Squaring the supply-chain sustainability circle can’t be half-hearted

We are all finding it difficult to ignore our slowly growing consciousness of food miles, along with the overall environmental impact of the transport of different products from the point of manufacture to consumption. Energy and resource-intensive products are falling out of favour with consumers and increasingly environmentally conscious corporate customers.

Sustainability can often be mistakenly conflated with the singular issue of greenhouse-gas emission, explains Prof Heletjé van Staden, assistant professor of management in the supply-chain management area at UCD College of Business.

“While this is not the case, it is one of the many pressing sustainability issues currently being faced by industry,” she says. Future goals in terms of emissions are clear, van Staden asserts: “Industries need to start including minimising emissions in their optimisation objectives, as opposed to solely minimising costs and meeting customer-service target levels.”

But for a company’s supply chain to be sustainable, a few tweaks here and there won’t cut it, van Staden says. “Such an approach requires forward thinking and proper change management to get all stakeholders on board, with a whole-system approach including circular business models, design for the environment and the right to repair, etc.”

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Several steps can be taken by companies to improve the sustainability of their supply chains – “without greenwashing”, she adds.

“In terms of freight emissions, this can mean collaborating with supply-chain partners to bundle shipments, ensuring they use only full container load trucks and other transport,” she says, noting that in 2020, an incredible 20 per cent of all trucks on the road in the EU were empty – indeed, very few are ever filled to capacity. “Such collaboration immediately translates into saving emissions, since road is well known to be far more carbon intensive than other common transportation modes, such as water and rail.”

Research also shows that strategies such as synchromodal transport – the efficient use of different transport flows and logistics – can significantly reduce transport emissions while still allowing companies to meet reliability targets, van Staden says. “Such approaches can contribute to companies’ sustainability agendas.”

Many companies have made changes in packaging, eliminating plastic and shrinking the size of external packaging to reduce materials

—  Lorcan Sheehan

Lorcan Sheehan, chair of the Ibec Supply Chain Network and CEO of PerformanSC Supply Chain Ltd says that most Irish companies are aware of the need to address sustainability within their supply chains and many already have adopted ESG (environmental, social and governance) frameworks to guide their efforts. But while it may have gathered significant momentum in recent years, sustainability within supply chains is not a new concept.

“It has been a consideration since the early 1990s but good supply-chain practices have always looked to eliminate waste and improve design,” Sheehan says. “On a tactical level, many companies have made changes in packaging, eliminating plastic and shrinking the size of external packaging to reduce materials and create increased density through transportation. Companies are also reviewing their product portfolios, with many considering a reduced range or using techniques such as postponement to create customer choice in a more sustainable and cost-effective manner.”

At a more strategic level, Sheehan notes an increased regional focus within global supply chains – creating shorter, more local supply chains.

A bigger change, however, is a move towards circular supply chains. “We cannot continue to rely on a linear supply chain where materials are extracted from nature, used and thrown away at the end of their lives,” Sheehan says. “In a circular supply chain products are designed with a view to extending their life and to recovering products and materials at the end of life as inputs into replacement products. This will create new challenges in how companies approach supply chains, but it also presents opportunities in the recovery of materials and new business models where products may be rented rather than sold in certain industries.”

But as the pressure builds, the coming years we will see more legal requirements to address sustainability, Sheehan adds. Whether through sectoral targets, sustainable financial reporting disclosures, a common taxonomy on what is considered sustainable, climate action legislation, packaging legislation, producer responsibility schemes or requirements to enable circularity and corporate sustainability reporting, the requirements will change based on company size and scope.

Yet by their very nature, supply-chain teams are “extremely resourceful” in meeting complex challenges, Sheehan notes.

We hold ourselves accountable to deliver against an ambitious set of targets aimed at driving continuous improvements

—  Clive Wilson

“While there will be changes that will drive additional costs, there remains a large suite of actions that address waste, that support the migration to sustainable energy, that extend product life, that recover materials from waste, that can all reduce costs, he says. “Sustainability metrics now need to be part of decisions in designing and improving supply chains.”

How do Coca Cola HBC do it?

Coca-Cola HBC is the bottling partner to The Coca-Cola Company and a member of the Coca-Cola System, responsible for the manufacture, distribution, sale and channel marketing of its beverage portfolio across 29 markets including the island of Ireland. In 2022, the Dow Jones Sustainability Index ranked Coca Cola HBC as the world’s most sustainable beverage provider.

Clive Wilson, supply-chain director with Coca-Cola HBC Ireland and Northern Ireland, says sustainability is integrated into “every aspect of our business”. The company has a holistic sustainability strategy underpinned by an ambition to achieve net zero emissions by 2040, he says. “We hold ourselves accountable to deliver against an ambitious set of targets aimed at driving continuous improvements.”

In 2022 Coca Cola HBC established a specific carbon-reduction roadmap for its local operation in Northern Ireland. “This focuses on achieving ‘Big Bet’ decarbonisation initiatives across our value chain by 2030 and includes initiatives such as decarbonising our direct operations further by switching to 100 per cent renewable energy, accelerating our journey to a more circular, lower-carbon packaging approach, efficiency improvements to our cold drink equipment such as our in-store coolers, and the acceleration of our green fleet programme,” explains Wilson.

“This, alongside our work in partnership with our suppliers to eliminate the 90 per cent of our carbon footprint that results from third parties, is helping us develop a low-carbon transition plan, supported by long-term investment.”

All bottles and cans sold by Coca-Cola HBC are 100 per cent recyclable and the company has begun a journey to integrate more recycled materials into its packaging.

“More than 50 per cent of our plastic portfolio now consists of recycled PET – this, along with our introduction of more sustainable cardboard solutions and reducing the weight of our packaging, has eliminated almost 5,000 tonnes of virgin PET from the supply chain annually,” Wilson says. “Together with our suppliers and partners, we are working to design more sustainable packaging and take action to ensure that our packaging doesn’t end up as waste.”