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Progress and Problems on the Way to Sustainable Supply Chains

Insights from the 2024 UN Global Compact Network UK Annual Summit

Creating sustainable supply chains is now a key priority for businesses worldwide, but while progress is being made, significant challenges remain — particularly when it comes to bridging the gap between large corporations and their smaller suppliers. As businesses increasingly commit to environmental and social goals, many SMEs are struggling to keep up with the growing demands for sustainability data. This imbalance raises critical questions about how well the current system is working and whether it is truly advancing progress toward the UN Sustainable Development Goals (SDGs) by 2030.

Context: Slow progress on the SDGs amid rising ESG reporting expectations

The 2024 UN report on progress towards the Sustainable Development Goals (SDGs) paints a concerning picture. Despite global efforts, only 17% of the 169 targets across the 17 goals are on track. Disturbingly, a third of the targets, particularly SDG 2 (Zero Hunger) and SDG 14 (Life Below Water), have stalled or even regressed. In contrast, SDG 7 (Affordable and Clean Energy), SDG 12 (Responsible Consumption and Production), and SDG 17 (Partnerships for the Goals) have shown the most significant progress, particularly in areas like multilateral trade and corporate sustainability practices.

World events, including rising conflicts, climate disasters, economic volatility, and the lingering effects of COVID-19, have exacerbated the situation, pushing an additional 23 million people into poverty. There are now 37 million refugees and 120 million displaced individuals globally. As the UN report underscores, “Sustainable development is not possible without peace,” further highlighting the complexity of achieving the SDGs.

These challenges emphasize the urgent need to accelerate progress and address the funding shortfall for sustainable development. A key part of the solution lies in creating supply chains that are inclusive, sustainable, and equitable—where small businesses are empowered, workers are fairly treated, and gender equality is prioritized.

Panel Diascussion at the 2024 UN Global Compact Network UK Annual Summit

At the same time, the rise of ESG-related regulations and expectations is contributing to increased demand for sustainability data from companies of all sizes. New frameworks such as the European Corporate Sustainability Reporting Directive (CSRD) and the forthcoming UK Sustainability Disclosure Standards are driving this shift, further intensifying the pressure for comprehensive non-financial reporting across supply chains.

How can businesses strengthen relationships with suppliers to ensure mutual sustainability amid growing disruption?

Supply chains, already weakened by the pandemic, remain highly vulnerable due to an increasing number of global disruptions — ranging from geopolitical conflicts and climate change to natural disasters. In this environment, businesses of all sizes are under mounting pressure to not only stabilize their supply chains but also to meet the rising demands for sustainability data from regulators, customers, and other stakeholders.

While collaboration across the supply chain is often emphasized as a solution, it raises a critical question: How can larger companies provide meaningful support to their smaller suppliers, many of whom face significant resource limitations?

Large businesses must move beyond good intentions and focus on practical strategies that ease the sustainability burden on their smaller partners. Doing so would ensure that the entire supply chain is more resilient and aligned with broader environmental and social goals. Building stronger relationships between big companies and SMEs is key to achieving mutual sustainability, but it requires shared understanding, transparent communication, and a commitment to providing the tools and resources needed by smaller enterprises.

Organizing team — 2024 UN Global Compact Network UK Annual Summit

Organizing team — 2024 UN Global Compact Network UK Annual Summit

Examples of large corporations supporting sustainable supply chains Unilever, a global leader in sustainability, works with 54,000 suppliers worldwide through its “Partners with Purpose” program, which focuses on innovation, sustainability, and impact. Suppliers are chosen based on shared values centered around environmental protection and climate action.

Unilever has invested £350 million to support its supply chain, particularly to integrate smaller suppliers and smallholder farmers, with 40,000 new smallholder farmers added to its procurement network. The company has also made the protection and restoration of nature a priority, collaborating with partners like WWF and P&G (in Southeast Asia) to reduce its biodiversity footprint through regenerative agriculture, plastic reduction, and increased use of recycled packaging.

Large businesses must move beyond good intentions and focus on practical strategies that ease the sustainability burden on their smaller partners.

Siemens takes a data-driven approach to sustainability, emphasizing transparency to assess risks and opportunities within its supply chain. By analyzing this data, Siemens can, for example, identify opportunities to source from social enterprises. Siemens believes that sharing data with suppliers strengthens relationships and enhances customer assurance. With 65% of its supply chain made up of SMEs, Siemens recognizes the importance of acting as an anchor institution to support smaller suppliers by providing them with tools, such as carbon calculators, and sharing knowledge to help them meet sustainability requirements.

