How Sustainability Benchmarking Improves Supply Chain Performance and Environmental Impact

Sustainability has emerged as a critical focus for businesses worldwide, driven by increasing consumer awareness, tightening environmental regulations, and corporate responsibility goals. For many organisations, the supply chain represents a significant part of their environmental footprint, as it includes everything from raw material sourcing and manufacturing to transportation and distribution. Sustainability benchmarking provides a powerful way for businesses to assess their environmental impact, identify areas for improvement, and align their supply chain practices with sustainability goals.

By tracking sustainability metrics—such as carbon emissions, energy consumption, waste reduction, and resource efficiency—sustainability benchmarking allows organisations to compare their performance against industry standards and best practices. This process not only helps businesses reduce their environmental impact but also enhances operational efficiency, reduces costs, and improves brand reputation.

In this article, we will explore the key components of sustainability benchmarking, the benefits it offers, and how organisations can leverage benchmarking to improve their supply chain’s sustainability and overall performance.

The Importance of Sustainability in Supply Chains

Sustainability is no longer a "nice-to-have" aspect of business operations—it has become an essential factor in ensuring long-term success. Supply chains, with their global reach and complex operations, often contribute to a company’s largest environmental impacts. Adopting sustainable supply chain practices can provide significant advantages, such as:

1. Compliance with Environmental Regulations
   Governments and regulatory bodies are implementing increasingly stringent environmental standards, including carbon emissions limits, waste management protocols, and sustainability reporting requirements. Sustainability benchmarking ensures that companies comply with these regulations and avoid fines or penalties.
2. Meeting Consumer Expectations
   Today’s consumers are more environmentally conscious, favouring products and brands that prioritise sustainability. Sustainability benchmarking helps organisations demonstrate their commitment to reducing their environmental footprint, attracting eco-conscious consumers, and strengthening brand loyalty.
3. Cost Reduction
   Sustainable supply chain practices often lead to reduced costs. Optimising energy use, improving waste management, and using sustainable raw materials can cut operating expenses while minimising environmental harm.
4. Risk Mitigation
   Environmental risks—such as resource scarcity, climate change, and supply chain disruptions—can have a significant impact on business operations. By benchmarking sustainability performance, organisations can identify and mitigate risks related to their environmental footprint.
5. Long-Term Value Creation
   Incorporating sustainability into supply chain practices not only enhances operational efficiency but also drives long-term value. Sustainability initiatives can open up new markets, foster innovation, and position businesses as leaders in their industries.

Key Components of Sustainability Benchmarking

Sustainability benchmarking involves measuring and evaluating an organisation’s environmental performance across various aspects of the supply chain. Here are some of the key components that should be included in sustainability benchmarking efforts:

1. Carbon Footprint and Greenhouse Gas (GHG) Emissions
   Carbon emissions are one of the most widely tracked sustainability metrics. Sustainability benchmarking helps organisations measure their carbon footprint at every stage of the supply chain—from raw material sourcing to transportation and distribution. Reducing carbon emissions not only helps businesses meet regulatory requirements but also contributes to mitigating climate change.
2. Energy Consumption
   Energy use is another critical aspect of sustainability. Benchmarking energy consumption across supply chain operations, including manufacturing, warehousing, and transportation, allows businesses to identify inefficiencies and transition to renewable energy sources. Reducing energy consumption leads to cost savings and supports environmental goals.
3. Water Usage
   Water is a finite resource, and efficient water usage is a priority for many organisations, particularly in manufacturing and agriculture. Sustainability benchmarking includes tracking water usage and identifying ways to reduce water consumption, recycle water, or improve water management practices.
4. Waste Reduction and Management
   Reducing waste is a key sustainability goal for many organisations. Benchmarking waste management practices involves measuring the amount of waste generated, tracking how much is recycled or repurposed, and setting targets for reducing landfill contributions. Circular economy principles, such as reusing materials and designing products for durability, are also critical in waste management.
5. Sustainable Sourcing
   The environmental impact of raw materials and components used in production is a significant part of a company’s sustainability performance. Benchmarking sustainable sourcing involves evaluating suppliers’ sustainability practices and ensuring that raw materials are sourced responsibly, such as through fair trade or forest stewardship certifications.
6. Logistics and Transportation Efficiency
   Transportation is often a major contributor to carbon emissions in supply chains. Benchmarking logistics efficiency includes measuring transportation-related emissions, optimising delivery routes, and transitioning to low-emission or electric vehicles. Intermodal transport, which combines different modes of transportation (e.g., road, rail, sea), can also reduce emissions.
7. Packaging and Material Use
   Packaging plays an important role in sustainability, as excessive or non-recyclable packaging contributes to waste. Sustainability benchmarking includes tracking the environmental impact of packaging materials and identifying opportunities to reduce, reuse, or recycle packaging.

