Strengthening Supply Chain Sustainability: Eight Dimensions for Responsible Business

Key Points

• Value chains play a key role in business action on climate change and sustainable development because they impact billions of livelihoods and ecosystems around the world.
• Amid recent disruptive global events, including geopolitical tensions and wars, extreme weather events, and shifting sustainability regulations, supply chain management professionals are working in a context that demands urgent action despite decision-making becoming ever more complex.
• BSR’s freshly updated Value Chain Leadership Ladder can help companies assess their maturity across eight fundamental dimensions, enabling solid supply and/or value chain management and progress on sustainability.

Impacting billions of livelihoods and ecosystems around the world, value chains are a critical lever for business action and progress on climate and sustainable development. The pandemic, geopolitical tensions and wars, extreme weather events, and increasing and then diverging corporate sustainability regulations are just some of the disruptive events that have impacted the daily realities of supply chain management professionals and communities along the value chain. We have reached a point where the need for action is ever more urgent, yet the context for decisions and investments is growing increasingly more complex and seems to be in a constant state of flux.   

In these chaotic times, it’s imperative to take care of the fundamentals (e.g., supplier relationships) that enable supply chain resilience and efficiency. It's impossible to accurately predict how current trade tensions will play out or what crises will come next; however, strong foundations and enduring value chain relationships will best equip companies to navigate these challenging times.  

Informed by 30+ years of working with companies on downstream and upstream impacts across industries, our freshly updated Value Chain Leadership Ladder outlines how to advance business leadership in value chain sustainability. It is designed to help companies assess the maturity of their value chain sustainability processes and programs across eight fundamental dimensions, which enable solid supply and/or value chain management and sustainability progress. Performing the assessment helps evaluate the extent to which companies have a robust program in place and informs key actions in each of these areas. 

The Ladder’s internal dimensions focus on actions that companies can take within their own organizations: 

1. Value chain knowledge and understanding: Knowledge is power. Having a better understanding of your value chain and the people, organizations, relationships, ecosystems and dynamics within not only supports effective and context-specific sustainability action, but also enables companies to anticipate the implications of shocks (e.g., tariffs, climate events) and allows for effective contingency planning. 
2. Strategies and processes: Increasing integration between companies’ sustainability and supply chain strategies ensures they are actively addressing material business risks (e.g., supply security) and capturing opportunities for sustainability-related competitive advantage and innovation. 
3. Commercial terms and buying practices: Approaching these with principles of fairness and shared value positions companies for collaborative relationships that (i) can support navigating value chain volatility and (ii) don't undermine business partners’ ability to make investments that support their buyers (e.g., investments in innovation, in excellence, and in addressing sustainability risks to which buying companies are also exposed). 
4. Governance and management: Appropriate oversight and institutional capacity and incentives are essential to achieve a company’s supply chain and sustainability objectives. 

The external dimensions highlight how companies can pursue progress on sustainability goals beyond their own operations: 

1. Business partner engagement: Considerate and collaborative supplier and business partner engagement is a critical path for developing innovative sustainability solutions, mitigating sustainability and human rights-related risk, and conducting due diligence. 
2. Value chain worker and community engagement: Meaningful engagement with workers and communities along the value chain can help companies anticipate emerging issues, address long-term business risks (e.g. low farming incomes deterring young farmers), and identify and address serious human rights violations. 
3. Collaboration: Working collectively can help deepen and amplify progress on mutual sustainability goals. By sharing resources and knowledge with each other, companies can solve business-critical risks together that they might not be able to address alone. 
4. Reporting: Disclosure on various topics, whether specific (e.g., forced labor) or broad (e.g., sustainability and due diligence measures), remains and is becoming more important for regulatory compliance in many countries. Furthermore, decision-useful reporting helps investors and other business-critical stakeholders understand and gain confidence about the company’s value chain context and management of related issues. 

Recommendations for Companies 

Sustainability and supply chain leaders are operating in a turbulent context. With new regulations, growing interest in responsible value chains, and continued instability, companies need to take a more collaborative approach to supply chain sustainability and supplier engagement, stepping away from expensive, data-intensive practices. With these challenges in mind, the Ladder encourages companies to work in these ways:  

1. Expand from “supply chain” to “value chain.” Companies can consider impacts on society and the environment all along the value chain, reflecting a growing recognition of the salience of downstream impacts and their inclusion in due diligence regulation. The Ladder enables a more dynamic assessment as companies/industries vary in where impact is greatest (upstream/downstream). 
2. Elevate the importance of solutions that are co-created with and led by suppliers and workers. While it’s been long acknowledged that partnership between suppliers and workers enables greater and more sustained impact, sustainability solutions have too often been centered on buying companies’ priorities, rather than leveraging the skills and ideas and catering to the needs of the groups who are most impacted. Companies can provide the most impacted people with a priority role in solutions development and take a collaborative and enabling role in co-creation and solutions led by relevant groups.    
3. Reinforce balance between data, measurement, and context. With the proliferation of digital tools, standards, and regulation, it is even more urgent to avoid overburdening suppliers with data collection. Companies need to be mindful of the context for suppliers, business partners, and workers; to focus on data that is meaningful and useful; and to recognize its limitations.  
4. Maintain responsibility when increasing agility. Agility is the watchword as 2025 continues, but it comes with implications for human rights and sustainability as supply chain and sourcing regions shift (e.g., loss of livelihoods). The Ladder encourages companies to integrate sustainability principles in making and implementing decisions, with due diligence and responsible onboarding and exit as key frameworks to follow.   

When companies are understandably forced by recent events into reactive decision-making, they may fail to consider the long- or medium-term implications for their relationships with suppliers and impacts on communities. Focusing on the fundamentals of value chain management, supported by tools like the Value Chain Leadership Ladder, can help companies move away from reactivity and into proactive, less transactional efforts.  

Interested in learning more about addressing today’s global challenges in your company’s value chains?  Contact BSR’s Supply Chain team to understand the strengths and gaps in your current supply chain approach. 

This article was originally published at the BSR website "Sustainability Insights" and is written by Cliodhnagh Conlon, Director, Consumer Sectors, Renata Greenberg, Director, Transformation, Ricki Berkenfeld, Associate Director, Consumer Sectors and Transformation, & Erin Demarest Seglem, Manager, Consumer Sectors at BSR.