May 13, 2025 • 38 mins
Sustainability has become an imperative for many companies—but in the face of regulatory rollbacks and budget cuts, are those goals here to stay? In this episode, we explore how companies can meaningfully pursue sustainability, even amid shifting political and economic pressures. We discuss growing public support for sustainability, the role of data and modeling in shaping corporate sustainability strategies, and how companies can build resilient, responsible supply chains.
In this episode, we’re joined by members of the MIT Sustainable Supply Chain Lab, hosted within the MIT Center for Transportation & Logistics: Tori Arnold, Project Manager, Dr. Sreedevi Rajogopalan, Research Scientist, and Martin Staadecker, Research Assistant. The lab’s annual State of Supply Chain Sustainability Survey offers insights into the current state of sustainability across industries—we invite you to complete this year’s survey here (open until May 31st, 2025).
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(00:00):
- Welcome to another episodeof "Supply Chain Frontiers,"
the MIT CTL podcast wherewe explore the trends,
technologies, and innovationsshaping the future
of supply chain management.
I'm your host for thisepisode, Mackenzie Berry.
Today, we're diving intothe world of sustainability
and its implications for supply chains.
(00:21):
Joining me are members
of the MIT Sustainable Supply Chain Lab,
hosted in this MIT Center forTransportation and Logistics,
Dr. Sreedevi Rajogopalan,
a postdoctoral associate at CTL,
Martin Staadecker, a researchassistant in the lab,
and Tori Arnold, aproject manager in the lab
who is spearheading the Annual State
(00:41):
of Supply Chain Sustainability Survey.
Here's what I know.
The MIT Sustainable Supply Chain Lab
aims to support companiesand organizations
to improve logistics andsupply chain operations
by creating appliedand innovative research
aimed at fostering growth
while considering environmentaland social sustainability.
The lab connects researchoutcomes to practical settings,
(01:03):
enabling companies and stakeholders
to leverage supply chainsas a beneficial force
to reach global sustainabledevelopment goals.
They also seek to improve the visibility
of supply chain impacts
and develop strategies to help reduce them
so companies can betteraddress consumer, political,
and shareholder concerns.
In this episode,Sreedevi, Martin, and Tori
(01:24):
will explore the currentstate of sustainability
across industry, current challenges,
and key insights from their work.
Welcome, everyone, so glad to have you.
If we could just start out
by having everyone introduce yourselves
and your work in the lab,
we can start with you, Sreedevi.
- Sure.
First of all, thank you,Mackenzie, for having us.
My name is Sreedevi,
I'm a postdoctoral researcher
(01:44):
at the Center forTransportation and Logistics.
I'm associated withtwo labs at the center.
One is a Sustainable Supply Chain Lab,
and the other is a Low IncomeFirms Transformation Lab.
My research interestsincludes sustainable sourcing,
diversity, equity, andinclusion in supply chains,
and understanding andimproving business operations
of small and micro firmsin developing countries.
(02:04):
- Wonderful. Martin?
- Great.
My name is Martin Staadecker,
I'm a student in theTechnology and Policy Program
here at MIT, a master'sstudent in my first year,
and I'm also a research assistant
in the Sustainable Supply Chain Lab
working on trying to understand
the ways companies measuretheir greenhouse gas emissions
and the trade-offs there exists
with different ways of measuring.
(02:25):
- Tori?
- Yes, I'm Tori Arnold,
I'm the project manager of theSustainable Supply Chain lab,
as well as the Low IncomeFirms Transformation Lab
that Sreedevi is also a part of as well.
So trying to help wrangleeverything together
and keep everyone moving forward.
- Yes, no small feat, no small feat.
(02:46):
I read a introduction of the lab,
but just, Tori, wonderingif you can give us
a kind of overview of the MITSustainable Supply Chain lab
and its primary goals,
how it started as someone on the inside.
- Yeah, so I think yourintroduction is great.
The lab was really startedin 2016, a part of CTL,
so it was a few different initiatives.
(03:07):
There was a Responsible Supply Chain Lab
and then a Sustainable Logistics,
and then eventually they kindof merged to become one lab
really focusing onsustainable supply chains,
both environmental and social,
and like you stated,
really working on helpingcompanies and organizations
gain visibility
(03:28):
but also be able to bettersupport their company
to move further in the sustainable sector.
- And as I understand it,
it was something that industrieswere really calling for.
