How Supply Chain Problems Are Impacting Sustainability Efforts

supply chain problems

With millions of companies operating worldwide, the global supply chain has grown more extensive than ever before, and the impact of the supply chain on the environment has become a topic of interest for many businesses, environmental scientists, and consumers.

With ongoing supply chain problems, it is becoming more and more difficult for businesses to commit to their pledges of sustainability. Despite many problems, however, businesses wish to remain sustainable in an effort for higher growth rates. It has been found that sustainable companies or businesses that use sustainable processes save money, avoid environmental regulation problems and earn a better reputation amongst their customers.

According to a report by McKinsey & Company, most companies report that around 90% of the company’s negative environmental impact comes from the supply chain itself. So, how exactly are supply chain problems impacting and hindering companies’ bids to be more sustainable? There are two main ways to consider:

Unavailability of Recycled Materials

A lot of the environmental impact from big companies comes from the packaging and shipping stage of the supply chain. Companies like PepsiCo and Mondelez, amongst others, have committed to using more sustainably sourced and recyclable packaging for their products. However, supply chain problems such as scarcely available recycled materials have made meeting these commitments difficult. During the peak of the Covid-19 pandemic, most of the plastics available were being used by the medical industry, with a very little left over for product packaging. As for recycled plastics, there was a shortage due to industry disruptions and labor shortages. There is also the issue of recyclable materials like cardboard facing severe price hikes in the past couple of years, which discourages companies from using these materials.