Supply chains tied to multinational corporations represent over 80% of global trade and engage over one in five workers. Supply-chain management therefore has a significant impact on key social and environmental challenges. Despite this importance, there is currently no comprehensive, empirically grounded understanding of how companies address sustainability in their supply chains.
Researchers of Stanford University developed a global database based on a random sample of publicly listed companies with annual reports in English to provide insight into how the private sector contributes to advancing global sustainability via their supply chains. This study provides a large-scale empirical analysis of corporate sustainable-sourcing practices across multiple sectors and geographies.
Abstract
Global supply chains play a critical role in many of the most pressing environmental stresses and social struggles identified by the United Nations’ Sustainable Development Goals (SDGs). Responding to calls from the global community, companies are adopting a variety of voluntary practices to improve the environmental and/or social management of their suppliers’ activities. We develop a global survey of 449 publicly listed companies in the food, textile, and wood-products sectors with annual reports in English to provide insight into how the private sector contributes to advancing the SDGs via such sustainable-sourcing practices. We find that while 52% of companies use at least one sustainable-sourcing practice, these practices are limited in scope; 71% relates to only one or a few input materials and 60.5% apply to only first-tier suppliers. We also find that sustainable-sourcing practices typically address a small subset of the sustainability challenges laid out by the SDGs, primarily focusing on labor rights and compliance with national laws. Consistent with existing hypotheses, companies that face consumer and civil society pressure are associated with a significantly higher probability of adopting sustainable-sourcing practices. Our findings highlight the opportunities and limitations of corporate sustainable-sourcing practices in addressing the myriad sustainability challenges facing our world today.