The idea that corporate supply chains can be made sustainable is a core part of political and corporate net zero strategies.
For the most part, this is a greenwash.
The term ‘supply chain’ refers to the steps that materials, commodities, and products pass through in their lifecycle. This typically includes the sourcing of materials, production and packaging, and finally storage and distribution.
As a simple example, the supply chain of a loaf of bread might include growing wheat, milling it, baking it, distributing and selling it, and finally eating it.
In practice, in many cases, it is more convoluted than that and rarely linear. The supply chain of a loaf of bread can include chemical production for fertilisers, fertiliser production, seed production, pesticide production, water supply, growing the wheat, collection of salt, production of yeast, production of sugar, baking, and production of packing materials. At every step of the way there are storage, distribution, and logistics components as well as ancillary things such as energy, equipment, and maintenance.
Each step can recursively branch into a hundred others resulting in a fractal-like complexity that belies the neat notion of a “chain”.
And that’s just a loaf of bread.
The supply chains of, say, other processed foods, clothes, cleaning and beauty products, and many household items are similarly or, in many cases more, convoluted. Supply chains of products like phones, laptops, cars, and large machinery like trains, planes, and automobiles can easily be an order of magnitude more complex. What about the supply chains of road and rail infrastructure, energy grids, and construction projects?
In reality a supply chain is more like a mesh of interconnected pipes with each node and junction being part of any number of different supply chains.
***
Nowadays, around 90% of all globally traded goods are transported by sea in containerised shipping. This typically means that they are part of a corporate supply chain because you don’t typically ship small-batch, locally-sourced, non-industrial products in containers. This gives you a finger-in-the-air feel for how ubiquitous corporate supply chains are.
It is therefore understandable that supply chains would be a primary target of sustainability and climate justice activities, like the EU’s Corporate Sustainability Due Diligence Directive (CS3D) or like numerous startups and consultants who focus measuring the impacts of supply chains with a view to reducing the negative outcomes.
At first glance this makes sense: If supply chains are everywhere, making an improvement to them could have a huge impact.
Say for example you devised a way of making a cargo ship be 10% more fuel efficient or invented a way of reducing refrigeration emissions during food transportation. You could reasonably conclude that by making that new technology or process ubiquitous across all relevant supply chains you would engineer a significant slashing of global emissions.
Make those interventions and tweaks in as many nodes as possible in the supply chain and voilà: net zero achievement unlocked.
***
There is just one problem with this: it doesn’t work.
Supply chains can’t be greened much like you can’t make knives safe by blunting them: It’s not physically impossible to blunt a knife, but then its purpose would be lost. Similarly, a genuinely ‘green’ supply chain would lose its value to the corporate owner.
The reason is simply that the value of a supply chain lies in the fact that through separation and distance, resources can be converted into profits at a rate which would not otherwise be possible. They do that by effectively laundering labour and resources along the way, obfuscating their origin as they progress along the chain and hiding their true costs.
That is their purpose.
The transparency required to make supply chains green would very often invalidate the reason for the supply chain’s existence in the first place and making them genuinely sustainable quickly hits a glass ceiling above which corporate executives choose not to go.
Putting all of this aside for one second, even when ‘green’ interventions are actually implemented into the logistical operations of supply chains, what usually happens is nothing more or less than the efficiency paradox which simply results in a higher overall throughput thus negating any localised improvements.
***
So what’s the answer?
For many scenarios it’s localisation and decentralisation.
Take the bread-making example described at the beginning. The complicated bread-making supply chain is not actually required by anyone except the intermediaries who make outsized profits from it.
It is not necessary to cultivate huge monocultural wheat fields in Canada and Ukraine for someone to bake a loaf of bread in Scotland. Most of the people and nodes involved benefit very little from this process: end consumers eat a product with sub-par nutritional value, labourers and workers in supermarkets and logistics firms earn minimum wages often on precarious contracts, and farmers get tied into contractual obligations they can only fulfil with expensive and damaging agricultural practices.
The only winners (in the short term) are the shareholders and senior executives of the supermarkets and industrial farms who are actively dis-incentivised from complying with supply chain transparency and disclosure legislation.
On the other hand, if for a minute you step outside the parameters of what we’ve come to accept as being the “normal way of doing things”, you can easily see how a local and decentralised supply chain is, without the need for regulatory pressure, inherently transparent. If you can literally see or visit your suppliers and producers then transparency is built-in.
A lot of the lack of care consumers, intermediaries, and producers exhibit when things happen far “away” is very likely to evaporate when that “away” comes closer. When everything is closer to home the incentive to waste less, pollute less, and care more is built-in.
For certain products and processes this is relatively easy to imagine. Like bread. For other things, say machinery, medicines, and energy infrastructure, it’s harder to imagine going hyperlocal in the same way.
But decentralisation comes into play here again in a slightly different way to how we normally hear it talked about. What is required is decentralisation through the open-sourcing of knowledge about process and know-how. This once again would provide built-in transparency with all the positive knock-on effects that come from that.
So when we talk about “investing system change” this is the kind of stuff that we increasingly need to see money and effort invested in — projects and ideas that radically rethink how we do things and not just fiddle with the existing system.
***
Photo by Chaz McGregor on Unsplash
Leave a Reply