Altruism is no longer the driving force for businesses investing to become more sustainable

Stuart Nivison, Global Head, Client Network Banking, HSBC

We are seeing companies increasingly under external scrutiny with incentives from government and regulators as well as network expectations from customers, suppliers and communities to behave ethically. Looking behind the point of purchase and the brand, we know there is a huge network of interconnected suppliers, customers and business relationships working together to bring that product to us as consumers. So the impact of this ‘ecosystem’ on sustainability is significant – typically about 80% of the environmental impact of a business is located in its supply chain. This is a risk and also an opportunity.

We are regularly talking to large buyers who are the forefront of thinking, looking beyond supply chains as being simple cost reduction projects and now considering how they can create value by collaborating with their key, strategic suppliers. We know that when well-managed, these ecosystems of companies and people give life and value to a brand and consistency of customer experience. Not done well - they can be costly, unreliable and present risks to companies and communities.

For me, sustainability also makes good business sense for smaller firms, and we know that they can see change coming. At HSBC we recently did some research and found that while only 18% of smaller firms rate being sustainable as important to them today. But, almost half (46%) said they believed it would be important to them over the next three years.

All of us have a role to play as end-consumers. Increasingly we are rightly considering the environmental and social impact of the purchases we make – and brands are taking notice.

While many businesses have taken initial steps to control their direct footprint, for example by improving energy efficiency or reducing disposable waste, many are now looking to their network of suppliers to adopt similar practices. Our research tells us that 31% of global businesses have already actively made changes to their supply chain in the past two years for reasons including the climate, ethics, and customers’ or partners’ expectations, but this is a work in progress and it requires sustained focus, change and investment – and that is where we come in.

In my view, international banks have a key role to play in accelerating this move to sustainable business practices and more sustainable global supply chains. We are already working on pilot solutions today to help some of the most progressive buyers meet their sustainability objectives. This can take a number of forms: from traditional green lending to innovative schemes such as programme-based lending that finances the investment needed by key suppliers, or by using adjustable pricing in Supply Chain Finance schemes to help suppliers meet sustainability targets.

I am keen to work with more companies that are serious about sustainability – from large buyers with ambitious targets on sustainability throughout their entire supply chain, to smaller companies recognising that a transition to being more sustainable is in their best interest. For me, sustainability is a cornerstone reason for supply chain change. Doing the right thing – making the transition to sustainability - could be the best thing not only for the environment and society, but for the future of your business.