The John Lewis Partnership, a purpose-led UK retailer, collaborates with 1,600 factories in its supply chain (excluding farms). Its cooperative business model allows for long-term thinking, prioritizing sustainability over short-term shareholder demands. John Lewis has noted differences in customer awareness between its Waitrose food stores, where sustainability is a key consideration for shoppers, and its John Lewis home and fashion stores, where customers are less focused on sustainability. An example of a successful SME partnership is with Tony’s Chocolonely, a chocolate brand known for its commitment to fair pay, sustainable sourcing, and 100% traceable cocoa beans. This partnership has led to 43% growth, showcasing how a strong, values-driven collaboration can drive both sustainability and business success. Traceability has become increasingly crucial for John Lewis to understand and manage the impact of its supply chain.

The UK Government’s Foreign & Commonwealth Development Office (FCDO) aims to increase women’s empowerment and opportunities in supply chains through the Work and Opportunities for Women (WOW) program. The initiative, which runs until March 2025, targets key risks such as lack of diversity and gender inequality while promoting economic opportunities for women in global value chains. For example, the program has contributed to a 22% increase in women’s participation in South Africa’s gold sector, with more women taking on leadership roles.

The UN Global Compact (UNGC) has also launched a Sustainable Suppliers Training Programme, which educates global suppliers of large companies on corporate sustainability practices, the Ten Principles of the UNGC, and the Sustainable Development Goals (SDGs). This initiative is designed to build capacity among suppliers, helping them align their operations with the broader sustainability goals of their corporate partners.

The perspective of european SMEs supplying large corporations

Small and medium-sized enterprises (SMEs) often lack the resources of multinational corporations, making it challenging for them to meet the growing demand for sustainability data from their business-to-business (B2B) customers. How do these smaller companies navigate the increasingly complex reporting requirements?

At Dulas, a renewable energy company, the ambition to contribute to global sustainability is strong, but fulfilling the vast array of data and reporting demands proves difficult. The company expressed frustration over the value of these reporting requirements, particularly on platforms like Ecovadis, where key sustainability messages from SMEs are often lost in the flood of data being requested. A related challenge is the requirement from large customers to conform to their proprietary procurement platforms, which places a heavy burden on smaller enterprises trying to meet various data formats.

The growing demand for sustainability data from suppliers can be seen as a positive step forward, indicating progress.

Roman Ltd, a UK-based shower product manufacturer and one of the few remaining European companies in its sector, echoes similar frustrations. With competing platforms all demanding different data, the company finds that much of the information requested is not even relevant to their product offerings. This disconnect between SME suppliers, large customers, and regulators is a significant barrier. As a result, SMEs like Roman tend to rely on alternative channels such as PR, training, and direct communication to showcase their sustainability credentials. Success stories and ethical practices are communicated through narratives rather than through platforms, which often feel like mere tick-box exercises.

Eland Cables, another SME, shares this view. The company strives to provide the sustainability data its customers require, but often those customers are unsure why they need the information. Eland also points out the competitive disadvantage they face—many of their competitors, particularly lower-cost suppliers from China, do not report the required data, leaving compliant SMEs to bear the additional time and cost burdens.

Despite these frustrations, SMEs generally agree that the sustainability journey is worthwhile. Some, like Roman, are using the SDGs to tailor their communications and make their sustainability efforts more personal and relatable to customers. Roman highlights its focus on the circular economy and ethical practices, efforts that are communicated more effectively through public relations than through data reporting. Similarly, Eland uses the SDGs as a framework to bring coherence to its various sustainability actions, making them clearer to customers.

In summary: What can be done to accelerate progress toward sustainable supply chains and achieving the SDGs?

The growing demand for sustainability data from suppliers can be seen as a positive step forward, indicating progress. However, critical questions persist: Are the requested data points truly meaningful? Do companies fully understand the purpose behind their requests? And, importantly, do these efforts provide genuine insights, given the immense workload they create for suppliers?

SMEs are increasingly calling for their larger business partners to spend more time understanding the specific data they are asking for and why. This deeper understanding could lead to more streamlined, consistent reporting frameworks across companies, reducing the heavy burden on smaller suppliers. As it stands, many SMEs are left to juggle multiple reporting demands from different customers, often in varying formats, which consumes valuable time and resources.

It is encouraging to see that many large companies are beginning to recognize these challenges and are actively seeking ways to collaborate with and support their suppliers. However, there remains significant room for improvement. A stronger, more shared understanding across the entire supply chain — coupled with clearer, more consistent data requirements — could significantly ease the burden on smaller enterprises, allowing for smoother and more sustainable collaborations.

David, Impact Entrepreneur Europe correspondent, is passionate about helping organizations succeed and increase their positive social and environmental impact. He is a Board-level adviser and consultant to several purpose-driven organisations, having led ESG/impact, strategy, marketing, and commercial development for major consulting, legal, banking, early stage, and charitable organisations. David is ... Read more
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