Supply Chain Risk Management and Sustainable Development Goals (SDGs)

Introduction to Supply Chain Risks

Supply chains today face numerous risks, including geopolitical tensions, sustainability regulations, and increasingly severe weather events. These challenges directly impact the ability of organizations to meet Sustainable Development Goals (SDGs), particularly those related to responsible consumption and production (SDG 12), climate action (SDG 13), and peace, justice, and strong institutions (SDG 16).

Strategic Considerations in Risk Management

Suzie Petrusic, Senior Director Analyst at Gartner, emphasizes the complexity of crafting an effective supply chain risk-management strategy. Organizations must balance preparedness for potential disruptions with cost considerations, ensuring investments align with their highest value activities to support sustainable business growth.

Key Focus Areas for Sustainable Risk Management

1. Value-Centered Investment: Companies should prioritize protecting their highest revenue sources, aligning risk management investments with business value and sustainability impact.
2. Cost-Benefit Analysis: Conducting thorough cost-benefit analyses ensures efficient allocation of resources, supporting economic sustainability (SDG 8) and reducing waste.
3. Governance and Accountability: Engaging profit and loss (P&L) owners in decision-making fosters responsibility and transparency, contributing to strong institutions (SDG 16).

Overcoming Common Failure Points

• Lack of focus on critical revenue streams and their sustainability implications.
• Insufficient cost-benefit analysis leading to suboptimal investment decisions.
• Failure to involve key business leaders in risk management decisions, weakening governance.

Integrating Enterprise Risk Management Across Functions

Effective supply chain risk management requires breaking down operational silos and adopting a holistic approach. This integration supports SDG 17 (Partnerships for the Goals) by fostering collaboration across departments and stakeholders to enhance resilience and sustainability.

Governance and Sustainable Investment Balance

Proper governance ensures a balance between organizational priorities and investment levels, enabling companies to build resilient supply chains that contribute to sustainable development. This approach aligns with multiple SDGs by promoting responsible resource use, climate resilience, and economic stability.

1. Sustainable Development Goals (SDGs) Addressed or Connected

1. SDG 9: Industry, Innovation and Infrastructure
   • The article discusses supply chain risk management and resilience, which are critical to building sustainable industrial infrastructure and fostering innovation.
2. SDG 12: Responsible Consumption and Production
   • References to regulations around sustainability and managing risks related to supply chain disruptions connect to responsible production and consumption practices.
3. SDG 13: Climate Action
   • Mentions of increasingly violent weather events highlight the impact of climate change and the need for climate resilience in supply chains.
4. SDG 8: Decent Work and Economic Growth
   • Focus on protecting revenue sources and business resilience relates to sustaining economic growth and productive employment.

2. Specific Targets Under Those SDGs

1. SDG 9: Industry, Innovation and Infrastructure
   • Target 9.1: Develop quality, reliable, sustainable and resilient infrastructure, including regional and transborder infrastructure, to support economic development and human well-being.
   • Target 9.4: Upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies.
2. SDG 12: Responsible Consumption and Production
   • Target 12.6: Encourage companies, especially large and transnational companies, to adopt sustainable practices and to integrate sustainability information into their reporting cycle.
3. SDG 13: Climate Action
   • Target 13.1: Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters in all countries.
4. SDG 8: Decent Work and Economic Growth
   • Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading and innovation.

3. Indicators Mentioned or Implied to Measure Progress

1. Indicator for SDG 9.1 and 9.4:
   • Proportion of the population and businesses with access to resilient infrastructure and sustainable industrial processes.
   • Investment levels in supply chain risk management and resilience-building activities.
2. Indicator for SDG 12.6:
   • Number or proportion of companies publishing sustainability reports or integrating sustainability into their business strategies.
3. Indicator for SDG 13.1:
   • Number of businesses with climate risk management strategies and adaptive capacity plans.
   • Frequency and impact of weather-related disruptions on supply chains.
4. Indicator for SDG 8.2:
   • Revenue protection and cost-benefit analyses related to supply chain resilience investments.
   • Productivity metrics linked to supply chain efficiency and risk mitigation.

4. Table: SDGs, Targets and Indicators

Source: supplychainbrain.com