- Yeah, so CTL works witha lot of industry companies
and they actually keptbringing up sustainability
and there was a few different researchers
working on one-off type projectswith different companies,
(03:51):
and then it became realized
that it was a much bigger need
to actually have a lab focus on that.
- Martin, you do a lot of workwith modeling and analysis,
how does data help you make the case
for sustainability investments
when you're speakingwith those in industry?
- Yeah, I think there's lots of reasons
to be doing investments in sustainability
(04:12):
and we're gonna get into those,
but I wanted to highlight just one story
of how data can really help.
So there's a new growth of movements
or there's this thingthat's called green bonds
or green investments,
and so, they're gettingmore and more popular,
especially in the European Union,
but around the world whereinvestors are saying,
"We'll give you money,we'll give you a loan,
(04:33):
but you have to meet certain targets."
And in fact, two weeks ago thecity of Gothenburg in Sweden
was one of the first to have to pay a fine
because they didn't meet their targets
and they were kind of proud of it.
They were like, "Oh,we're ahead of the curve,"
like, we set really ambitious targets
and, like, we're paying a fine,
but we're doing this
because we purposefullyset ambitious targets.
But it's just givingan example of how data,
(04:55):
like, to know if you metthose targets or not,
and to be able to set realistictargets, you need data.
And so, all of these new initiatives
that are happening around sustainability
are all underpinned by the need for data
on your emissions and your sustainability.
- Yeah, absolutely.
Sreedevi, how does the labbalance academic research goals
with the practical needsof industry partners?
(05:17):
I imagine that's always a negotiation.
- Absolutely, very interesting question.
Actually, we do not doany theoretical work.
Almost all our projectsthat we have done so far
are driven by real needs
that have been identified by a company
or the industry at large.
I can give you some examples
of some of our pastprojects that we have done.
For example, we've workedwith several companies
(05:37):
helping them redesigntheir supply chain network
with a focus on not just reducing cost
and increasing service level
or improving their operation metrics,
but also reducing the CO2 emissions.
And another project that we worked
was the company wanted us to assess
that their sustainable packaging design
and wanted to understand
if that is resulting in overall emissions.
And, interestingly,
(05:57):
what we found was while the design per se
is largely sustainable incomparison to the old design,
but when you looked
at the supply chain activities end to end,
the new design was actually resulted
in a 45% higher emissionsthan the old design.
So what we tell companies
is it's important not only to look
at sustainability in silos,
but to look at it
from a supply chainpoint of view end-to-end.
(06:19):
As a researcher,
while always be goodto find that sweet spot
where you can meet academicrigor with practical relevance,
but we do not take up any projects
that is not driven by real-world needs.
- Yeah, absolutely.
And that's a great point too,
because some companies could look
at just one part of the supply chain,
but if you're not lookingat it holistically,
you can't really measure
(06:39):
how impactful the changesthat they're making have been.
- I guess just on that note,
the companies that arecreating the same product
can have very different business models
and ways of integratingtheir supply chains
so they can be very vertically integrated,
which means they own their suppliers.
And so, in a way,
you can't really comparea company to company
which product is more sustainable
unless you look at theentire supply chain.
(07:01):
- And I think adding to that,
there's so many companieswho work in silos
and the sustainability team
is a small team thatdoesn't have the same reach
as maybe their marketing team
that people actuallydesigning new packaging
or things like that.
So when everything is done in silos
and not looked at itfrom a broad perspective,
that's when you can have problems
(07:22):
where you think you're lowering emissions
and you're actually not.
- Yeah, absolutely.
Just to add to that point,very interesting, Tori.
So when we look at companies,
when we work with companies
on meeting their sustainability goals
and what we find is thesustainability department
completely works in silos.
The supply chain team has no clue about
what the sustainability teamis doing, and vice versa.
And this happens in most companies.
(07:43):
- I see.
So for a company to reallyprioritize sustainability,
you have to make it apart of every single team.
- Correct.
- And that comes from settingthe culture in the company,
and that's a big part of it.
- Yeah, absolutely.
Transitioning now tolooking at industry trends,
policy, and public perception,
sustainability is a big partof the conversation right now,
particularly as we seegovernmental rollback
(08:04):
of investments in sustainability efforts.
At the industry level,
many companies have quietly rescinded
their sustainability goals.
Why should companiesprioritize sustainability
and the sustainability development goals?
