are made up of various dynamic, interrelated components, many of which transcend institutional boundaries. Companies that are keen to transition from linear to circular economic models can thus make limited progress on their own. However, institutions that invest in cross-industry alliances and embrace a more comprehensive perspective on operations, can deliver more tangible impact.
From a manufacturer’s perspective, ideally, the value addition initiates way before raw material reaches the plant. It hence becomes essential for a business to take strong cognizance of whether its suppliers are adhering to the sustainability standards it follows. Also, developing a local supplier base can significantly shrink the emission profile of inbound logistics, promote economic development in the region, and help build a balanced supply chain. Risk mitigation is another benefit that arises from ensuring adherence to a corporate’s ESG practices. Here it is not only environmental congruence, but also that of abiding by human rights and fair labour practices.
Within the production environment, the proven Japanese concept of Kaizen or continuous change can be adopted to trace and address opportunities, making the value chain incrementally sustainable. Such areas are diverse, ranging from using renewable energy, investing in intelligent tech for precision manufacturing and reduced process waste, attaining water positivity, designing low carbon packaging, and much more. In fact, the scope is only limited by the innovation potential of a business. Arguably, besides being sustainable, a greener value chain is also financially remunerative for an organization.
It is imperative to have a responsible end-of-life for products
However, for an organization that is genuinely committed to the ideals of green value chains, accountability does not end with the products leaving its warehouses. To secure a responsible end-of-life for their products, companies are under increased pressure today—and for good reason! There are several technologies available to limit the growth of waste volumes, including waste-to-energy, plasma arc recycling, and pyrolysis among others. Partners further down the value chain take on equal importance at that point. Corporate entities need to make sure that any waste that is recycled or reused can be tracked, that it is used for the same purposes for which it was sold to recyclers, that segregation is done correctly, operations are at par with international standards, and so on.
The debate on whether companies should pivot to green value chains is likely to continue into the days ahead. However, in the context of a future where critical resources are depleting fast and climate inaction is an existential threat, a Reduce, Reuse, Recycle approach that forms the foundation of an eco-friendly value chain is in the strategic interest of everyone
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.
The author is Global ESG Head with Sterlite Technologies Limited
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