The conditions for sustainable supply chains

IT&Telecom companies are pleased to present the report Sustainable supply chains which aims to explain the industry's potential to work towards more sustainable supply chains.

 - We have long recognized the need to highlight the challenges facing the industry. Our member companies, which produced the report, are actively working to make their supply chains more sustainable and to minimize the risk of abuse. Many are involved in international collaborations to address the issues and our members are represented in both the Responsible Business Alliance (RBA) and the Joint Audit Cooperation (JAC). It is our hope that the report can provide a nuanced picture of what the reality looks like today," says Magdalena Aspengren, chair of the IT&Telecom Companies Sustainability Council.

The supply chain from mine to store shelf is not easy to track

The production of a product, from the mine to the store shelf, is not simple to survey; rather, the reality is almost infinitely complex. Because of this complexity, controlling all stages of production is a difficult task. In Figure 1, we can see a possible supply chain where raw material extraction is done in Africa, material manufacturing in America, component manufacturing in Asia and America, final assembly in Europe and Asia, distribution worldwide, final delivery in Europe and finally use of the product in Sweden. A complete supply chain today inevitably involves a very large number of actors.

Responsibilities in the supply chain are regulated by commercial agreements between different parties, and as each actor often has several subcontractors, the further down the supply chain one goes, the more commercial agreements are created. The types of actors involved are illustrated in Figure 2. For example, the production of a laptop or a mobile phone requires tens of thousands of commercial agreements between different parties.

The advantage of the market economy is that it creates unprecedented wealth. It works by enabling the allocation of resources in an efficient way. No matter how you look at it, no one can dispute this fact.

The complexity of the supply chain can be said to be the anatomy of the market economy. Without all those tens of thousands of business contracts, it would never be possible to create the products we take for granted and which are necessary to create our prosperity. Complexity has a concrete function because it creates benefits for people, businesses and societies.

At the same time, the complexity poses a challenge to the industry in terms of ensuring the sustainability of supply chains. Reviewing these tens of thousands of business contracts and the actual circumstances of the operations linked to them is a very comprehensive task. The risks of social and environmental misconduct are illustrated in Figure 3 and Figure 4. Many companies do not have sufficient resources to carry out an audit on their own. Instead, they collaborate in international organizations. The Responsible Business Alliance (RBA) and the Joint Audit Cooperation (JAC) are two of these.

More information on the RBA is available here.

More information on the JAC is available here.