Commodity giants lead charge towards sustainable supply chain solutions

The colossal machines, that churn out everyday necessities such as the sprawling mines, the endless plantations, the enormous refineries are domains of the commodity giants. For decades, their focus has been on maximising output, and feeding the insatiable demand of a growing global population. However, the tide is turning. The very foundation of their business, i.e. the natural world, is under increasing strain. Climate change, deforestation, and resource depletion are stark realities, forcing a fundamental shift in the way these giants operate.

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Sustainability is no longer a fringe concept, but a strategic imperative. Commodities giants, once seen as environmental laggards, are now emerging as unlikely leaders, in the quest for a sustainable future. This transformation, isn’t driven solely by environmental concerns but, ;a matter of survival. Here’s how these mammoths of industry are leading the charge, in building a more sustainable supply chain:

Embracing transparency

For too long, the pathway of a commodity from source to shelf, was hidden in the shadows. The low level of transparency, was a hindrance to the tracing of environmental and social injustice in supply chains. The trend is for market leaders to foster a culture of openness. They’re putting in traceability systems, that trace raw materials from their source, and thereby, sustain responsible sourcing and ethical labour practices. The function blockchain technology, plays, in forming the digital thread, is its ability to ensure, these old systems cannot be altered. Customers are becoming more environmentally aware, and can easily make responsible purchases, by rewarding companies with sustainable practices.

Revolutionising farming

Deforestation and climate change are major problems, that result from agriculture. Major commodity players, such as palm oil and soyabeans, are striving for sustainable farming, via responsible agricultural practices. This comprises technologies like precision agriculture, which applies data and sensors, to develop fertiliser and water usage efficiently, and have a reduced environmental impact. Apart from that, they are also introducing regenerative agriculture, which is based on the development of healthy soil ecosystems, leading to increased carbon sequestration and improved crop yields.

Harnessing renewable energy

Energy consumption in the commoditysector, is resourceful. The top corporations are wisely putting their money to work, by harnessing solar and wind energy to power their enterprises. Apart from this, the use of renewable energy helps to decrease their dependence on fossil fuels, and, also act as a guide for the whole sector. .

Investing in circular economy principles

The linear economic model of the past, “take-make-dispose”, is not sustainable anymore. Companies in the commodity sector, are coming up with circular economy projects, where, they seek to reduce waste, and, increase resource use. This includes the use of programmes, such as creating recyclable products and the establishment of closed-loop recycling systems. To illustrate, a leading aluminium manufacturer is working together with car manufacturers, to find a way of recycling aluminium from end-of-life vehicles faster and more efficiently than before, as a result of which the need for virgin aluminium production will decrease.

Collaboration for change

Sustainability is not for the lone ranger. It is commonplace for the commodity giants to enter into agreements with governments, NGOs, and local communities. Through these networks, knowledge is shared, joint investments in sustainable practices are made, and industry-wide norms are developed. For example, a group of forestry industries, is partnering with local communities to preserve the remaining rainforest areas and promote responsible timber harvesting.

The road ahead: challenges and opportunities

The route to a completely sustainable supply chain, is characterised by a lot of hurdles. The immense size of the operations of commodity mega-companies, there is a need for a gradual transition. Besides, the producers that are adopting sustainable practices, are facing a problem in the area of fair payment for their labour. However, these roadblocks are not insurmountable, and, the rewards are worthwhile.

Sustainability, entails cost reduction through resourcing and waste minimisation. A stable and healthy environment, means, a more secure supply chain, which can help to prevent disruption, if there are extreme weather events. Finally, these magnates can boost their brand image through sustainability practices, thus attracting eco-conscious investors and consumers.

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The commodity sector is on the threshold of a choice. The giants that used to be the people who were thought to be unfriendly to the environment, have a new chance of being the ones, to lead the fight for a sustainable future. Their metamorphosis, catalysed by creativity, partnership, and a rising sense of accountability, gives a flicker of optimism for our planet.

The author is Portfolio Director, PackPlus & PackPlus South, RX India

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