20. Improving Social and Environmental Performance in Global Supply Chains

Global supply chains have delivered many benefits for consumers and firms. At the same time, they have become so integral to business that disruptions due to natural or man-made disasters can lead to major shortages in components and final products. Concurrently, social, environmental and ethical problems have arisen and continue to persist, despite government, private sector and nongovernmental efforts to address them. What are effective methods for global firms, or buyers, to gain an understanding of social and environmental problems in supply chains and to address them? We examine strategies using a sense and response framework, and find various approaches within this framework to be associated with improved performance. In particular, research suggests that using a collaborative, proactive approach with suppliers and providing meaningful incentives can be effective. There exists an opportunity to cascade these efforts to second tier suppliers and beyond, where some of the greatest impacts and opportunities to affect change lie.

As discussed in Chap. 1 by Bouchery et al. (Sustainable supply chains: introduction. In: Bouchery Y, Corbett CJ, Fransoo JC (eds) Sustainable supply chains: a research-based textbook on operations and strategy. Springer, Cham, 2023), improving supply chain responsibility is not only seen as a way to mitigate a variety of risks and meet regulations, but also as a means to increase profits, either by saving costs, growing revenues via positive brand image, or doing both. In this chapter, we discuss supply chain practices associated with improved social, environmental, and in several cases, economic performance. We discuss how leading firms are complementing compliance programs, which remain important, with an increased emphasis on building shared value for various actors along the value chain.