3 Ways Companies Can Prioritize People for Sustainable Supply Chains

Most Fortune 500 companies have made public commitments to create cleaner, more resilient supply chains. But nearly 90 percent of the world’s largest companies have neglected to factor in the workforce those supply chains depend on, especially people working in small and medium-size businesses.  

Supply chains have long relied on an unequal power dynamic between large buyers and smaller suppliers, especially when producing high-quality products at the lowest possible cost. This imbalance deepens as large buyers push the responsibility of operating sustainably onto suppliers already squeezed by demands for costs, quality and capacity.

This dynamic can ultimately lead to poor working conditions and low or stagnant wages for supply chain workers. To address this challenge, large companies must focus not only on how their supply chains affect the environment, but how they impact people, too.

New WRI research analyzing 1,000 corporate sustainability goals finds that only 12% of companies have at least one goal that centers the needs of the people driving their supply chains. Only 3% have goals focused on reskilling or upskilling workers, and less than 3% set out to improve working conditions.

Moreover, fewer than 10% of large companies are designing their goals in a way that considers partnerships with their suppliers. More companies need to be asking suppliers what they need and creating goals that will have mutual value and incentives for greening operations. According to WRI research, instead of partnering, most seem to be pressuring their suppliers to comply.  

This blind spot is striking. Fortunately, some companies are addressing it. They are investing time and resources to better understand the needs of people upstream in their supply chain and creating partnerships, with promising results.

Mars, Inc., for example, spent more than seven years working to understand challenges in the mint supply chain, critical to their Wrigley Chewing Gum products. Insights from mint farmers, collected with local, trusted partners, proved incredibly valuable. The company created the Shubh Mint program with farmers in Uttar Pradesh, India, where approximately 80% of the world’s mint is farmed and where climate change has made it increasingly difficult to grow fresh mint. So far, the program that has doubled mint yields, reduced water consumption by approximately 30% and increased incomes of the 26,000 smallholder mint farmers by 156%.

How Companies Are Centering People on Their Path to Sustainability

Large companies looking to create successful partnerships with small- and medium-sized suppliers can start by shifting away from traditional one-way conversations. This means recognizing that large buyers and smaller suppliers have different challenges, priorities and capacity for change. It means identifying what motivates the people managing and working for those smaller companies.

Unlike large corporations, upstream suppliers may not be under pressure from investors or consumers to reduce their greenhouse gas emissions. However, maintaining good relationships with large companies is important for suppliers to grow their businesses. Larger and smaller businesses can form partnerships with immediate and mutual benefits. They have shared interests in reskilling or upskilling workers, investing in more efficient and cleaner equipment, and accessing new markets and customers.

Here are some three ways companies are creating partnerships with their supply chain businesses that center the needs of workers while making progress on their sustainability goals.

 1) Creating Transparency

A significant challenge large companies and their chief procurement officers face when implementing supply chain initiatives is a lack of transparency within the supply chain. Logistics, procurement and supply chains with thousands of direct suppliers and hundreds of thousands of more indirect suppliers can account for anywhere between 50% and 70% of a company's operating costs.

With little to no visibility or relationships with many of these suppliers, it’s already a complex process to manage. In recent years, the landscape has become even more challenging due to disruptions from the COVID-19 pandemic, trade disputes, international conflicts and climate change.

Tony’s Chocolonely, a Dutch chocolate company, found a solution that prioritizes people in its supply chain while creating transparency by partnering with farmer cooperatives in West Africa so that the company can meet its vision of ending exploitation in cocoa.

In West Africa, there are  more than 30,000 cases of modern slavery in the cocoa sector, and the cocoa industry itself reports more than 1.5 million cases of child labor.

The company established a set of sourcing principles that includes: traceability, to understand where cocoa beans come from and the social and environmental conditions in those communities; paying higher prices to help farmers earn a living wage and adopt sustainable farming practices; making long-term commitments that offer income stability; and forging strong farming partnerships with cooperatives to implement sustainable farming programs.

Importantly, Tony’s recognized that it would need other industry players and governments to join their mission, so in 2019 it launched Tony’s Open Chain. The program shares insights and learnings from the company’s first 20 years of sourcing cocoa, while working to scale its impact.