Challenges in Sustainability Benchmarking

Although sustainability benchmarking offers many benefits, it also presents several challenges for organisations:

1. Data Collection and Transparency
   Collecting accurate and comprehensive data on sustainability metrics can be difficult, especially when supply chain operations span multiple regions and involve various suppliers. Many businesses struggle to track data from third-party suppliers or lack visibility into upstream and downstream supply chain processes.
2. Defining Relevant Benchmarks
   Finding relevant benchmarks that reflect the unique characteristics of a company’s supply chain can be challenging. Industries and regions often have different sustainability standards, making it difficult to find comparable data for benchmarking.
3. Balancing Cost and Sustainability
   Implementing sustainability initiatives may require upfront investments in new technologies, processes, or materials. Some businesses may find it challenging to justify these costs, particularly when short-term financial returns are not immediately visible.
4. Supplier Engagement
   Many businesses rely on a network of suppliers, and ensuring that suppliers align with the company’s sustainability goals can be complex. Suppliers may face their own sustainability challenges or may not have the resources to implement sustainable practices.
5. Regulatory Complexity
   Sustainability regulations and reporting requirements vary by region and industry, making it difficult for businesses to keep up with changing regulations. Failure to comply with environmental laws can result in penalties or damage to the company’s reputation.

Best Practices for Effective Sustainability Benchmarking

To overcome these challenges and ensure successful sustainability benchmarking, organisations should adopt the following best practices:

1. Set Clear Sustainability Goals
   Before embarking on sustainability benchmarking, businesses should define clear sustainability objectives, such as reducing carbon emissions by a specific percentage or transitioning to 100% renewable energy. These goals will guide benchmarking efforts and help prioritise areas for improvement.
2. Leverage Technology for Data Collection
   Using technology, such as supply chain management systems or sustainability tracking tools, helps businesses collect accurate data across their operations. Automated data collection can streamline the process and ensure that sustainability metrics are tracked in real-time.
3. Engage with Suppliers
   Collaborating with suppliers is essential for successful sustainability benchmarking. Businesses should engage with their suppliers to share sustainability goals, track performance, and offer support in implementing sustainable practices. Establishing sustainability criteria for supplier selection can also help ensure alignment.
4. Use Industry Standards and Certifications
   Benchmarking against recognised sustainability standards, such as ISO 14001 (Environmental Management) or B Corp certification, helps businesses compare their performance to established best practices. These certifications also enhance credibility with customers, investors, and regulators.
5. Incorporate Circular Economy Principles
   To reduce waste and resource consumption, businesses should adopt circular economy principles, such as designing products for durability, reusing materials, and recycling at the end of a product’s lifecycle. Benchmarking progress in implementing circular practices helps businesses measure sustainability success.
6. Report on Sustainability Progress
   Regularly reporting on sustainability progress increases transparency and accountability. Businesses should share benchmarking results with stakeholders, such as investors, customers, and employees, and highlight improvements made toward sustainability goals.

