Opportunities and challenges in integrating sustainability into FMCG supply chains

In the recent years, the world has seen a big shift in the needs and expectations of FMCG customers. As a result, businesses are facing the challenge of integrating sustainability into their supply chains while reducing costs. The Economist Impact report explores the main drivers of this change and the steps that businesses can adopt to facilitate it.

The role of consumer and employee expectations in decision-making

Due to increased customer awareness and expectations globally, ESG considerations have reached top of mind for FMCG firms, with improving ESG cited as the top strategic objective for a plurality of 44% of supply chain executives, a sharp upshoot from the 6th position in 2020. This is leading FMCG firms to embrace sustainable practices for their supply chains by screening supply chain partners based on a range of criteria ranging from carbon footprints and circular economy practices to enhanced labour standards. Notably, in North America, a key driver of sustainability centres on talent acquisition and retention, reflecting concerns about labour shortages and the region’s resilient job market in the face of a downturn. To thrive, FMCG companies in the region will need to stay attuned to both customers and employees.

Sustainability initiatives – cost drivers or cost savers?

An intriguing tension point lies in the fact that embedding sustainability is both viewed as a cost driver and a cost saver, with 2 in 5 stating that potential cost savings drive their sustainability agenda. While building a resilient supply chain by ending single-source procurement has helped alleviate bottlenecks, companies that have the vision and the financial means to invest in sustainable initiatives will see cost benefits in the medium term.

Finding solutions to shared challenges in sustainability

FMCG companies have realised that supplier collaboration is the only way to meet their sustainability goals. They are taking action with partnerships to develop sustainable logistics, investment in supply chain technology and tailored training support. Achieving full visibility of supply chains will be helped by increasingly standardised and broadly adopted metrics such as the GRI, ISO and SASB frameworks. Making the first effort to kickstart idea sharing, as well as monitoring and reporting on sustainability metrics will allow companies and suppliers to move towards a streamlined process over time.

Download The Economist Impact Report

Find out how sustainability is driving FMCG supply chain management in the evolving landscape. Click to download the report. For more information on Maersk’s integrated solutions and how they benefit your supply chain, select learn more.