Tony’s has recruited 20 companies, including Ben & Jerry’s and MrBeast’s Feastables, to join the effort and established a set of ambitions. That includes a collective goal of responsibly sourcing 80,000 metric tons of West African cocoa beans by 2028. As part of that scaling effort, Tony’s Open Chain tracks the number of child labor cases identified and closed and the number of farmers who are paid a living income for their cocoa beans.

2) Helping Suppliers Buy Renewable Energy

As part of their efforts to reduce greenhouse gas emissions in their supply chain, Ikea created an approach that made it easier for suppliers to buy renewable energy. The company set a goal to secure 100% renewable electricity for direct suppliers by creating bundled clean energy purchase agreements with suppliers.

Rather than having to create their own contracts, smaller companies could become part of joint bids and reduce their greenhouse gas emissions. Launched in 2021, the program initially targeted three of its largest supplier regions. Following a strong early response, Ikea expanded the program to 10 additional markets in 2023 and 14 more in 2025, bringing its total coverage to 27 markets. The program has enabled 491 suppliers (44% of all direct suppliers) to operate on 100% renewable electricity.

3) What Benefits One Buyer Can Benefit Many

When companies individually take action to address the needs of suppliers, improvements not only benefit that company’s supply chain but the other large companies that also work with those suppliers. For this reason, initiatives around blended finance options have become especially interesting for addressing the needs of people within supply chains.

In 2022, the Apparel Impact Institute launched an effort to create a $250 million fund to decarbonize the apparel and footwear industry. They secured seven lead funders from among the world’s largest clothing companies and philanthropies including HSBC, Target Corporation, PVH Corp., Lululemon, H&M Group, H&M Foundation and The Schmidt Family Foundation.

Their stated goal with the $250 million fund is to unlock a total of $2 billion in blended capital to scale proven impact solutions and remove up to 100 million metric tons of carbon dioxide from the apparel supply chain. Importantly, in shaping the fund, they have prioritized $120 million for grants to suppliers and have focused on ensuring suppliers get better investment and lending terms for critical operation upgrades and improving the quality of work for employees.

Sustainable Supply Chains Require an Investment in People

Despite a lack of people-centered considerations across corporate supply chain sustainability goals, these case studies prove that addressing the challenges felt by supply chains workers are not only possible but beneficial.

Companies can break from the old way of doing business, creating a new approach that address three key questions in relation to their supply chain:

1) Who, beyond direct suppliers, is impacted by a transition to sustainable supply chains?

Mapping the pain points deeper into supply chains can help companies go beyond talking about climate change. They can connect the impacts people experience from a changing climate to the lived experience of their suppliers and be better equipped to find actionable solutions.

2) What is in it for the supplier?

Understanding the interests and needs of suppliers can expedite problem solving. However, learning what a supplier's interests and needs are requires trust. Rather than relying on compliance auditors to track progress among suppliers, companies can adapt the “extension agent” model. They can send individuals to help smaller suppliers fix issues, with expertise and support, rather than a compliance checklist. This can build trust and ensure mutual value for buyer and supplier.

3) Where can investment be made for mutual benefit?

Innovative companies are testing new contract models and community benefits frameworks to prioritize the interest of partners in their supply chain. Some examples include: relational contracts that seek to build trust by outlining explicit terms but allow implicit terms and understandings to shape the behavior of the long-term relationship; and collaborative contracts that emphasize a cooperative approach toward a shared vision, values, and objectives.  

Bonus Question: Who Can Help Companies Build a Business Case for Investing in People?

Only about one-third of supply chain executives report being able to build a strong business case for supply chain sustainability investments. That business case depends largely on whether there is support (and pressure) from investors, governments, consumers and civil society. Those with a vested interest in seeing more sustainable, resilient supply chains should ask more questions and offer more support to companies that are willing to innovate and invest in people.

Ikea, Mars, Inc., Target and HSBC, which are mentioned in this article, provide funding to WRI.  WRI also serves as a nongovernmental organization partner for the Apparel Impact Institute. None of these entities provided funding for this research or influenced the content of this article.