Why Supply Chain Harmony is Essential to Sustainability

Collaboration has always been a crucial part of sustainability, whether between entire nations or individual people. 

Good working relationships are especially important across global supply chains, where companies have to work in harmony if they are to make inroads on reducing their Scope 3 emissions.

This is far from simple, though, and the challenges organisations face are impossible to overcome alone. Solving problems like climate change and labour transparency demand unity.

By working together, businesses, NGOs and governmental bodies can merge their knowledge and assets to achieve more widespread transformation than any organisation could accomplish independently – establishing a pathway to genuine, measurable progress.

Research by Deloitte revealed that 94% of businesses view supply chain sustainability as a strategic advantage - therefore, in an age where authorities increasingly require proof of sustainable practices, collaborative approaches enable CSCOs and CSOs to remain in front of changing regulations.

Central and Eastern European businesses appear to be leading the way, with 71% of organisations actively tackling supply chain sustainability and 77% meeting growing customer demands by modifying operations accordingly.

At the same time, Deloitte's WorldClimate strategy aims for two-thirds of suppliers to establish science-based emission reduction targets, motivated by the fact that purchased goods and services represent more than two-thirds of their emissions.

The commercial urgency for supply chain sustainability has reached unprecedented levels, although recent developments in the US may be starting to challenge this for that region. Nevertheless, no sector is being excluded – fintechs included.

The key to sustainable partnerships in the private sector

Salah Said, Head of Sustainability at Klarna has witnessed the revolutionary impact of partnerships and innovation in sustainability. With over a decade of experience, he stresses the importance of transforming business from the inside.

"I've been in sustainability for a little more than 12 years now," Salah explains. "Before that, I worked in a lot of non-profits, social innovation, social businesses and entrepreneurship - I felt it was always so hard to get corporates to do more."

"I realised there was a need to change things from within, so sustainability was a great opportunity for me to go and do a little bit of entrepreneurship and help companies do better."

He also highlights developments such as utilising AI to speed up ESG reporting and assist consumers in making more sustainable decisions – an area Klarna actively investigates.

"I think a lot of companies have embraced collaborations with non-profits and social businesses," he continues "seeing them as an opportunity to drive innovation within the business and not only as a vehicle to support more social and environmental impact outside of the business."

"Obviously sustainability isn't prioritised by every business in the world, otherwise we wouldn't be here. So that collaboration, I think, is really, really exciting."

Klarna embeds sustainability thoroughly within its operations, applying an internal carbon tax to promote reductions and championing sustainable shopping by showcasing retail partners with circular and resale alternatives.

It serves as an excellent example of how sustainability partnerships can reshape supply chains – demonstrating that responsibility need not conflict with business growth and innovation.

How data can drive sustainability

Building on this progress, Sophia Mendelsohn, Chief Sustainability and Commercial Officer at SAP, clarifies that SAP's ambition to achieve net zero by 2030 is intrinsically connected to stakeholder expectations: "Really good sustainability goals are always based on what your stakeholders want to see from the business.

"In our case, we know customers, investors and our communities are looking to SAP to explain and reduce their carbon emissions," she adds.

This demands a human-focused approach, Sophia adds: "The main challenges in reducing carbon emissions are not necessarily the emissions themselves – it is the people. They're the change management around the emissions reduction that has to line up with your business incentives and needs."

This is further strengthened by integrating environmental responsibility, human rights and AI ethics throughout SAP's operations and supply chain.

"Fundamentally, sustainability is a data play that supports and enhances generative AI," she says. "We all know AI is only as good as the data it can ingest and no dataset is good and complete without considering sustainability attributes. That's because every business, every product, every service depends on natural resource inputs and a stable climate."

To put these commitments into action, SAP monitors sustainability, emissions and AI through three pillars: "The first is reducing emissions at the root cause. That's the energy that the data centre runs off and the size and fit of the large language model being used.

