Why sustainability is more than carbon and construction materials

Social impact, ethical practices and economic value are headlines of an expanding sustainability agenda, says the Supply Chain Sustainability School’s chief executive officer Robin Mellon.

Every business or service has a supply chain, whether you’re selling coffee, clothing or construction materials. In some cases, these supply chains are quite simple. But increasingly, especially in large industries like construction, supply chains are complex and frequently inscrutable.

Mellon says Australia’s property and construction industry faces five main areas of supply chain risk: governmental, regulatory, economic, reputational and environmental.

“Each of those risks will ebb and flow depending on your business, but as the scope of sustainability continues to grow, so do the risks.”

Shifting community expectations, investor demand for transparency and increasing pressure on corporations to demonstrate good corporate citizenship are just some of the factors influencing supply chain sustainability, Mellon says.

“While in the past our industry was focused on environmental sustainability, today we are considering more social and economic factors,” he says. These include modern slavery, social value and economically-sustainable business models.

A recent survey of members of the Supply Chain Sustainability School found 52 per cent of respondents thought sustainability was a more important issue in their businesses than it was 12 months ago, and 49 per cent have already begun to engage their suppliers earlier.

“Seventy-nine per cent of businesses now have a sustainability plan in place within their organisations. This may not mean much in itself, but compared with five or 10 years ago, this is a massive shift,” Mellon says.

A new worldwide guidance standard for sustainable procurement, ISO20400, was released in June 2017 and broadens the definition of ‘sustainable procurement’ to include economic and social factors, alongside the environmental. Mellon says the standard’s impact “will be felt through big business first, but will trickle down to all small businesses through our supply chains over time”.

Issues like modern slavery, which “few people were talking about five years ago” are starting to dominate discussions, he adds.

“There’s a massive and immediate reputational risk involved in discovering that the materials in your building were created through forced labour, for example.”

The 2016 Global Slavery Index estimated that 45.8 million people in 167 countries are in some form of modern slavery, a term that includes debt bondage, forced labour and human trafficking. An inquiry is underway into whether the Australian Government should establish a Modern Slavery Act, similar to that established in the United Kingdom in 2015 which requires companies with a turnover of more than AU$59 million to report on their compliance annually.

Big business in Australia is already backing the introduction of an Act, and Mellon says it will “drive changes in both business and personal behaviours”.

“When large companies with influence over extensive supply chains make changes, people listen. Whether we are talking about carbon, certification of materials or modern slavery, a large company can change an entire supply chain in one move.”

Mellon says he’s inspired by the work of some industry leaders, who are embedding social value into their decision making. He points to Mirvac, which surveys its suppliers annually – “whether they are providing toilet paper or legal services” – to ensure each meets its vendor code of conduct and aligns with the company’s broader social impact agenda.

“Big organisations wanting to include social value in their decision making have a huge ability to change things for the better,” he adds.

Mirvac’s Song Café in Sydney’s 200 George Street, which operates as a social enterprise with all profits supporting YWCA initiatives, demonstrates the social impact the industry can make on supply chains and local communities, he says.

Mellon also points to the work of John Holland, which is currently rewriting its sustainability strategy in light of the new international standard and best practice procurement examples, and which insists that every preferred supplier be a member of the Australian Supply Chain Sustainability School “so that everyone involved in a project can be speaking the same language”.

In the instant information age, any oversight, irresponsibility or malpractice down the line can be exposed and shared on social media in the blink of an eye. In this environment, companies can’t afford to be complacent, Mellon says.

His message is simple.

“You can’t flip a switch and go from knowing nothing about sustainability in your supply chain to knowing everything. It’s a journey – and one we are all on. But there is free information out there to help people upskill – about energy and carbon, waste, biodiversity, sustainable procurement or modern slavery. If you learn just one thing a month, soon you’ll know a whole lot more.”

The Property Council’s Social Sustainability Committee is exploring a range of issues, including human rights. On 22 August, the Property Council and Supply Chain Sustainability School will co-host a forum of experts to explore the issues of modern slavery. To find out more about how to get involved in the committee’s activities, contact the Property Council’s policy manager Francesca Muskovic.