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Sustainable value chains

Today’s global economic system is based on a linear model that became dominant after the first industrial revolution introduced the concept of mass production. This model has delivered economic growth and increased prosperity over the past 200 years. Particularly since the end of the 1940s, technological and social innovation has boosted living standards for a majority of people on our planet.

In terms of economic growth it has been a story of incredible success. Within the same period of time, however, the Earth’s ecosystems have started to show signs of serious stress. The linear model involves extracting natural resources to make products that are used for a limited period of time, before being discarded as waste. It is often referred to as the ‘take-make-dispose’ industrial model. In contrast, a circular economy is an alternative economic model that involves decoupling economic activity from the consumption of finite resources.

A circular economy model derives its inspiration from nature’s biological cycle and creates closed loop material and energy cycles where waste is designed out because it is a value leakage. A circular model means using resources efficiently and prioritising renewable inputs, maximising a product’s usage and lifetime in order to extract the maximum value, and recovering and reusing by-products and waste to make new materials or products. 

 

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Issues you may be facing

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There are several key drivers for responding to this imperative:

  • Increasingly vulnerable value chains, based on social and ecological systems under pressure, are leading to resource health, availability and quality concerns for business.
  • Expectations from stakeholders are changing, meaning that organisations must engage beyond their boundaries and influence responsible practices up and down stream.

 By responding to this, your organisation could:

  • avoid risks caused by disturbances within social and ecological systems, supporting business models and production processes that are more stable and future fit;
  • proactively facilitate strengthened and socially/ecologically compatible value chains through timely action;
  • make smart choices regarding who your business partners with and relies upon for insights, goods and services - those known for responsibility regarding human rights and carbon intensity, for example; and
  • enhance brand reputation through association with those walking the same journey. 

 

How we can help you

Strategy and Transformation

1. Analyse status quo: Understand the health and viability of key inputs to your business model (current and future) as well as the practices of suppliers/customers within your value chain; to determine areas of highest exposure and opportunities to improve on your processes to maximise positive impact.

2. Define ambition: Understand where you want to be positioned and obtain senior buy-in for this ambition. We have helped companies prepare briefing papers and facilitate workshops to help determine this ambition.

3. Plan: Develop an implementation plan and create the right governance structures around delivery of this plan. We have helped companies develop implementation plans while ensuring broad internal buy-in to the plan.

4. Implement (tactical): Start with tactical responses such as governance reviews and materiality assessments which are essential to successful implementation. These will help define your strategy and approach towards supply chain risk management.

5. Implement (strategic): Initiate more strategic responses such as supplier analyses and quantifying risk maps per product/service offered. Start to integrate identified risks into your company’s existing risk management framework and supplier intervention and training efforts.

6. Train: Ensure that staff are trained on new policies and processes. Communicate the shift in thinking on supply chain risk and response.

 

Reporting and Assurance

7. Report: Disclose the progress of your company’s journey towards meeting responsible business and supply chain commitments.

8. Assurance: Ensure credible and robust data on performance for internal and external decision-makers.

 

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Jayne Mammatt

Jayne Mammatt

Partner, PwC South Africa

Tel: +27 (0) 11 797 4128

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