Corporate

40% of businesses have seen revenue growth from investments in supply chain sustainability, and 34% have seen cost savings, according to DNV report

Lean and green: building sustainable and cost-efficient supply chains

DNV’s latest report, ‘Lean and green: building sustainable and cost-efficient supply chains’, shows that companies investing in sustainability initiatives are seeing positive financial benefits despite some uncertainties on how to respond to the latest raft of European ESG regulations coming into force from 2024.

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Lean and green: building sustainable and cost-efficient supply chains

Høvik, 29 November 2023 – Following a survey of 525 Europe-based business leaders and management personnel in companies with more than US$250 million in annual global turnover, the report set out to investigate the real-world influence of sustainable practices on business outcomes and the challenges still ahead.

The responses show that 1 in 4 leaders have already experienced revenue growth as a result of their investments in sustainability measures across their supply chains, and a further 38% are expecting to in the next year. In addition, over a third (34%) said that supply chain sustainability has already produced cost savings, with 40% expecting such savings within the year.

Paul McNeillis, Regional Director, Europe – Supply Chain & Product Assurance at DNV, said, “Organizations are increasingly investing in digital technologies to measure, report on, verify, and reduce their supply chain carbon emissions and associated costs. At the same time, many are also driven by the mandatory requirements of sustainability regulations to ensure traceability and human rights compliance along their supply chains. Leading organizations are able to leverage digitally enabled assurance to address both environmental and social risks while also taking out cost inefficiencies thereby reducing ESG risks and supply chain costs at the same time.”

In fact, about a third of respondents say their digital supply chain initiatives have already produced both revenue growth and cost savings, with around half expecting those benefits to materialize within the next year.

However, despite most having initiated some sustainability measures across their operations, 35% of the survey respondents said that a lack of understanding and readiness for incoming regulation – such as the EU’s Corporate Due Diligence Directive, EcoDesign for Sustainable Products Regulation, the Corporate Sustainability Reporting Directive (CSRD) and the Carbon Border Adjustment Mechanism (CBAM) – is the biggest barrier to their organization complying with supply chain sustainability rules.

Paul continued, “Organizations in any doubt need to determine their state of readiness for these regulations with a clear gap analysis, and put a compliance and value generation plan in place ahead of the implementation dates.”

Geir Fuglerud, CEO – Supply Chain & Product Assurance at DNV, said, “With mounting pressure from regulators, investors, media, and consumers on environmental and social fronts, being sustainable while maintaining profitability is an ambitious task. However, with thanks to the contributors to this report, we can demonstrate that it is possible – as long as you have the right digital tools to monitor, measure, verify, and report on sustainability measures effectively, and you’re clued up on compliance.

“As DNV partners with many public and private organizations across the world on their supply chain sustainability journey, helping them get up to speed with the technologies available to assist them is an essential part of this. We hope this report instils some confidence for the road ahead, and that the recommendations outlined within it can support more organizations to ensure that embedding sustainable practices doesn’t have to mean greater overheads, but done effectively and supported by the right tools, it can unlock great potential for growth.”