"We have a wonderful customer, Chobani," Sophia adds. "They make ethically sourced and produced yoghurt – and they've used SAP business AI to reduce their time spent on expenses by 75%. Every time I hear them say that, I think that's 75% of their time back to their core sustainability mission."

Ultimately, she underscores the significance of leadership alignment: "The CSO, the Chief Sustainability Officer, should be up first and foremost for the application of AI for their needs and goals."

Standardisation in measuring environmental impact

Inter-industry transformation is an increasingly favoured strategy, spanning finance sectors like the one Klarna functions within, SAP's software domain and now beauty as well - among the world's most rapidly expanding industries.

While partnerships within the cosmetics sector typically manifest as marketing collaborations, EcoBeautyScore is spearheading a different approach.

The EcoBeautyScore Association has introduced the first worldwide, science-based environmental scoring framework designed specifically for beauty and personal care products.

This framework tackles a vital requirement for a standardised, transparent method to measure and convey environmental impact throughout the industry.

Jean-Baptiste Massignon, Managing Director of the EcoBeautyScore Association, explains that while "sustainability has become a major focus in the beauty industry," the lack of a "standardised, science-based system for measuring and communicating environmental impact remains a key challenge".

The existing environment is filled with numerous eco-labels and statements that are frequently inconsistent or incomparable, generating confusion for consumers and creating opportunities for greenwashing.

EcoBeautyScore seeks to address this by offering "a harmonised, transparent and science-backed methodology" for evaluating the environmental footprint of beauty products. Jean-Baptiste emphasises the system is "designed to be inclusive, encouraging participation from across the industry to drive collective improvement."

Partnerships with over 70 prominent cosmetics brands and associations, including L'Oréal, Beiersdorf, Henkel and Kenvue, are essential to EcoBeautyScore's strategy - establishing "a credible foundation for both brands and consumers," which promotes transparency and unified action in sustainability.

As regulatory frameworks grow increasingly intricate, it's not simply that businesses desire to collaborate with each other, indeed many are direct rivals, but that they genuinely must.

Sophia describes how SAP's sustainability tools help reduce these challenges: "The number one thing customers are using SAP sustainability solutions for right now is to remove that friction of regulatory compliance and reporting."

She notes that businesses aim to be "rewarded for their investments in sustainability" by providing "fair and transparent information to their own customers, employees and shareholders." To enable this, SAP's solutions "semi-automate the regulatory reporting process," alleviating the data collection, generation and aggregation that typically absorb substantial time and resources behind every sustainability report.

The competitive dimension of corporate sustainability is not overlooked by Salah: "Collaboration is key and I feel sustainability is a pretty competitive space for a lot of companies, especially in a time where sustainability and ESG become commodities."

How supply chain management could shape the future of sustainability

Despite this, Salah views this as a promising aspect of the field, observing that "companies can come and work together and drive change more meaningfully" through partnership. Anticipating the future, he foresees major changes in corporate sustainability.

"Policies are increasing and expectations from stakeholders, especially investors, are increasing," he explains. "But at the same time, a lot of companies embrace the opportunity within sustainability."

He highlights that when businesses, like Klarna, acknowledge "there is a lot of business value within ESG and embrace it", they discover new opportunities for developing value propositions that connect with customers.

Jean-Baptiste contributes the viewpoint of a successful collaborative sustainability initiative. "One key lesson is that collaboration across competitors is possible, and powerful, when driven by a shared goal," he explains.

The EcoBeautyScore's success is largely attributable to the openness and engagement of its members across the beauty industry.

Sophia concludes with a practical perspective that reinforces the applied value of incorporating sustainability across business functions: "What we see here in hundreds, if not thousands of conversations is that sustainability remains a fundamental attribute of how our customers want to run their operations."

Her primary recommendation restates a simple but essential step: "The number one thing you can do is ask how sustainability fits into the business processes that you run every day."

It is evident, therefore, that the future of sustainability rests not only in innovative technologies and frameworks but also in collective commitment, transparent communication and the determination to integrate sustainability into everyday business operations.