Why organisations need to find a balance between resilience and sustainability

There are growing downside risks when there is a continual imbalance between resilience and sustainability.

Sabu Mathai, research director at Gartner Supply Chain said delayed progress on sustainability can leave organisations unprepared for environmental risks.

“Today, fast-moving changes in both environmental regulations and the environment itself, for example, extreme weather, natural resource degradation, create increasing operational and strategic exposure for the supply chain and the entire enterprise,” he said.

A Gartner survey of 336 supply chain leaders in March 2023 showed that 52 percent of leaders cited competitive differentiation as their biggest motivation to increase supply chain sustainability over the coming three years.

Mathai said organisations can better position themselves for an emerging low-carbon economy by taking advantage of sustainability opportunities.

“If they don’t reach for opportunity, others might get there first. Nearly 60 percent of leaders responding to our survey said a failure to balance sustainability and resilience could result in lost market share to present-day or future competitors,” he said.

To stop deferring sustainability initiatives, Mathai recommended that organisations make sustainability compulsory, not a “nice to have”.

“Building in sustainability starts with a recognition of the growing connection between sustainability and resilience, but it goes further,” he said.

“For instance, build-in companies take a whole-of-enterprise approach to explore the business case for sustainability. They see sustainability’s high costs in the context of the rising costs of inaction, and they lower the net costs of sustainability by finding new ways of doing business.”

Mathai said companies that “build-in” sustainability are 3.7 times less likely than “bolt-on” companies to deprioritise sustainability for resilience even though they face nearly equal rates of disruption.

Four key changes

Chief supply chain officers (CSCO) that build in sustainability within their organisations have four key differentiating factors, Mathai explained.

“First, they build sustainability into supply chain capabilities and network changes, envisioning a long-term supply chain transformation that takes both sustainability and resilience as core design principles,” he said.

Second, Mathai said they integrate sustainability into jobs and business processes.

“Opening bandwidth for sustainability by prioritising critical objectives and recovering misallocated resources,” he said.

Thirdly, Mathai said CSCOs ease the costs and first-mover disadvantages of sustainability through ecosystem partnerships, sharing sustainability’s benefits and burdens with competitors and value-chain partners.

“And finally, they frame sustainability’s high costs together with the rising cost of inaction and delayed progress, and they make sustainability a key driver in their risk management processes," he said. 

Mathai explained that supply chain sustainability isn’t something CSCOs can achieve on their own – it requires an enterprise approach.

“However, less than a third of supply chain leaders report that their internal business partners appreciate the connection between sustainability and either risk management or business performance,” he said.

“This means CSCOs will need to start by making sustainability’s risks and opportunities much more apparent for other senior leaders.”