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As businesses worldwide face mounting pressure to adopt sustainable practices, the supply chain has emerged as a critical area for embedding Environmental, Social and Governance (ESG) principles. A green supply chain minimizes environmental impact while fostering social responsibility, enabling companies to reduce emissions, enhance resource efficiency and ensure ethical sourcing.
This approach mitigates risks associated with climate change and resource depletion and bolsters a business’s reputation. It attracts eco-conscious consumers and meets the growing expectations of investors and regulators.
According to a 2023 report, over 70% of supply chain professionals view sustainability as essential to their operations, underscoring its strategic importance. The World Economic Forum further indicates that effective supply chain management is critical for achieving broader ESG objectives, as it enhances brand reputation and customer loyalty. In today’s business landscape, building a green supply chain is a strategic step toward long-term growth and resilience.
Challenges in building a global green supply chain
Building a global green supply chain presents multifaceted challenges, particularly in achieving visibility and transparency across supply chain functions. According to EY, many organizations struggle with fragmented digital adoption, as 22% of supply chain leaders rely on basic tools like emails and spreadsheets, while only 42% have begun adopting cloud-based platforms.
This lack of integration hinders real-time data sharing, which is crucial for tracking environmental impact and aligning with sustainability goals. Additionally, transitioning to decarbonization and net-zero targets is complicated by economic constraints, with businesses often facing competing ethical and economic objectives.
Securing investments in green technologies can be challenging, as these initiatives require significant upfront costs that may disrupt existing value chain goals like cost reduction and efficiency. Furthermore, the lack of uniform standards across international markets exacerbates the complexity of compliance, especially for multinational corporations managing diverse sourcing strategies and varied environmental regulations.
Related: How Businesses Can Empower Consumers to Make Sustainable Choices
How to implement sustainable practices across the supply chain
A truly green supply chain relies on technology to drive sustainable practices from sourcing to delivery. Walmart exemplifies this with its advanced digital capabilities that align operational efficiency with environmental responsibility.
By employing AI-driven forecasting, Walmart minimizes overstocking, reducing energy usage and waste in its supply chain. The company’s blockchain technology tracks the origin, freshness and environmental impact of its food products, fostering transparency and sustainability across its supplier network.
Walmart has also tested electric trucks and refrigerated trailers to cut emissions, demonstrating how innovative logistics contribute to achieving its net-zero emissions goal by 2040. These efforts illustrate how technology enables businesses like Walmart to meet sustainability targets while maintaining a competitive edge.
Similarly, my company, ATRenew, a major electronics recycling and transaction platform in China, focuses on reducing its carbon footprint by using intelligent systems and digital management for streamlined recycling and green warehousing. It also fosters a sustainable supply chain with both upstream and downstream partners.
This approach enables us to reduce material consumption while optimizing waste management processes, proving that operational efficiency and environmental responsibility can go hand in hand. These examples underscore how businesses can reduce the ecological impact of their supply chains using cutting-edge technology.
Related: Overcoming Greenwashing in Today’s Supply Chains
Tracking emissions and waste in the supply chain
To advance green supply chain practices, businesses increasingly leverage technology to track emissions, energy usage and waste.
DHL, for instance, uses its GoGreen Dashboard, a sophisticated data platform designed to measure carbon emissions across logistics activities, including warehousing, packaging and transportation. The dashboard uses advanced analytics to identify carbon-intensive areas, enabling DHL to optimize delivery routes, switch to energy-efficient vehicles and propose actionable strategies to reduce emissions.
This tool enhances internal sustainability efforts and provides partners with transparent sustainability metrics, fostering shared accountability. By adopting data-driven strategies, businesses can more accurately monitor their environmental performance and take immediate corrective actions to meet sustainability benchmarks.
Circular economy and waste minimization
Technology is a key enabler for businesses adopting circular economy principles, facilitating waste reduction and material reuse through innovative systems. Digital tools, such as IoT sensors and AI-driven platforms, allow companies to monitor resource usage, identify waste hotspots and streamline recycling processes. Automation in areas like sorting and quality inspection ensures efficient material recovery, while blockchain technology enhances traceability, ensuring recycled or repurposed materials meet quality and ethical standards. For instance, businesses in the recycling sector increasingly use advanced algorithms to align recycling standards with changing market needs, improving resource recovery rates.
Related: Sustainability In the Supply Chain Is the Need Of the Hour
Conclusion
The journey toward a green supply chain is both a challenge and an opportunity. By incorporating cutting-edge technology into operations, supervision and waste management, businesses can address environmental concerns while achieving cost efficiencies and competitive advantages.
Integrating ESG principles into supply chains empowers businesses to align profit with purpose, whether through AI-driven forecasting, IoT-enabled monitoring or digital recycling systems. As consumer and regulatory demands for sustainability grow, businesses that invest in green supply chains will not only thrive in the market but also contribute to building a more sustainable future.
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