Supply chain organizations are feeling increasing pressures to embrace ESG (Environmental, Social, and Governance) as part of a broader sustainability strategy. According to Forbes, while 90% of executives recognize sustainability’s importance, unfortunately only 60% have a strategy in place. This blog shows several ways companies can take steps forward by citing practical examples of ESG practices that trailblazing supply chain teams across various industries have deployed in recent years.
To better understand how ESG principles are shaping supply chain strategies, it’s important to break down what each component – Environmental Social, and Governance – actually entails:
- Environmental Impact: How a company’s operations affect the planet, including energy use, emissions, and waste reduction efforts.
- Social Responsibility: A company’s commitment to ethical practices in labor, community engagement, diversity, and human rights.
- Governance & Transparency: The systems and policies that ensure ethical leadership, accountability and openness in the operations.
Environmental Impact
Companies are taking an integrated approach to address environmental sustainability, focusing not only on carbon emissions, but also on minimizing waste and rethinking product lifecycles. Unilever has set a strong example through regenerative agriculture and renewable energy initiatives. In 2024 alone, Unilever launched 23 regenerative agriculture projects which supported ecosystem restoration programs. Additionally, 85% of the electricity they use comes from renewable sources. At the same time, there’s growing momentum around circular economy practices – an approach that looks beyond the traditional “make à use à dispose” model. For instance, DHL is exploring ways to make packaging and logistics more sustainable, offering reusable packaging options and working with customers to improve how returned or end-of-life products are collected and reprocessed, reducing overall waste in the supply chain.
Social Responsibility
Fair compensation, inclusive representation, and workplace safety are central pillars of social ESG. Social responsibility initiatives can go a long way in creating a positive workplace environment, loyal employees, and satisfied customers. An example of this is IKEA and the Jordan River Foundation working together to create lasting job opportunities for refugee and local women in Jordan. This partnership focuses on empowering women by providing stable, year-round employment in textile production. Artisans receive above-minimum wages, social security, and health insurance, with many reporting increased household income and improved quality of life. The initiative also helps keep traditional crafts like Bedouin weaving alive while bringing different communities closer together. IKEA and JRF aim to employ 400 women by 2027, furthering their commitment to economic inclusion and cultural preservation.
Governance and Transparency
Strong governance ensures ethical decision-making and accountability. PepsiCo’s Pep+ initiative– a company-wide effort to embed sustainability into every aspect of its business – is supported by a strong ESG data governance framework managed by their Global Sustainability Office. This framework includes a centralized system with formal review processes, ensuring data accuracy and consistency across the organization. The governance process involves multiple layers of validation, which fosters internal accountability and reinforces external trust by providing reliable insights to stakeholders. In addition to strong internal checks and balances, companies also build trust through transparent customer engagement. FedEx’s carbon tracking tool empowers customers to monitor their shipment emissions, aligning with its goal of carbon neutrality by 2040. Initiatives like FedEx’s strengthen consumer relationships while reinforcing sustainability commitments.
Moving Forward
Integrating ESG isn’t just about good ethics, it’s smart business. Companies that prioritize these three principles will lead the future, gaining competitive advantages while making a positive global impact.
