Covid‑19 and Supply Chain Sustainability: Replication and Explanation

For the past two years, we have asked the question “Since the start of Covid-19, my firm’s commitment to supply chain sustainability has…” And for the last two years, we have received almost identical results from the Englishlanguage respondents. In 2021, 30% answered that their firms’ commitment had increased, and 47% said it stayed about the same. This means that for the second consecutive year, roughly 80% of respondents reported that their firms were undaunted by the global pandemic. [3] This replication of results adds support to our previous conclusion that approximately 80% of firms held fast to their supply chain sustainability goals during the Covid-19 pandemic.

To many, these results were counterintuitive. How could a global pandemic not derail supply chain sustainability (SCS) efforts? [4] But this year, our qualitative research offered another interpretation. In our semi-structured executive interviews, we heard several respondents describe how the pandemic actually brought supply chain management—and in particular, supply chain transparency and resilienceto the fore in a way that it never had before. Previously, global supply chains simply ran silently and unseen in the background of business operations and day-to-day life. In 2020, we began to see emerging evidence of firms shoring up—and even accelerating—their SCS efforts as a risk management measure and a way to strengthen their supply chain resilience. [5] And in 2021, we see this idea spreading and taking hold more broadly.

One interviewee from a global electronics manufacturer summed up this driving force: “A tremendous amount of supply chain disruption has challenged us to look at what we can do different, what we can do better.” Similarly, another third-party logistics professional from North America told us, “The visibility and the awareness of the supply chain, and with that the attention that was focused on bringing different solutions to market gives us the ‘air cover’ that we need to offer things like EVs (electric vehicles) and distributed warehousing solutions.”


Figure 2: Change in supply chain sustainability (SCS) commitment in 2021 (n = 1,694)

“In the face of constant disruptions, leading companies worldwide are urgently redesigning their supply networks and ecosystems to not only address business continuity and resilience, but also to improve their supply chain for sustainability, which is a very high priority for internal and external stakeholders alike.”

Hong Mo Yang, Senior Vice President – Industry Strategy, Blue Yonder

Figure 3: Change in SCS commitment by region (n = 1,533)

However, we also see that the global commitment to supply chain sustainability has not been as robust in the face of the Covid-19 pandemic as the English-only responses of past years would suggest. When reconsidering this same question regionally, we see differences in the impact of Covid-19 by the region where respondents’ firms are headquartered. Notably, a smaller percentage of respondents working for firms headquartered in Latin America & the Caribbean reported their firm’s commitment to SCS increased since the start of Covid-19. As one respondent from Latin America said, “The pandemic stopped these agendas for the last two years.”

Our previous reports highlighted that firm size is an important factor in commitment to supply chain sustainability, and that proved true again this year.

Figure 4: Firm size by region (n = 305)

Pressures: Turning Up the Heat

Since 2019, we have asked survey respondents to rank the level of pressure that their firm faces to increase supply chain sustainability from 10 different potential sources along a 5-point Likert scale. Those responses typically cluster around the 3–4 (“high” to “very high”) range. However, some pressure sources show significant changes over time. To see where there were meaningful shifts in responses over time, we compared the average response for each year in Figure 5.

Figure 5 shows how sources of pressure change over time. We see that almost every source of pressure shows an increase over three years of observation, with pressure from investors rising most dramatically, followed by pressure from corporate buyers. This sentiment was also captured in this year’s executive interviews. An interviewee from a global electronics manufacturer explained, “I think we’re seeing more and more that our customers—both our direct customers and our indirect customers—are expecting it, or in some cases demanding it. They are looking to only purchase from companies that are investing in sustainability and are committed to being leaders in that space. I think there is a much stronger pull from the customers for it.” And another respondent from a North American logistics firm told us, “I think pressure primarily comes from organizations who are manufacturing that product and shipping it applying that pressure to carriers who are taking that product. Most of the environmental initiatives that carriers are asked to carry out cost them money. In some respects, they’re doing it because they are being required to do it.”

This anecdotal information, combined with the data shown in Figure 5, indicate strong B2B pressure in 2021. That is, it’s not external watchdog groups like NGOs, regulators, or the media who respondents felt ratcheting up the pressure in 2021; rather, it’s their own customers, leadership, and creditors. Overall, this indicates that in the fall of 2021, commercial pressure to improve supply chain sustainability was at least as prominent—if not more so—than regulatory or public pressures. The recency of this shift toward commercial SCS pressure can also be observed in Figure 6, where the pressure that respondents reported sensing from company executives and investors increases steadily, but by contrast, pressure from corporate buyers remains flat but jumps sharply from 2020 to 2021.

“Customer demand is a major driver of supply chain sustainability initiatives. Firms we work with are looking for ways to reduce supply chain emissions and adopt more sustainable practices in response to that customer demand. This is the case even in markets where regulatory pressures are not as ambitious.”

Christian Piller, Vice President for Research and Sustainability, project44

Figure 5: Level of pressure from top 2021 sources year over year (n = 1, 472). Filters will change ‘n’ value and may result in too small of a sample to draw statistically significant conclusions.

Figure 6: Sources of SCS pressure (n = 1,136)

Supply Chain Sustainability Goals: The Environment Bounces Back

Once we understood variation in pressure sources, we looked to understand how respondents evaluated their firms’ supply chain sustainability goals. Like the approach we applied to understanding sources of SCS pressure, we compared the responses across 10 different dimensions of sustainability over the three years of survey data.

Again, for each sustainability dimension, responses mostly coalesced around an average score of 3.5. However, every dimension shows change year over year.

And when comparing 2020 to 2021, every dimension shows an increase.

Interestingly, commitment to climate change declined from 2019 to 2020 but then shot up significantly from 2020 to 2021. This was also true of respondents’ prioritizations of supply chain circularity. At the same time, commitment to social issues, including human rights protection; supplier diversity, equity, and inclusion; and fair pay and fair trade continue to make steady increases every year from 3 (“high”) in 2020 to 4 (“very high”) in 2021.

Figure 7: Goal change from 2019–2021 (n = 1,100). Filters will change ‘n’ value and may result in too small of a sample to draw statistically significant conclusions.

Put Your Money Where Your Mouth Is: Supply Chain Sustainability Investments

We also investigated the potential gap between the respondents’ assessments of their firms’ supply chain sustainability goals and their assessments of their firms’ investments to meet those goals.

Respondents were asked to assess their firms’ investment in the same 10 sustainability dimensions using the same 1–5 Likert scale.

In Figure 8, we compare average responses along each dimension. It is, perhaps, not surprising, though disappointing all the same, that every dimension shows goals ranked more highly than investment.

And indeed, this has also been the case in prior years’ reports. Actual investment is, after all, costlier than is goal-setting.

But we can also detect a subtler signal in Figure 8: The gap between goals and investment is higher on social dimensions than for environmental ones, another repeat from last year’s report. However, we also see evidence of progress in closing the sustainability investment gap in recent years, particularly for human rights protection.

Figure 8: Gap between goals and investments (n = 2,187)