Could de-globalisation spur greener supply chains?

Author: Greg Gowans

Geopolitics-driven de-globalisation and profit-driven localisation is an opportunity to improve sustainability by recalibrating supply chains, says UBS Bank.

The conclusion from UBS comes in its recently-published report, titled ‘Chain reaction’. The report itself stresses the following key findings:

First and foremost, UBS believes the upheaval in global supply chains presents a unique chance for companies to not only mitigate risks, but also enhance sustainability. The bank states that by reconfiguring supply chains to reduce risk exposure, companies are increasingly scrutinising the environmental and social impacts within their networks, looking into both the risks associated with both direct and indirect suppliers. 

The report also stresses how traditional supply chain strategies have long prioritised cost minimisation and reliability. However, UBS claims that sustainability considerations are necessitating a fundamental shift from a “least cost” to a “least risk” mindset.

In order to navigate this transition, the UBS report emphasises the use of 4 pillars; Evaluate, Optimise, Collaborate, and Develop.

Central to the framework is the proactive engagement with suppliers to enhance sustainability performance. Rather than simply discarding underperforming suppliers, companies are encouraged to work collaboratively with them to improve sustainability practices. This approach fosters long-term relationships and drives meaningful change across the supply chain.

Finally, the report concludes that failure to seize the opportunity presented by supply chain realignment may lead to further disruptions in the future. With tightening regulations and heightened expectations from investors and consumers, UBS says that companies who neglect sustainability considerations risk falling behind and facing increased scrutiny and challenges.

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