- Yeah, I mean, when we think
about why companies shouldprioritize sustainability,
I think there's a business case for it,
and then there's another case,
(08:24):
so I'll start with the business case.
The first thing is a lot ofsustainability improvements
are actually energyefficiency improvements
are cost improvements.
I mean, if you have visibilityin your supply chain,
it can also make your supplychains more resilient.
It means if there's a geopoliticalevent in another country,
you can adjust your operations.
It means that whenCOVID or something hits,
you can react more quickly
(08:45):
because you have that visibility,
you have that partnershipwith your suppliers.
So there's a lot of, like, good,
just simple business reasonsto do what's sustainable.
The next reason I would say
is there's also what wecall transition risks where,
because in general,
the world is moving towardsbeing more sustainable,
there is the risk
that maybe there'sgoing to be a carbon tax
or certain tariffs.
We see the EU coming out with the CBAM,
(09:07):
which is a tariff forhigh-emission products.
And so, these transitionrisks basically say
that if you don't investin sustainability now,
you might be locked intosomething that is high mission
that is gonna harm yourbusiness in the future.
And then, finally,
I think this is not talkedenough in the space often
is there's just a moral and ethical reason
to go towards sustainability.
(09:28):
I think our world needs it.
Climate change
is gonna have really badimpacts on our world.
And so, a lot of leaders
and a lot of the leading companies,
that is their main driveris that their CEO decided,
that, "Oh, this is a priority for me."
- Yeah, and I would add to that,
so our lab director, Dr. Josue Velasquez,
has had conversations and presentations
(09:50):
at many different companiesabout sustainability.
And one company in particularactually came to him
and said, "If the worldfails, then we can't succeed."
So our company cannot succeed
and continue to grow if theworld is kind of failing
and we don't have a livable environment.
So it is still like a business case
to be able to make those initiatives.
Yes, you're doing things that'sbetter for the environment,
(10:12):
but in the end,
it actually will stillhelp your company thrive.
- Self-preservation, indeed.- Yeah, exactly.
- So what is the primary pushback
that you all see companies make
against prioritizing sustainability?
- I think one of the primaryreason for a pushback
is companies focus on short-term goals.
Sometimes they're constrainedby the financial pressures
or, you know, thepressure on profitability.
(10:34):
There are also regulatoryand political uncertainty,
and they do not knowif today's regulations
would stand for the next five years or so.
But, interestingly, what we found,
let me give you some statistics
about the current stateof affairs in the US.
So the Sustainable SupplyChain Lab at the center
has joined hands with the Freight Lab,
and we are in the process
of forming a sustainabletransportation consortium
of shippers, carriers, and brokers
(10:56):
to address some of the commonsustainability challenges
in that particular space.
And recently we held a couple of webinars
for these companies to justgauge the interest levels
and also to understandwhere do they stand.
And we conducted a poll asking them
what is their current stand
when the Trump governmenthas pulled the US
out of the Paris Agreement,
close to 95% of the companieswho attended the webinars
(11:18):
said that they are significantly committed
to their sustainability goals
and there is no change interms of their investments
or initiatives despite the US
pulling out of the Paris Agreement.
So while they have problemswith their short-term goals,
but with regulatory pressures,
I think companies still continue to focus
on their sustainability-relatedinitiatives.
- And the vast majority of those companies
(11:38):
were US-based as well.
- And so your point, Martin,
you spoke about geopolitical upheaval
being a reason why a companywould invest in sustainability,
and we see that right now
being the primary concernshort-term and long-term,
even if companies havetraditionally cited that
as a reason why they wouldn'tinvest in it short-term.
But anything to add on your end, Martin,
in terms of primary pushback you see
(11:59):
against prioritizing sustainability?
- Yeah, I mean, we hear a lot of news now
with the recent election,
and I think people are rightly concerned,
but I think also when youlook at the world as a whole,
the movement towardssustainability is still ongoing.
There was a survey recently,
they surveyed peopleacross the entire world
and they did a representative survey,
which means that it's representative
(12:21):
of the distribution ofpeople in the world,
and they found that 86% of people said
that people should tryto fight global warming.
So that's a pretty high percentage.
And in fact, then when they asked,
would you be willing to contribute 1%
of your household income every month
to fight global warming,
69% of the people in the world said that.
So we have more than half the world
that wants to contribute their income
(12:43):
and that believes that peopleshould fight global warming,
and they also said that people
should be more politicallyactive on this topic.