The Role of Supply Chain Consultants in Sustainability Benchmarking

Supply chain consultants bring expertise in sustainability benchmarking and supply chain optimisation. They help organisations overcome challenges, implement sustainability initiatives, and align their supply chain operations with environmental goals. Here’s how consultants support sustainability benchmarking efforts:

• Data Collection and Analysis: Consultants assist businesses in gathering accurate sustainability data from across their supply chain, including from suppliers, manufacturers, and logistics providers. They analyse this data to identify areas for improvement and develop actionable insights.
• Industry Benchmarking: Consultants have access to industry-specific sustainability benchmarks and best practices, enabling businesses to compare their performance with peers and top performers in their sector.
• Supplier Engagement: Supply chain consultants facilitate collaboration between businesses and their suppliers to ensure alignment on sustainability goals. They help develop sustainability criteria for supplier selection and track supplier performance on key environmental metrics.
• Sustainability Strategy Development: Consultants work with organisations to develop customised sustainability strategies that focus on reducing environmental impact, improving operational efficiency, and achieving regulatory compliance.
• Technology Implementation: Consultants help implement the right technologies, such as carbon tracking tools, energy management systems, and sustainable sourcing platforms, to enable effective sustainability benchmarking and progress monitoring.

How Trace Consultants Can Help with Sustainability Benchmarking

At Trace Consultants, we specialise in helping organisations improve the sustainability of their supply chain operations through comprehensive benchmarking services. Our team of experts works closely with clients to assess their current sustainability performance, identify areas for improvement, and implement strategies that reduce environmental impact while enhancing efficiency.

We offer a full suite of sustainability benchmarking services, including:

• Data Collection and Sustainability Audits: We help businesses collect and analyse data on carbon emissions, energy use, waste management, and other key sustainability metrics. Our sustainability audits provide a clear picture of your supply chain’s environmental impact.
• Industry-Specific Benchmarking: Trace Consultants provides access to relevant industry benchmarks and best practices, ensuring that your business measures its performance against the top players in your field.
• Sustainability Strategy Implementation: We work with your team to develop and implement tailored sustainability strategies that align with your goals and drive long-term value for your business.
• Supplier Engagement: Our consultants help you collaborate with your suppliers to set sustainability goals, track progress, and build long-term partnerships that contribute to a greener supply chain.

By partnering with Trace Consultants, your organisation can take meaningful steps toward sustainability while maintaining cost efficiency and improving supply chain performance. Let us help you achieve your sustainability goals and make a positive impact on both the environment and your bottom line.

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Supply Chain Sustainability Reporting Series by Emma Woodberry

Part 3 – Modern Slavery in the supply chain and reporting obligations

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What is Modern Slavery?

Modern slavery describes a workforce that is exploited during their employment, without an option to leave or refuse due to threats, violence, coercion, deception or abuse of power. It comes in many forms including human trafficking, forced labour, child labour, and debt bondage.

Due to the nature of the work involved in production, processing, packaging and transport of goods, there is a high risk of modern slavery in most supply chains in Australia – these risks vary by industry and are heightened in imported food produce and textiles.

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Modern Slavery Reporting

Modern Slavery reporting helps to hold organisations accountable for their actions and policies, ensuring they are taking steps to prevent and address modern slavery within their operations and supply chains. Australia’s Modern Slavery Act 2018 has encouraged transparency and ethical practices for Australian organisations to help identify patterns and hotspots, which can be targeted for prevention efforts. A recent independent review of the Act has identified key changes that will impact organisations existing reporting, including:

Increased modern slavery due diligence requirements

Requiring organisations to have due diligence processes in place to effectively identify risks in their supply chains through supplier assessment

New mandatory reporting criteria

The threshold for reporting on Modern Slavery risks in the supply chain via a published Modern Slavery statement has been reduced from $100m to $50m annual consolidated revenue

New penalties for non-compliance

Financial penalties are likely to be introduced for failure to comply to with any of The Acts requirements, such as failing to publish a modern slavery statement or failing at having an appropriate due diligence process in place.

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Understanding your supply chain’s risk of Modern Slavery

When looking to understand the level of risk in your supply chain, it’s important to understand the inherent risk based on your industry and types of goods and services you offer. For most Australian operations, the risk is focused on supplier’s supply chains, and depending on where operations are based, transport and logistics processes.

