What, really, is the state of sustainability and our supply chains?

April 28, 2022
Green hypocrisy exists.

Google Cloud recently released a global study that explores the challenges and opportunities of business leaders around sustainability. It revealed that supply chain and logistics executives are struggling to measure their sustainability efforts, with only 10% capturing the impact of programs that have been put in place (compared to 19% global average) and only 12% acting on measurement findings to make their program stronger (compared to 17% global average). 

However, a majority of industry execs (51%) indicate their companies are making an effort to offset carbon footprint (compared to 45% global average) and 49% conduct research into business partners to actively support green vendors (compared to 44% globally).

We wanted to dive deeper, so we connected with Hans Thalbauer, managing director, global supply chain, logistics & transportation with Google Cloud, to learn more. Take a look… 

Smart Industry: What is your role / involvement with this project? 

Hans: Google Cloud conducted a survey in collaboration with The Harris Poll of 1,491 executives across 16 markets . All respondents worked at the C-Suite or VP level and work in one of the following industries: financial services; retail/CPG; healthcare and life sciences; manufacturing and heavy industry; technology, telecommunication, media, entertainment, gaming; and supply chain and logistics.  

Perspectives of executives in supply chain and logistics were of particular interest, as the industry has been among the most affected by COVID and pressured to remake itself. We wanted to see to what degree executives are prioritizing sustainability and are taking real measures of impact. 

With the majority of industry executives saying their organization is in the planning or early implementation phase of sustainability programs, it’s time to get started. We want to work with supply chain and logistics companies to overcome the hurdles holding their sustainability programs back and help drive powerful business transformations. 

Smart Industry: What finding in the study most surprised you about supply chain logistics? 

Hans: I’ll start with what the survey revealed that I didn’t find too surprising: a large majority of supply chain and logistics executives are struggling to measure their sustainability efforts.  

What I was surprised to find was that executives agree that green hypocrisy exists and their organizations have overstated their sustainability efforts, with the second highest admission at 65% (compared to 58% globally).  

What I was pleased to see is that a majority of industry execs (51%) say their companies are making an effort to offset carbon footprint (compared to 45% global average) and 49% conduct research into business partners to actively support green vendors (compared to 44% globally).

Smart Industry: Would you expect findings in a study like this to change drastically in a year? Five years? How have these perceptions changed since pre-pandemic? 

Hans: I believe these findings have the potential to change drastically moving forward, as many industries are undergoing dramatic changes due to not only the health crisis, but the climate crisis, the energy crisis, labor shortages and geopolitical challenges. 

These challenges have impacted and will continue to impact the way global trade operates. As global supply chains are stressed, companies are increasingly incentivized to move away from global outsourcing and build more regional and local supply chains. This shift to a post-outsourcing world will help businesses reduce risk by limiting global dependencies and reduce their carbon footprint by shortening transportation cycles. The shift to regional supply chains is, in part, made possible by advancements in technology and automation that improve efficiencies in manufacturing, lowering cost to compete with globally outsourced production. 

As a result, we are at the precipice of a significant shift that will reorganize supply chains and impact how companies address sustainability. I believe the shift will in many ways bolster sustainability efforts. 

Smart Industry: What is most commonly hindering the success of supply chain programs? What's the solution? 

Hans: A common hindrance to the success of supply chain sustainability programs is the lack of measurement. Despite having sustainability programs in place, supply chain and logistics executives struggle to benchmark their efforts. Only 10% of industry respondents said that their organizations have measurement tools in place to quantify their sustainability efforts, and just 12% are using those measurements to optimize based on results. And 79% of industry leaders agreed that they want to advance sustainability efforts, but don’t know how to actually do it (compared to 65% global average). Without a way to track impact, executives can’t accurately measure progress, maintain accountability, and drive optimizations.  

To overcome this challenge, companies are turning to technology solutions—cloud, AI/ ML, satellite imagery, data analytics—to simplify their ability to act on sustainability. 99% of industry respondents agree that technology makes it possible for their organization to be more sustainable. Technology can help executives gain clarity and transparency about the impact of their sustainability initiatives on the environment and their business. 

Want more from Hans? Check out his recent Smart Industry webinar focusing on supply chain opportunities here.