Businesses face five sustainability risks to supply chains, according to new report

on Monday, December 13, 2010

Businesses face five sustainability risks to supply chains, according to new reportProper supply chain management is an essential part of any business plan and, according to a new report commissioned by Ernst & Young, there are a few key criteria that companies can focus on that could cut sustainability risks as they move to eliminate waste from their supply chains.

According to the report, the five greatest climate change risks that businesses face are in their strategic, compliance, financial, reputational and operational endeavors. Strategically, companies should see the link between cutting back on waste and reduced costs, while in compliance practices, businesses may need to track data on energy use and make that information available for audits.

In regards to financial issues, businesses may need to take into account the varying price of carbon in different jurisdictions and new due diligence requirements for acquisitions. A company's reputation can also be affected as they contract suppliers and must ensure that those companies are complying with emissions, waste and safety guidelines. Lastly, the report affirms that operationally, companies should focus on reducing waste in manufacturing and logistics in their suppliers' operations.

Ernst & Young's climate change and sustainability supply chain leader, Eric Olsen, asserted that as companies increasingly contract other firms to supply them with goods, they must ensure that those firms meet their sustainability goals as well and try to "improve the environmental impact of their products and services."

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