So I feel like the movement is going,
and companies are realizingthat and it's not going to stop.
- And speaking to another concern
that a lot of consumers arehaving in the current moment
is that of greenwashing,
which is used to create afacade of sustainable efforts
(13:04):
without actually having to take action.
And a lot of companies tactics
are only getting sneakier around this,
it can be difficult forpeople to distinguish
between earnest effortsand deceptive messaging
in regards to greenwashing.
What are some forms of greenwashingthat we often overlook?
- Sure.
So this is an interesting question to me.
I like to draw historicalexamples and precedents,
(13:26):
and if there's one industrythat has been really good at,
I guess not greenwashing,but misleading the public,
it would be the tobaccoindustry in the 1950s
all the way up to the 2000s,and even a bit recently.
So when you look at their mechanisms
of how they were ableto confuse the public,
one of the big ones
is that they invested heavily in research
and they built a narrativethat more researchers needed,
(13:47):
and they invested in reallygood research to be clear,
like they invested on researchof the specific mechanisms
for cancer related toair pollution, et cetera.
But it was research that wasdistracting away from research
that was trying to figure out
whether cigarettes cause cancer.
And so, one of the waysthat we see greenwashing
in our society today
is how companies arefunding research activities
(14:07):
and directing our attention
more so than making amisleading claim per se.
And so, we have to be really careful of,
well, if there's all this publicity
about a specific technology,
is our attention being misdirected
because it is being promoted
by certain special interest groups?
- Absolutely.
So a lot of the statisticsthat you all have cited
have confirmed that there istremendous public interest
(14:30):
in investing in sustainability,
but that doesn't necessarily get us
to the challenges that wesee in implementing solutions
for sustainability.
So just curious, if youcould speak to, Sreedevi,
what's an example of achallenge that you faced
implementing a sustainability solution
and how you overcame it?
- Sure.
(14:50):
So the Director of theSustainable Supply Chain Lab,
Dr. Josue Velasquez, hewas part of this project
and then eventually I joined him.
So we were working
with one of the largestretailers in Mexico,
and they wanted us to help them
with their last mile delivery operations
and also the cargo consolidation.
And while we were working with them,
we asked them what isthe strategy they follow
to cater to their end consumers?
(15:11):
Because for majority of their customers,
they do fast shipping.
And we said, "Is thereany specific strategies?"
They said, "No, as andwhen the order comes,
we try to focus on deliveringto those customers."
And then we asked, like,
"Do you think customers really care
if we give them the right information
about the impact of fast shipping?
Do you think they would careand change their decision?"
The company said, "Well, I do not know."
(15:33):
They were very reluctant basically,
and they said they didn't wanna lose out
on their consumer base,
and they said, "No, we don'twant to touch that space."
But then we somehow tried to convince them
and we did a field experiment with them,
wherein consumers, atthe time of purchase,
were given environmentalimpact information
of fast shipping.
And we said, "If you delay your delivery
by one day or two days,or five to seven days,
(15:55):
this is the savings interms of emissions."
And close to 70% of the consumers
actually delayed their delivery,delayed their shipping.
So that is one solution
that we felt like wehad initial resistance,
but then when implementedreally had fruitful results,
which was pretty much inline with what Martin said
that a lot of people are really interested
in sustainability,
they want to bring about a change.
(16:17):
- And willing to make certainsacrifices for it too,
which, as you mentioned,
a lot of companies werehesitant to explore it at first.
- On that note,
I think what wasinteresting with the survey,
which I didn't mention,is they also asked people,
"How likely do you thinkothers are to agree with you
and think that sustainabilityis important," et cetera.
And people consistently underestimated
how much others were on board
(16:38):
with what they thought was important.
And so, it's exactly what you're saying
of the company initially says,
"Oh, I don't think ourconsumers and clients
are gonna want this."
But then, in the end, they do.
- Let the record show,let the record show.
Turning to you, Martin,
what are some currentsustainability challenges
that you would like toaddress with your modeling
to have a real-world impact
on the way a companyapproaches sustainability?
(16:59):
- Yeah, absolutely.
So I'll get a tiny bit technical,
but it won't be too scary.
- I trust you, I trust you.
Take us through it.
- So, currently, the way companies measure
their greenhouse gas emissions,
their carbon emissionsis there is three scopes.
They use the greenhouse gas protocol,
and so Scope 3 is like category three,
it's where most of theemissions come from.
