How businesses can balance sustainability and resilience amid continuous disruption is an important question to ask in the age of continuous disruption.
Nearly two-thirds of companies today regularly deprioritise sustainability for resilience, according to Gartner.
Faced with frequent disruptions and a wide range of long-term risks, businesses and their supply chain leaders today devote more attention and resources to resilience than they did in a bygone age of supply chain sustainability, the advisory firm added.
But sustainability and resilience converge as environmental risks pose a growing threat to the supply chain and the enterprise, Gartner pointed out.
According to Sabu Mathai, Research Director with the Gartner Supply Chain Practice, there are growing downside risks from a continued imbalance between sustainability and resilience.
Delayed progress on sustainability can leave organisations unprepared for environmental risks, he said, adding that fast-moving changes in both environmental regulations and the environment itself today — such as extreme weather and natural resource degradation — create increasing operational and strategic exposure for the supply chain and the entire enterprise, he said.
A Gartner survey of 336 supply chain leaders in March 2023 showed that 52% of leaders cited competitive differentiation as their biggest motivation to increase supply chain sustainability over the coming three years.
Organisations can better position themselves for an emerging low-carbon economy by taking advantage of sustainability’s opportunities, Gartner pointed out.
Nearly 60% of leaders responding to our survey said a failure to balance sustainability and resilience could result in lost market share to present-day or future competitors, survey results indicated.
How to break out of the cycle of deferring sustainability initiatives
Amid continuous turbulence, the most important factor is making sustainability a key aspect of doing business, and not a “nice-to-have” that’s easily set aside when disruption hits, Mathai said.
Gartner said it has identified an approach for businesses to balance sustainability and resilience that only a minority of organizations utilise today through interviews and survey research.
These organisations “build-in” sustainability at the core and make it essential to an evolving business, rather than “bolting-on” sustainability at the margins where it is more likely to be deprioritised, the firm noted
Building in sustainability starts with a recognition of the growing connection between sustainability and resilience, but it goes further, Gartner said.
For instance, build-in companies take a whole-of-enterprise approach to explore the business case for sustainability, the firm noted, adding that they see sustainability’s high costs in the context of the rising costs of inaction, and they lower the net costs of sustainability by finding new ways of doing business.
Companies that “build-in” sustainability are 3.7 times less likely than “bolt-on” companies to deprioritise sustainability for resilience even though they face nearly equal rates of disruption while better balance brings benefits, Gartner said.
What build-in companies do differently to balance sustainability and resilience
According to Mathai, build-in companies do four things differently to balance sustainability and resilience.
First, they build sustainability into supply chain capabilities and network changes, envisioning a long-term supply chain transformation that takes both sustainability and resilience as core design principles.
Second, they integrate sustainability into jobs and business processes, opening bandwidth for sustainability by prioritizing critical objectives and recovering misallocated resources.
Third, they ease the costs and first-mover disadvantages of sustainability through ecosystem partnerships, sharing sustainability’s benefits and burdens with competitors and value-chain partners.
And finally, they frame sustainability’s high costs together with the rising cost of inaction and delayed progress, and they make sustainability a key driver in their risk management processes.