All of a sudden, green is white-hot. Consumers are stepping up to environmental responsibility, governments are legislating green practices, and more and more companies are discovering a business case for sustainability. This really shouldn’t come as a surprise: An organization’s sustainability strategy naturally becomes more important as populations grow, resource costs increase, stakeholder demands multiply, and regulations become more stringent. Take the European Union, for example, where extension of emissions trading to airlines is being considered, and where the Waste Electrical and Electronic Equipment (WEEE) Directive sets specific collection, recycling, and recovery parameters. Looking more globally, G8 leaders are considering mandatory emissions reductions of up to 50 percent by mid-century.

But increasingly, sustainable business practices—anchored by sustainable supply chains—are coming to the forefront because they make good business sense. Although supply chain leaders are frontline players in the sustainability game, they often struggle with a role that’s difficult to define or enact. For one thing, sustainability policies begin at the very top of an organization, with senior executives who believe that long-term economic and brand value are consistent with strategies that positively impact the environment and the community. How supply chain leaders proceed is directly related to the philosophies and policies emerging from the C-suite.

Still, it’s clear that supply chain management is key to interpreting, enacting, and optimizing sustainability initiatives. Right now—that is, without waiting for the boardroom to get on board—supply chain execs can be studying the sustainability forces acting on the organization, analyzing the potential effects of these forces, understanding the implied supply chain trade-offs, and beginning to formulate high-level response strategies.

It also may help to think about sustainability challenges and rejoinders in three supply chain contexts. As shown in the figure below, the first of these is sustainable product design and manufacturing—the role of supply chain management in developing environmentally conscious products, processes, and services. Action items in this category could include:

• performing product life cycle assessments to understand and, subsequently, minimize the potential environmental impact of a product or service throughout its life;
• spearheading the development of new “green products and services,” reshuffling current markets, and creating completely new markets;
• thinking “hemispherically,” which entails exploring new options for near-shore sourcing and manufacturing to reduce the company’s carbon footprint; and
• identifying and collaborating with high-risk sourcing/manufacturing partners to overcome anti-green practices that could produce problems down the road.

The second context is sustainable physical asset management, which involves extending green operations through greater adherence to power usage, water consumption, waste output, cooling and heating requirements, and lighting issues. A cornerstone of sustainable physical asset management is reassessing the composition, structure, and mission of the supply chain network. With greater weight placed on sustainability issues, including new “green markets,” such a study could reveal new ways to minimize or eliminate energy-intensive storage and manufacturing operations, reduce travel times, and increase truckload utilization.

The final component is sustainable end of product life—supply chain initiatives relating to product reuse in secondary markets, recycling, reuse of raw materials, and waste disposal. A particular large issue in this realm is packaging: seeking ways to reduce package content and increase the use of enviro-friendly (e.g., biodegradable) packaging materials.

Take plastic bottles and tamper-proof packaging. The growing backlash against the negative environmental impact of these items is certain to intensify. Another example is reverse logistics. Sophisticated return/repair operations are usually those that excel logistically. Superior parts and service forecasting enables organizations to stock repair centers and move product and materials with greater efficiency, thus minimizing waste and pollution.

After decades in a supporting role, sustainability has finally made it to the business world’s center stage. Critical mass has been reached: Enough consumers and governments have “signed on” to the point that corporations have little choice but to respond in a major way.

Fortunately, there is significant opportunity amidst the obligation, where sustainability in supply chain can lead to a win-win situation that benefits both the environment and the organization. Sustainability can become an engine for shareholder and brand value if it:

• aligns with business imperatives, such as growing new business, optimizing assets, and protecting long-term business value;
• creates value via emissions reduction, materials safety, waste reduction, land sustainability, water-use optimization, energy reduction, and social value; and
• is underpinned by rigorous strategic analysis, program management, and performance measurement.

Supply chain leadership and innovation will be needed to meet each of these conditions. Chances are good, in fact, that the environment and high performance will depend on it.