And it's really hard to measure
(17:19):
because basically you haveto look at your supply chain
and ask your suppliers,"How much do you emit?"
And then that counts as your emissions.
And then your suppliershave to ask their suppliers,
"Well, how much do you emit?"
And that counts towardsyour emissions, and so on.
And so what happens is when companies
actually try to measuretheir emissions in practice,
is they're systematicallyunderestimating their emissions,
not because they're evilor anything like that,
(17:40):
but just because it's really hard
to go all the way up the supply chain
and take ownership over the emissions
from your entire supply chain.
And so we have thissystematic underestimation
in a lot of our emissions.
Now, there's other waysto measure emissions too,
but they have their own problems.
So in my work, what I'm hoping to do
is kind of look at these different ways
and see can we find a middle ground
where we're both able to do something
(18:02):
that is feasible for the companies,
but maybe have, for example, a baseline
that is not an underestimate
that companies can start from
and then from thereimprove their estimates.
And the whole reasonthis is really important
is that, right now,
if you're a company and youwanna do the right thing,
and you want to go reachout to your suppliers,
suddenly your emissionnumbers are gonna get worse
because you're takingownership of your supply chain
and you're calculating these things
(18:23):
that previously you weren't calculating,
and now your numbers go up.
And so that really drives companies
away from investing intheir sustainability.
- One thing I would addis it might be helpful
to define what the scope one, scope two,
Scope 3 is for everyone.
So scope one emissions
is what you as a company areactually using and burning.
So if you have machine in your factory
(18:45):
and that's using gas or whatever,
you're burning that on your location,
that's your scope one emissions.
Scope two emissions isall of your utilities,
so that's very easy to track.
You build those most likely.
And then Scope 3 isreally everything else.
So that is all of, like Martin was saying,
all of your suppliers,
your supplier suppliers,
going all the way to the raw material,
(19:07):
which is really meant
for you to be able to have visibility
into what your impact is as a company.
And so, if you make shoes,
how much are you emitting
when you go all the way backto that fabric and dying it,
cutting it, all of that stuff,
all the way up to the end product,
and then beyond as it's getting consumed,
and then, can it be recycled or not?
(19:30):
- This episode of "Supply Chain Frontiers"
is brought to you by the AnnualMIT State of Supply Chain
Sustainability Survey.
If you work in industry,
you can help shape the future
of supply chain sustainability,
we invite you to respond
to the 10-minute surveyat sustainable.mit.edu.
(19:51):
One of the major projects thatthe lab undertakes every year
is the Annual State of SupplyChain Sustainability Survey,
say that five times fast.
Wondering if you couldwalk us through, Tori,
what inspired the creation
of the lab's Annual Sustainability Survey
and how has it evolved over the years?
- So the initial survey
was created by Dr. Alexis Bateman,
(20:12):
who was a former research scientist,
and at the time,
she was the head of theSustainability Initiatives at CTL.
So she created the survey
with the main intent ofcapturing best practices
that companies around the world,
what are their sustainable initiatives,
and how do they go about that,
with the large focuson sustainable sourcing
(20:34):
and social sustainability.
So over the course of the years,
the survey has captured
many political and global disruptions
because it was actually launched in 2020.
So the survey went live,I think January of 2020,
so right before all thecraziness of the pandemic.
(20:55):
And with that, I thinkbecause it has lasted,
we now actually havereally interesting results
based on what happened duringthe pandemic, the start of it,
before things really started to change,
as well as afterwards, thereare different global wars,
the Ukraine and Russia situation,
as well as economic fears happening.
(21:16):
- So a lot of rich datato capture uncertainty
that doesn't seem to havean end in sight for that.
- Yeah, so it's veryinteresting when it started
and it actually is able
to really track prettyinteresting results.
And since then we've evolved,
and are able to add in over time,
so it's added in differentsustainability initiatives
that have become more important
(21:37):
based on what regulationsare being passed,
as well as climate pledges,
small and mediumenterprises, and many more.
- And can you share asurprising insight or trend
just looking at last year's survey,
as I know that one coveredmultiple years of data?
- Yeah, so last year, our report,
we did a compilation of allof the surveys together,
(21:58):
so we looked at everything holistically.
So one of the questions
is about your company'scommitment to sustainability,
and has that grown ordecreased over the time
or stayed the same?
And one thing that came outthat was very interesting
is during the pandemic, thosecommitments actually grew.
