Outlook of Sustainability Policy and Regulations on Supply Chains

November 29, 2022

Sustainability is in the headline news weekly, if not daily. It’s now a strategic issue.

Ignore it at your peril.

This post is the final one in a series on regulatory influence over sustainable supply chains. It is a forecast or future outlook of sustainability regulation on supply chains.

International and national trends and priorities will make sustainability a matter of priority.

We’ll unpack the trends and how they affect you. We’ll look at risks, including costs and benefits. We’ll also address how to achieve solutions that give you a competitive advantage. As always, we want to provide you with a path ahead that avoids risks while looking for opportunities.

Let’s get started.

The emergence of sustainability as a strategic asset

Since the 1970s, sustainability issues have risen in importance. The increase in government regulation, non-governmental regulation, and market-based regulation reflects that.

Government and the private sector are both engaged in reducing their environmental impacts. That includes their supply chains. That raises the question of how sustainability will develop over the long term.

In assessing the outlook of sustainability, we’ll inspect how regulations can affect supply chains. Specifically, we’ll look at the following:

  • government-private industry cooperation,
  • the rise and utility of technology, and
  • the emergent role of innovation.

With that, let’s start with the emerging trend regarding government-industry interests.

Moving towards greater balance between competing interests

Moving into the future, it’s clear sustainability regulation is on the rise. All you have to do is look at the latest CIA World Factbook, 2020-2023. This is a source prepared by the CIA for its use and the government’s. It serves as a baseline of intelligence for making national security decisions.

In the 2021 issue of the Factbook, the CIA added environmental issues to its assessments. Environmental issues in the Factbook include Current Issues; International agreements; Air pollution; Climate; Land use; and Urbanization, to name a few.

The government’s interest in sustainability has grown and will continue to grow. The same is true for the private sector. Exxon is spending between $15 billion in the next five years. Exxon set aside this outlay of cash for specific programs.

Chevron, too, is dedicating vast sums, over $10 billion, to reduce carbon emissions. These are only two companies addressing sustainability. Many others are following suit and embracing the transition to sustainable operations.

Maersk also has an admirable sustainability program that focuses on “sustainability performance”. It has clear decarbonization goals making it a sustainability leader among ocean carriers. Case in point: it has aligned the company with the European Climate Foundation 2050 Net Zero carbon emission. And Maersk is on track to meet that goal.

As stakeholders embrace sustainability, cooperation between the public and private sectors should improve. That will likely stem from increased collaboration and coordination between government and industry.

In the years ahead, the inherent conflict of interest should diminish. Agreement on goals will help to cement agreement and foster cooperation. Economic opportunities will also encourage improved relations between regulators and industry.

Technology enables and drives sustainable supply chains

A key driver of increased cooperation between regulators and private industry is technology.

Stakeholders agree resources are scarce and becoming scarcer. They also understand the need to reduce their pollution footprint. Global competition is yet another stimulus advancing sustainability as a strategic issue.

As leading firms adopt “green” initiatives, they may set industry standards that exceed governmental standards. That would positively affect the environment and profitability. Additionally, some green initiatives can help reduce risk—a major issue in a world of increasing risks.

In 2022, we find ourselves relying increasingly on technology to deliver solutions. Technologies available to make operations more sustainable are as follows.

  • Big Data
  • Artificial Intelligence/Machine Learning
  • Internet of Things (IoT)
  • Additive Manufacturing (3D printing)
  • End-to-End Visibility
  • Automated and Electric Vehicles
  • Drones and Robotics

That’s the picture in 2022. The future will likely offer more sophisticated technological solutions. These solutions will likely make operations leaner, more effective, and more efficient.

This may sound like Nirvana, and to a degree, it is. All the existing technologies businesses leverage today are in various stages of development/implementation. The future will see greater technological solutions enabling sustainable operations.

Innovation enables and drives sustainable supply chains

Like technology, innovation factors hugely in fostering sustainable supply chains. Innovation will likely increase out of sheer necessity. Government regulation, global competition, increasing supply chain risks, and opportunities will demand innovative solutions.

Chief among these will be the shift from regulations’ reliance on costs to benefits. Again, the tug-of-war between sustainability and economic goals will diminish. Technology and innovation will make opportunities and outlook of sustainability detectable. The shift in thinking will move from inherent conflict to mutual benefit. That change alone will propel the drive toward sustainable supply chains.

Corporations’ future depends on innovation for profitability and market advantage. These are positive drivers emphasizing the carrot over the stick. Thus, a new and positive approach will take hold. Once this happens, stakeholders can integrate sustainability into supply chain planning and execution. Along with increased cooperation among stakeholders, the future of sustainability looks bright.

The value of marketing sustainability issues

Marketing opportunities will also arise to appeal to customers. Stakeholders, especially customers, want to see corporations act more responsibly towards the environment. Non-governmental and market-based programs will factor heavily here to advance goodwill.

Conclusion of the outlook on sustainability

Sustainable supply chains are the wave of the future. Sustainability and supply chain management will work together seamlessly.

Sustainability regulation is here to stay, and it's growing. Businesses can influence the pace and nature of regulation by being strategic and proactive.

The path ahead is not set in stone. That means you can influence it. To do that, you must approach sustainability strategically and proactively. Governments and industry are moving from inherent conflict to mutual benefit. Regulations will balance costs with benefits. These approaches to regulation indicate the future of sustainability is on the rise.

At American Global Logistics, we focus vigorously on daily operations. We approach future operations with dedication and effort. Once we identify a potential trend, we explore it in-depth for risks and opportunities.

We go beyond ordinary standards. We seek extraordinary solutions to give you a competitive edge. We look at how we can convert challenges into opportunities.

If you want different results, you must do something different. Partner with AGL to get different results. We’ll help you improve your profits and performance.

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