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Given the need for increased due diligence coming into legislation, trace. takes a two-way approach to modern slavery risk assessments:

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1: Assess current maturity in supplier due diligence and risk assessment

- Review internal processes, systems and data used when selecting and onboarding suppliers

- Assess existing risk assessment processes and outcomes to determine effectiveness

- Identify opportunity to uplift and improve due diligence and risk management

2: Identify and assess modern slavery risks within the value chain

Map out the value chain in providing goods and services, including supplier’s supply chains

Assess modern slavery risk by each supplier and identify actions taken to date

Identify improvement opportunities and develop an implementation plan

Develop / update modern slavery statement and publish in line with The Modern Slavery Act 2018

Determine adequate reporting required to ensure ongoing transparency and risk management

Modern Slavery is one element of sustainability reporting for organisations, feeding into broader ESG objectives. You can read more about supply chain sustainability reporting in our first article, and Scope 3 carbon emissions in our second.

Get in touch today to see how we can help you identify the effectiveness of your due diligence processes, or assess your risk for Modern Slavery in the supply chain.

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Emma Woodberry

Senior Manager

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Pioneering Progress: Improving Supply Chain Efficiency in the Australian Mining Sector

In today's competitive and increasingly sustainability-focused business landscape, mining companies across Australia are under constant pressure to enhance cost efficiency, bolster sustainability, and improve service levels. Targeted investments in supply chain processes present a significant opportunity to achieve these objectives.

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Achieving Cost Efficiency through Supply Chain Optimisation

Effective supply chain management is key to improving cost efficiency in the mining sector. Investing in advanced technologies such as AI and machine learning can optimise various supply chain operations, from demand forecasting and inventory management to logistics and transportation.

For instance, predictive analytics can help mining companies anticipate demand fluctuations, enabling them to adjust production schedules and reduce excess inventory costs. Similarly, real-time tracking of shipments can minimise delays and prevent costly disruptions in the supply chain.

Another promising area for investment is automation. Automated processes can not only reduce labour costs but also enhance operational efficiency and accuracy. For instance, automated warehousing solutions can ensure quick and accurate retrieval of materials, reducing operational downtime.

Embracing Sustainability through Green Supply Chain Practices

As the call for environmental responsibility grows louder, mining companies can enhance their sustainability profile by investing in green supply chain practices. These might include the use of renewable energy sources for supply chain operations, sustainable sourcing of materials, and the implementation of waste reduction strategies.

Investments in cleaner technologies, such as electric vehicles for transportation and solar-powered equipment, can significantly reduce carbon emissions. Similarly, by partnering with suppliers that adhere to environmentally friendly practices, mining companies can promote sustainability throughout their supply chain.

Additionally, waste reduction strategies, including recycling and the use of waste-to-energy technologies, can turn waste into a valuable resource while reducing the environmental impact of mining operations.

Improving Service Levels with a Robust Supply Chain

A well-managed supply chain is instrumental in delivering high service levels, which is a crucial differentiator in the competitive mining sector. Investments in supply chain resilience can help mining companies navigate disruptions and ensure consistent service delivery.

For example, investing in supply chain risk management tools can help identify potential risks and devise contingency plans. Also, building strong relationships with suppliers and maintaining a diversified supplier base can protect against supplier-related disruptions.

Furthermore, digital platforms can enhance visibility throughout the supply chain, enabling swift response to any potential issues. This not only improves operational efficiency but also builds trust with customers due to increased transparency and reliability.

As the Australian mining sector continues to evolve, strategic investments in supply chain processes offer a path towards improved cost efficiency, enhanced sustainability, and superior service levels. By embracing advanced technologies, green practices, and a resilience-focused approach, mining companies can position themselves for success in an increasingly demanding business environment. These investments not only yield financial rewards but also contribute towards a more sustainable and resilient mining industry.

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Contact us today, trace. your supply chain consulting partner.

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