So, globally,
everyone was actually morecommitted to sustainability.
(22:21):
The following two pandemicyears, as we go into 2022,
we have the economic concern.
So there was a lot of globalconcerns about a recession.
And at that point,
people actually started decreasing
their sustainability initiatives.
So I think one thing thatwas kind of interesting
is when you look at now companies
are a little bit moreconcerned about their capital
(22:41):
and making sure that they have the money
to be able to survive.
At that point,
they're decreasing some of theirsustainability initiatives.
We've kind of passed the economic concerns
and people are actuallystarting to invest more
in their sustainability.
And then one other piecein that same bubble
is as we looked at the company size,
so we did this in two different ways,
(23:02):
we looked at it globally,
and then we broke thosedown by company size.
And when you look at the company size,
the smaller companies always were the ones
to actually decrease theirsustainability initiatives first,
because, again, they have less capital.
So you think during COVID,
those small companies were ones
that were really concerned about failing
or really didn't havethat longstanding capital
(23:23):
to be able to survive.
- Just to add to what Tori mentioned
about the last year survey,
the highest pressure
came from investors followedby governments and regulations.
And another key insight,if I were to point out,
is that companies that received pressure
were 143% more likelyto set net zero goals,
and 287% more likely
(23:45):
to make investments insustainability-related initiatives.
- So you're saying thatconsumer pressure works?
- Yes, pressure fromexternal agencies works.
- Consumer pressure,
and especially investor pressure.
- Investor pressure, yeah.
- I see.
And after you get all thisinformation on this data
from the companies that you survey, Tori,
how does the survey shape
how industry approaches sustainability?
(24:07):
- Yeah, so when we launchedthe report afterwards,
so we do all of our analysis,and look at everything,
and then we share that out with companies,
anyone can have access to it,
you can find all of thepast ones on our websites,
but you can go back and see those results,
so then you can evaluate,
I think one thing that's very interesting
is we also have a question in the past
(24:29):
about how much companies
are actually investing in theirsustainability initiatives,
which all companies areactually investing less
than they need to be toactually be meeting their goals.
But as you look at it,
environmental has more moneyput against it than social.
So social, you're a lot farther away
from reaching that goal
(24:50):
where environmental we'rea little bit closer,
and those are kind of working together.
I think social is a little bit harder
for people to realize the amount of money
that takes to meet some of those goals,
you just think maybe
they'd need to make a new commitment
inside their organization
versus actually puttingmoney towards that.
- And when you say social sustainability,
what kinds of things does that entail?
(25:11):
- So it basically points out
to how you treat your employees,
what kind of suppliers you deal with,
is your supplier complyingwith some labor regulations,
preventing child labor,
and fair trade practicesand things like that.
And also, companies are obliged to work
with diverse suppliers,minority-owned businesses,
women-owned businesses,
businesses in different regions
(25:31):
that otherwise would not getany kind of business at all.
So big companies are expected to work
with such small companies,
and that's part of their ESG rating.
So all those contributeto social sustainability.
- And this year's surveylaunched on March 1st,
it's open until May 30th, 2025.
What is different about this year's
State of Supply ChainSustainability Survey?
(25:51):
- So this year we wanted toget a deeper understanding
of some of the topics that arerelevant for sustainability.
One is in terms of thesustainability initiatives,
we wanted to understand
what sustainability initiatives
companies are prioritizing and why,
and does it vary fromindustry to industry?
And is there any difference
between industry leader and a follower?
The other thing thatwe wanted to understand
(26:13):
was related to Scope 3 emissions,
particularly we wanted toknow how companies prioritize
which Scope 3 categories to focus on,
and also to understand
if that varies by industry,and from company to company,
and to what extentcompanies have visibility
in their supply chains
to effectively track Scope 3 emissions.
We also focused on understanding
(26:34):
what third-party platformsor tools companies use
to measure Scope 3 emissions,
and the challenges they face
and the kind of engagementmethods and levers they use
to deal with their suppliers
both to measure and managethe Scope 3 emissions.
And the third emphasis is on small
and medium-sized businesses
where we wanna not onlyunderstand the challenges,
(26:55):
but whether the customers
who are dealing with these smalland medium-sized businesses
are asking forsustainability-related information
and what kind of support they're getting
from these big customers and big buyers
to manage their sustainability efforts.
These are some broad topics
that we are covering in this year.
- Absolutely.
