Large companies are setting ambitious sustainability targets but relying on small- and medium-sized enterprise (SME) supply chain partners to bear much of the burden of reaching those goals. WRI’s analysis found that only 3% of companies set goals that support reskilling, entrepreneurship and education for workers in their supply chains, and fewer than 3% have targets that support working conditions or worker well-being. The result: top-down solutions that overlook the needs of the people expected to implement change.

CREST is believed to be the first major initiative to encourage large, multinational companies to recognize and include the voices of SMEs and their workers when developing supply chain sustainability targets and policies. The stories and perspectives of SME workers and business owners are central to this initiative.

Centering Worker Voices to Create Equitable Supply Chains

Achieving corporate climate goals equitably requires a better understanding of the needs of SMEs along the value chain — and translating that into practical support for their workers. This project highlights a blind spot for large companies, paving the way for more equitable supply chains by supporting SMEs.

To set a new sustainability action agenda for equity in global supply chains, WRI Global is identifying, amplifying and communicating the systemic challenges that SMEs and their workers face in meeting the mandates of multinational companies to reduce climate impacts.

Researching Opportunities for Supply Chain Innovation

WRI’s working paper, Elephant in the Boardroom: People Are Missing in Corporate Supply Chain Goals, helps large companies understand the critical role of SMEs in achieving their sustainability goals. With a large company’s supply chain accounting for 50% to 70% of its operating costs, aligning this significant share of the business with its sustainability goals is no small task. It requires understanding what SMEs in supply chains — and the people that own and work at those SMEs — need to transition to new ways of doing business. This suggests two major challenges companies face in setting and achieving sustainability targets:

  • People. Large companies can find it difficult to achieve climate or nature objectives unless they also consider how people factor into those goals.
  • Partnerships. While a large company could achieve a climate or nature goal without incorporating suppliers’ needs, those suppliers end up absorbing the costs. This can put SMEs at a significant disadvantage, or out of business, and can also come at the expense of workers and communities. If suppliers redirect resources to meet large companies’ goals, that could mean fewer resources to invest in areas important to the workers (e.g., better wages or factory conditions) and surrounding community (e.g., local sourcing or air or water pollution controls).

Action Agenda: Investing in People in Supply Chains

WRI’s study outlined three actions that companies and their partners can take to create more people-centered, resilient supply chains. These underpin a follow-up project to CREST: Mapping, Matching and Money.

  • Mapping. Who is impacted by the transition to sustainable supply chains? 
  • Matching. What is in it for them? 
  • Money. Where can we invest for mutual benefits?
     

Cover image by Arno Senoner/Unsplash