Sustainability Assessments Likely to Increase

Supply-chain sustainability is something that should be a high priority for ethanol producers, writes Sara Hessenflow Harper. Data collection is a critical component of that.
By Sara Hessenflow Harper | September 17, 2014

With today's low corn prices and high production levels, ethanol producers are likely not thinking about supply-chain sustainability. But it's always smart to prepare for the future. Because corn is a key part of the ethanol supply chain, awareness of the long-term forecast is essential. 

The next few decades promise to be an incredible time of volatility, opportunity and risk. For food companies, ethanol manufacturers and retailers, the key to minimizing the negatives, capturing new markets and keeping projected cost increases lower than competitors is in having a deep understanding and better risk management of their supply chain. This includes the ability to find and create new shared value streams with the most resilient, productive and sustainable companies in the supply chain. Data collection is a critical enabler of this competitive advantage pathway.

Sustainability, at its simplest, is the ability to meet the needs of the present without comprising the ability of future generations to meet their own needs.

Further evidence of how important the role of data collection and analysis is becoming in the food and agricultural space (among many others) is in a new survey out on what high level corporate executives have on their "top of mind" for the next year. Three main themes emerged:
1. Supply chain management is becoming more complex. Consumer goods and retail executives   ranked this as their No. 1 challenge and the one most likely to receive increased funding this year.
2. There is a big shift in executive attention toward the need for data and the impact data analysis has in helping understand and secure supply chains. 
3. Sustainability and corporate social responsibility issues are increasingly driving decisions.
Notable findings from the survey include:
• 56 percent of consumer goods and retail business leaders cited data analytics as being important to their firm’s strategy, making it the highest-ranked strategic area in the survey.
• 44 percent of business leaders cited traceability and transparency around end-to-end value chains as a top goal for their company just ahead of reducing waste and emissions (42 percent) and sustainable sourcing (41 percent).
• 52 percent of respondents reported that they have a strong or good capability to meet their sustainability agenda. Reputation and brand (41 percent), consumer demand (34 percent) and competition (28 percent) were cited as three main drivers behind sustainability.
• 56 percent said health, corporate social responsibility and sustainability priorities are very important to their business.
• 42 percent placed supply chain management at the top of their list for increased investment over the next 12 months.

The take-away from this survey is that the folks who ultimately buy commodities feel the need to invest in gathering information to make informed decisions about their supply chain, sustainability priorities and increased transparency. The only way to do this is through gathering data from the ground up, which means the push for sustainability assessments or audits is only going to increase.

We speak often to farmers, agricultural associations and food companies on how important it is to capture data and to make sure it is working for them first, before reporting it on to the larger supply chain. Taking a more systematic approach toward layering a wider array of data (like sustainability and financial) into long-term business planning processes can help individual farm operations and food companies make better decisions and reduce long-term costs the same way it helps large corporations. It will also get these entities ready for the sustainability reporting onslaught that is coming their way.

The decision before the agricultural industry is increasingly becoming how and who will provide data about their growing performance, not if data will be collected.

As the retail industry continues to ask questions about the sustainability of the products they sell, fuel and shipping will also be impacted. So, in addition to agriculture, ethanol and other fuels will be looked at with the sustainability lens as well. This is a good thing if businesses can demonstrate environmental consciousness using data. Now is the time to start thinking about your sustainability plan to position yourself to be the market leader.

Authors: Sara Hessenflow Harper
Sustainability Director,
Vela Environmental,
Kennedy and Coe LLC
202-544-8200
sharper@kcoe.com

Contributor: Donna Funk
Principal, Kennedy and Coe