So every year you take the information
and seek to improve it
based on the responsesthat you're getting.
(27:16):
Martin, if you were to makeyour case to our listeners,
for those who are working in industry,
why should people in industry
complete the survey and whocan, who are you looking for?
- Yeah, I mean, I'llstart with the second,
who can is really everyone.
Everyone who's working in acompany can complete the survey.
We want information notonly from the companies
that are from the sustainabilitydivision of companies,
(27:37):
but from people working inlogistics or transportation,
and all these othersections of the companies
where we really don'thave that much visibility
into how they're viewing sustainability.
As to why they should do it,
I think anyone who's found ourreports in the past helpful
should definitely do it
because we're gonna makeanother one of those reports.
And importantly, this year,
our report is quite different
(27:58):
in that we've dialed in onto some of the,
I guess gaps in our knowledge
about how sustainability works.
We've looked specificallyat how can companies
better share data among each other,
we've looked specifically
at what are the biggestchallenges they face
in terms of measuring Scope 3 emissions.
And so, these are thingsthat the companies themselves
will be really interestedin seeing the results,
(28:19):
and that will only be possible
if we have a lot of peoplefill out the survey,
so please go fill out the survey.
- And it's in five languages.
So seeking accessibilityis a priority here too.
Turning now toward looking forward
and the future of sustainability,
how should industry
approach designingsystems that are resilient
and adaptable as climate science evolves?
- Yeah, I like your question
(28:40):
because I think it reflects a sentiment
that a lot of people have
when they listen to podcasts like ours
or when they talk to scientists,
that there's a lot of things
that are evolving in this space,
and in a way that's true.
And I think when you askscientists about what they do,
the first thing they go towards
is like all the things they're working on,
which is of course at the edge
where there's still a lot of uncertainty
and things that we don't know.
(29:02):
But at the same time,
I think climate science
has been an established field for decades,
and the fundamentalsare no longer evolving.
It's a fact, it's established.
And so when a company looks athow they can build resilient
and adaptable systems fordealing with climate change
and mitigating climate change,
I think the strategiesare already out there.
I think what needs to happenis leaders in companies
(29:24):
to go into their company and say,
"Okay, I'm gonna do this.
Let me learn about it,
read the things thatare already out there,
and then build a program,"
build initiatives in their company
to move themselves towards those goals.
- And one of the thingsthat can feel overwhelming
for people approaching sustainability
is how impossible it mayfeel to make a difference.
(29:44):
But, just curious, assomeone within the field,
what technologies or toolsare you most excited about
for improving sustainability outcomes
over the next, say five to 10 years?
- So there's lots of excitingthings happening right now.
So right now,
the European Union is passing
a Carbon Border AdjustmentMechanism called CBAM.
And this is a policy,it's basically a tariff,
(30:05):
but it will be proportionalto your emissions,
and it's for raw materials.
And the reason theydid this, is in Europe,
they have a systemwhere if you emit a lot,
and if your factory or your big business
emits a lot of greenhouse gas emissions,
you have to pay a fine or a fee.
But what they saw was happening
is a lot of companies werejust leaving the European Union
because they didn't wanna pay those fines.
So now what's gonna happen
with this Carbon BorderAdjustment Mechanism
(30:27):
is even if you leave the European Union,
if you still wanna sellproducts to the European Union,
you're gonna have to pay thatfee anyways at the border.
And so, on one hand,
it prevents companies fromleaving the European Union,
but on the other hand,
it's this really cool mechanism
where it's what we call a race to the top,
where now other countries are incentivized
to be more sustainable,
to be able to sell to the European Union,
(30:47):
and they're also incentivized
to start measuring their sustainability.
So you see this ripple effect
across the entire worldthanks to this policy.
So that's a really exciting policy.
And I'll give one more,
which is a lot more niche,
but when we talk about companiessharing their information
about their sustainability,companies have thousands,
sometimes tens of thousands of products,
so you can't be sendingemails or Excel spreadsheets,
(31:08):
you have to have asoftware system to do this.
And so, when you're talking about, okay,
how can we interfacethese software systems
of all these different companies
so they can share dataabout their products
and their sustainability,
well, you need a standardlanguage to do that.
You need a protocol that says, "Okay,
when my field is namedcarbon emissions with an S,
and that's the field I'm gonna look at,
and I'm not gonna startlooking for a field
(31:29):
that looks for carbon emission."
