Little known, but a fact: the per person environmental impact of Switzerland’s global supply chains is the highest compared to Europe. Accordingly, there is a lot of untapped potential for improvement in this country. This article summarizes the most important findings and strategies for optimizing value chains for decision-makers in business and politics.
Improving sustainability in supply chains means — as in other disciplines of corporate sustainability — identifying and improving environmental, social and economic impacts. This has an impact on corporate management along the entire value chain of products and services.
Legal requirements in Switzerland in the context of value chains
Switzerland already has several legal standards that make companies responsible for their supply chains. For example, the regulation on due diligence and transparency regarding minerals and metals from conflict areas and child labour. It obliges companies to check their supply chains for human rights and environmental compatibility. Such legal frameworks promote the implementation of sustainable practices throughout the supply and value chain. Foreign laws must also be observed. The German Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz LkSG) and the EU Due Diligence Directive applies to Swiss companies under certain conditions. As part of CO 964 and the Climate Reporting Ordinance, companies can also use TCFD as a guide and report on their supply chain emissions (Scope 3).
At the same time, the public sector implements sustainability criteria in public procurement. It thus creates an incentive for suppliers to implement sustainable practices in the private sector. Because only the fulfilment of these criteria makes it possible to qualify for public tenders.
In this context, the Swiss Federal Office for the Environment FOEN has published an environmental atlas on sustainable supply chains that is well worth reading. Valuable guidance is also provided by the National Research Program NRP 73, which, under the auspices of the Swiss National Science Foundation, provides recommendations for action and best practices for decision-makers from business and politics on sustainable supply chains based on scientific findings on the web free of charge.
NRP 73 develops knowledge for a sustainable, resource-conserving economy in Switzerland that promotes prosperity and strengthens competitiveness.
The NRP 73 white paper recommends an innovative governance approach in the context of supply chains to effectively counteract the high environmental impact of global supply chains in Switzerland. The policy recommendation is a ‘smart mix’ (hybrid governance) of binding legislation and voluntary measures by companies. This concept of hybrid governance makes it possible to combine the strengths of the private sector and regulation by combining a clear legal framework with the innovation potential and flexibility of companies.
The use of such models can help Swiss companies not only to make their global supply chains more responsible, but also to strengthen their resilience by proactively adapting to changing environmental standards and even driving them forward.
What is a sustainable supply chain?
Sustainable supply chains integrate principles of environmental compatibility, social responsibility and economic viability into every step of the supply chain. From raw material extraction to product delivery, each stage should contribute to long-term value creation. This is both in terms of corporate value and in terms of social and ecological value.
Digitization processes play a decisive role in this process of optimizing supply chains. Through the targeted use of technologies such as IoT or blockchain, companies can significantly increase transparency and efficiency in their supply chains.
Strategies & best practices for optimizing the supply chain
Optimizing the supply chain and sustainable supply chain management are twins. Various strategies are available to Swiss companies wishing to make their value chains more sustainable. These include:
- Integration of sustainability criteria in procurement processes
- Development and implementation of due diligence approaches
- Use of sustainable logistics concepts and systems
NRP73 has implemented three projects as part of its focus on sustainable supply chains:
The findings from the three studies offer entrepreneurs and politicians alike valuable guidance when implementing sustainable strategies. All three projects and the lessons learned from them are outlined below as a brief summary:
Project 1: New approach to energy and material cycles
The aim was to contribute to a more profound understanding of the impact of private household consumption and supply chains in Switzerland. In addition to existing reports, the project has produced a reproducible result of a precise analysis of supply chains and environmental impacts. This covers both the Swiss supply chain and global supply chains.
At the same time, an approach was developed that combines a bottom-up and bottom-down approach to the energy and material cycle in a database. This is supplemented by other factors such as social impacts, critical resources and supply chain disruptions.
Project 2: Sustainability criteria for public procurement
An interdisciplinary research team has examined existing sustainable procurement practices and developed a specific set of sustainability criteria for public tenders in Switzerland. These criteria were then checked for compliance with Swiss law.
Despite the growing emphasis on sustainability in public tenders under national law, there is currently no standardized framework for measuring and comparing sustainability in this area. This research project aimed to fill this existing gap.
Project 3: Evaluation of value chains in the cocoa industry
In this project, methods for assessing the sustainability and resilience of cocoa supply chains were developed and applied. The aim was to identify opportunities for improvement within a transdisciplinary framework. The research objective was also to strengthen the sustainability and resilience of the global value chains on which the Swiss market depends.
The focus was on identifying the specific challenges in these supply chains, analysing relationships between stakeholders and developing a framework for assessing resilience at company level.
Advantages of sustainable supply chains
The implementation of sustainable supply chains can initially be associated with higher costs. For example, procurement costs for more environmentally friendly materials or labour abroad that is not only paid in line with the market. As simple as these examples sound: Their implementation often presents management with complex challenges. In the long term, however, the advantages outweigh the disadvantages.
Integrating sustainable practices into supply chains brings numerous significant benefits for companies. These are both economic and ecological in nature:
- Increasing efficiency and reducing costs: Sustainable supply chains are often more efficient. Because they aim to minimize waste and optimize the use of resources. This leads to a reduction in costs. For example, through lower energy consumption, more efficient logistics processes and the reuse of materials.
- Increasing competitiveness: Companies that promote sustainable supply chains increase their competitiveness. Optimized processes lead to increased efficiency and thus the ability to compete in the market.
- Risk management and compliance: With sustainable supply chains, organizations can respond better to regulatory requirements. Risks in connection with environmental and social standards can be minimized.
- Reputation gain and customer loyalty: Sustainable supply chain management improves a company’s image. It strengthens the trust of stakeholders. More and more customers love brands that live sustainability.
- Reduction of environmental impact: By implementing sustainable methods in the supply chain, companies can significantly reduce their environmental footprint. This is conducive to CSRD reporting. The most common successes include minimizing waste, reducing greenhouse gas emissions and conserving natural resources.
- Long-term stability and future security: Companies that maintain sustainable supply chains are usually better prepared for future challenges such as raw material shortages, climate change and social change.
- Partnerships: Many Swiss companies are increasingly relying on partnerships to achieve sustainability goals. They work together with NGOs, government authorities and other stakeholders. This enables them to implement more effective and comprehensive sustainability practices in their supply chains.
- Industry-specific initiatives and programs: Industry-specific initiatives and programs also promote sustainability in supply chains: For example, the Swiss food industry is actively working to reduce food waste and promote sustainable agricultural practices.
For companies and organizations, the first step towards establishing a sustainable value chain is a comprehensive analysis of the existing supply chain. The decisive factor here is the definition of clear sustainability targets and criteria. These differ depending on the location and market environment (competitors). However, they should always be based on national and international standards and comply with mandatory legal requirements.
The integration of a sustainable value chain into the corporate strategy is essential. Consistent implementation, training, transparent communication and cooperation with suppliers are crucial to success. Monitoring and regular reviews guarantee that the measures are effective.
Sustainable supply chains: Conclusion
Switzerland sets important standards with its legislation and initiatives such as NRP 73. It promotes the integration of sustainability principles in supply chains. The collaboration between businesses, government agencies and NGOs demonstrates the transdisciplinary approach required to implement effective sustainability practices.
As the NRP 73 white paper summarizes, Swiss policy should introduce hybrid governance approaches for a sustainable economy to address environmental impacts along the supply chain. Decision-makers will find detailed information and recommendations for action in the white paper available for download.
