Global Trend

Supply Chain

Technology improving transparency

While a growing number of companies have set ambitious supply chain goals over the last decade — from achieving zero deforestation to ending child labor — progress against these goals has been inconsistent.

This has been largely due to the complexity of supply chains, particularly where suppliers source from multiple small local operations in countries where regulations and enforcement are less robust, and where transparency is absent or at best minimal.

Almost two decades ago, the world’s largest chocolate companies pledged to prevent children from working in their supply chains. A recent report has found that none of the signatories have successfully eradicated child labor. It’s been a decade since the Consumer Goods Forum, an industry association comprised of roughly 400 companies, passed a resolution to achieve Zero Net Deforestation in the commodity supply chains responsible for the bulk of the world’s deforestation — cattle, soy, palm oil, and pulp & paper — by the year 2020. Just 21 companies have reported quantitative progress on at least one zero deforestation commitment. While progress on supply chain sustainability has been made by isolated companies, it has simply been too slow and incremental to meet the scale of existing challenges. As AI, digitized operations and blockchain technology continue to mature, the hype of previous years is starting to be justified. Practical, real-world collaborative applications of technology could unlock meaningful action at scale.

2020 Forecast

AI, blockchain, use of satellite images and digitization of supply chain data will continue to grow in sophistication, advancing end-to-end supply chain transparency. These technologies will be essential for companies to keep pace with increasingly stringent regulations and expectations from consumers and large customers for increased transparency and disclosure. They will also offer the potential to address issues as they arise in real time. With just ten years to achieve the Sustainable Development Goals, rapidly scaling these technologies will require deeper collaboration across industries — from food and agriculture, to mining, tech and apparel.

Signals to Watch

  • In 2019, 43% of CDP Supply Chain program members confirmed that they currently deselect existing suppliers based on their environmental performance. A further 30% are considering implementing this.

  • A recent report from Deloitte revealed that 34% of large global companies have already used blockchain technology, while 86% are confident that its mainstream penetration is inevitable.

  • After failing to eradicate child labor for more than a decade, three of the world’s largest chocolate companies are now supportive of European regulations to help protect child workers. The regulations would legally require cocoa importers in the European Union — the world’s biggest cocoa market — to map cocoa supply chains and disclose human rights violations such as forced labor and use of underage children.

  • New legislation passed in 2019 in the Netherlands could see company executives criminally prosecuted if the business is proven to have repeated incidents of child labor.

  • Global shipping companies are going digital, with leaders including Maersk increasing efficiencies by offering a digital platform that allows customers to remotely view and book empty container space.

  • IBM has developed the IBM Food Trust alongside companies such as Kroger, Nestlé and Carrefour to provide end-to-end supply chain visibility of food products.

  • In 2019, the number of CDP supplier respondents reported that they are engaging with their suppliers on climate change increased by one third, up to 35%. This compares to just 23% in 2017.

  • The World Economic Forum in collaboration with Everledger, Lenzing Group, TextileGenesis™ and the International Trade Centre recently created the first neutral and public traceability platform capable of visualizing blockchain-based supply chain data from multiple companies and sources. Data will not be shared externally, and sensitive data can be hosted at UN data centers, benefitting from special UN  privileges regarding neutrality and immunity. 

"A very important cornerstone [to ending child labor] is transparency.​ We can't learn if we can't talk about what we are seeing on the ground. We can't learn if we can't talk about our successes and challenges."

Advice for Business

  • Companies need to identify areas in their supply chains where sustainability progress has been slow or a challenge and explore how technology could enable greater progress.

  • Further collaboration is needed amongst peers and competitors to work collectively to address challenges, such as child labor, where progress has been slow.

  • As new technologies are adopted, companies should collaborate with peers and competitors to ensure that common suppliers are not having to use multiple tools for transparency and to ensure best practice for applying new technologies to sustainability.

  • Further disclosure on engagement with suppliers to manage social and environmental risks, particularly on human rights and climate change, is needed.

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