Once upon a time, sustainable business practices were solely the domain of companies’ CSR policies. But today’s modern economy calls for a shift in thinking and some of the world’s biggest brands — such as Asda and Unilever — are embedding sustainability deeper into the DNA of their business. How are they doing this? By not only collaborating with other companies to share knowledge and solve issues around best practice, but also by fostering better communication across their supply base.
Martin Chilcott, Founder and CEO of online supply chain collaboration platform 2degrees, is working with the companies leading the way in this arena. He encourages others to embrace supply chain collaboration to share knowledge and cut costs, and emphasises that businesses have the power to create competitive advantage out of the sustainability challenges we face.
“We find between 60% and 80% of the challenges that any one supplier faces have already been resolved by another company. 2degrees is about unlocking knowledge which is otherwise shut away; applying a sort of professional crowdsourcing, knowledge-sharing philosophy,” says Martin.
“There is an alignment becoming apparent between doing good where your markets and suppliers are, and being a good business and getting good results”. – Martin Chilcott
He also points out that knowledge is sometimes shared across industries that may not otherwise cross paths. For example, beer brewers may seek knowledge on reducing costs and energy in the heating and cooling of liquids, the processes of which have already been cracked by the chemicals industry.
The focus of 2degrees is to foster the sharing of knowledge to enable businesses to operate more effectively and efficiently, to not only impact the bottom line, but also to work toward more sustainable practices. And Martin makes a good case for why other companies should follow suit.
“As our population hurtles towards nine billion people and our middle class grows, the rate of consumption of Earth’s resources is going through the roof,” stresses Martin. “That causes huge amounts of problems and often, because of the way we structure our businesses, we are not masters of the challenges that face us; they’re not in our direct control, they are part of a shared challenge spread across the supply base.”
Many businesses, from the fashion to the resource industry, are in a vulnerable situation because of their structure, the demands on natural resources and the way goods and services are outsourced or produced offshore, explains Martin. “The only way they can deal with it is by working closely with their suppliers and getting them to work with each other to sort out their common problems. A good example is companies like Mars and Nestlé, which are working together in Africa to try to support and build resilience among smallholder cocoa farmers. And every other agricultural commodity is faced with similar pressures.”
Considering the challenges, the 2degrees founder says it’s imperative that large businesses collaborate. When a company has thousands of suppliers and huge numbers of people affected, Martin stresses the ineffectiveness of simply sending in a consultant or joining an industry roundtable.
“You’ve really got to engage at an operational level if you’re going to make a difference. It’s logical to use different platforms to do that — whether it’s 2degrees or something else. There’s a fabulous mobile platform called WeFarm. It works with smallholders, mainly in Africa, and uses text messaging to link up knowledge across a supply base to solve problems.”
One of the biggest changes that Martin has noticed in recent years is that it’s the large companies driving change harder and faster than governments; it’s something he noticed influencing the formation of the Sustainable Development Goals and also in the lead up to the 2015 Paris Climate talks.
“It’s getting to a point where companies can see that they are facing existential threats to their businesses if these issues are not addressed. For example, those in the cocoa and tea industries,” explains Martin. “Companies like Mars, Nestlé, Coke and Pepsi are beginning to ask questions like, how much profit should we be making in order to be sustainable over a long period of time? There’s an interesting debate about short-term versus long-term profits.
“It’s not that this is not about shareholder value, but companies are starting to take a longer-term perspective on how to have sustainable shareholder value by having sustainable markets and secure supply chains.
“There is an alignment becoming apparent between doing good where your markets and suppliers are, and being a good business and getting
good results.”
As such, companies are beginning to embed their sustainable practices deeper into their businesses. Martin praises this ‘revolution’, noting that businesses have moved from simply developing strategies and policies around sustainability to actually operationalising them.
“These concepts are becoming major strategic drivers for large organisations,” he says. “Unilever achieved zero waste to landfill in all of its factories around the globe last year. We are really beginning to see companies making real progress like this.”
Ultimately, for Martin the message to businesses is clear: “You cannot survive and thrive as a medium-to-large sized company in the modern economy if you do not collaborate. You need to get to grips with new tools, technologies and ways of working. If you do that, then you can use collaboration to not only cut costs and risks, and drive innovation across your business and your supply base, but also, you can actually turn the sustainability challenges we face today into a competitive advantage.”
