External forces are usually culprits when a debate about business failure arises. Technology, competitors, and emerging markets pose a lot of threats on the organizational development and sustainability. As a result, most organizations have put in place strategies that seek to mitigate these factors only. However, external forces are not the only ones that can bring down a business! Just because a company is running fine and making profits that are in line with their goals, it does not mean that we turn our heads to the blind spots that may be slowly bringing the company down. One of the major blind spots in organizations is sustainability risk.
Within our sustainability consulting, we find common characteristics among sustainable organizations as having the ability to effectively manage the flow of information across key business stakeholder relationships. While many organizations target immediate value, some of the more well known leading organizations continuously assess the health of their supply base. This provides for opportunity to immediately determine risk. In fact, the true ‘business sustainability’ differentiators are those who understand and effectively mitigate the potential derailleurs of supply.
Unfortunately, many organizations falsely subscribe to the belief that business sustainability is only for larger organizations; yet, there is the recognition that risk does not discriminate. To unprepared organizations - big or small, the business risks of carbon, water, and climate change disclosure takes many forms:
- Potential increase in operating cost
- Potential increase in supply costs
- Potential disruptions to supply or loss of supplier relationships
- Potential loss of revenue or market share
- Potential to business reputation
- Potential inability to secure investment dollars or capital
A Supply Management post, Why Risk is Really an Opportunity, offers insight into business sustainability risk management. Selecting the supply chain as the ‘richest’ business opportunity, the professional consulting firm presents a comprehensive view of value in sustainable supply chain risk management:
- More Robust Supply Chain: Offering better agility and responsiveness, with fewer single points of failure
- Better Prepared for Incident: Lowers impacts such as damage to reputation
- Better Customer Service: Quick incident detection allows for a more proactive response
- Improve Product Launches: Greater positive publicity for new products and reduce rework
- Focus on Strategy: Spend less time fire-fighting and prioritize resource activities
Water, carbon, and energy management is becoming a critical sustainable business strategy to address internal and external risk. Business executives and entrepreneurs seeking new and innovative ways to improve their business processes, minimize risk, and reduce costs, are encouraged to look to growing supply chain risk as an opportunity. Today’s leaders are taking supply acquisition to the next level by incorporating sustainable supply chain management practices into their traditionally exclusive ‘tier-one’ procurement decision making. The sustainable businesses of the future will not only understand but manage their risk exposure across the entire value chain.