And so, this protocolis being built right now
by a consortium of companies
in the European Union called Pact,
And so, that's a reallyexciting thing as well.
- If there's any constant,
especially nowadays, it's uncertainty.
So just curious how you approach this
from a modeling standpoint.
How do you think about uncertainty
(31:49):
when modeling environmental scenarios,
especially in the face of climate change?
- So I think we can divide uncertainty
in like a few different buckets.
There's some forms of uncertainty
that no matter what you doin terms of the modeling,
you can't resolve.
We won't know the price of fuel in 2050,
that is just not something we can know.
And so I think as a modeler,
it's important to recognize sometimes
(32:10):
there are things we cannot model,
and then there's uncertainties
that we maybe could find ifwe have the right information.
As a modeler, it's really important
to be able to understand
what type of uncertaintiesyou're dealing with
and then when it's important,
work and look at what data you can find
to be able to reduce that
and be able to communicate it clearly.
- And, Sreedevi, Iwanna speak to something
(32:31):
that's important to your work.
Can you talk about theintersection of sustainability
with equity and justice in your work
and how they all work together?
- Sure, very interesting questions,
it's something that'svery close to my heart.
So sustainability has three pillars,
economic, environmental, and social.
All three pillars are very important.
A company cannot say
that I want to focuson economic prosperity
(32:52):
but not wanna focus on other things.
And at the same time,
a company cannot invest in environmental
and social sustainability-relatedinitiatives
if they do not have a business model
that is economically viable.
So all these three pillars are important,
and I strongly believe
that it's important to linkenvironmental conservation
with reducing inequalitiesand elevating poverty.
And before I joined MIT,I worked on a project
(33:14):
that focused on over 25,000
women micro enterprises in India.
Our objective was to bringin policy level changes
that will basically helpthese women micro enterprises
to thrive despite all thesetbacks and challenges they face.
You know, as part of the LIFT Lab,
which is also called
the Low Income Firms Transformation Lab,
our focus is on small and micro firms
in developing countries,
(33:34):
and we develop technologyand training solutions
for these companies
so that they increase theirproductivity and survival rate.
And what is interesting is the Director
of the Sustainable SupplyChain Lab, Dr. Josue Velasquez,
is also the founder of the Lift Lab.
And that clearly sums it all,
how important it is to not just focus
on environmental sustainability,
but on social sustainabilityas well, and it's together.
(33:55):
- And really looking to makethat long-term difference
and give people autonomy in that regard.
Thinking about not just thefuture of sustainability,
but the lab in particular,Tori, what's next for the lab
in terms of researchfocus or new initiatives?
- So we actually have twopretty exciting projects
that we're working on.
So one is, Sreedevi actuallymentioned it earlier,
we're partnering with the Freight Lab
(34:16):
to create a sustainabletransportation consortium.
So that's working directly with people
in the transportation field,
so shippers, brokers, carriers,
and actually looking at initiatives
that we can do to actually make them
become more sustainable.
Is it different types of vehicles or fuel,
or is it changing the network design
(34:36):
of how our fuel is built andshared throughout the US?
So that's one area that we're looking at
that we're pretty excited about.
Our other one that takes up so much time
in the best way possible
is our Scope 3 challenge consortium.
So we're partnering with the CDP,
which was previously known asthe Carbon Disclosure Project,
and that's an organizationthat most companies
(34:59):
are actually disclosingtheir emissions on.
So they have over 23,000companies globally
disclose their emissions.
We're working with them
as well as different high tech industry
to create this consortium
to help them lowertheir Scope 3 emissions,
so different ways
that they can actuallyget accurate information
to be able to properlyreduce those emissions.
(35:22):
- And what is the priorityon Scope 3 versus the others?
I know you all explainedthe difference before,
but why a focus on Scope 3?
- Scope 3 is really the focus
because it's the hardest to do.
So it's very hard for companies to,
like we were saying before,
they actually even know whattheir Scope 3 emissions is
because they don't havethose close relationships
(35:42):
with their suppliers,
and maybe they only knowtheir tier one suppliers,
the ones that they'redirectly working with,
but they don't know anywhere past that,
so they don't know theirsupplier suppliers.
And because this goes all theway down to the raw material,
really a company,
your company is responsiblefor those emissions.
You wouldn't be mining some mineral
if it wasn't to make that product.
(36:04):
So your company has aresponsibility to learn
and to know what those emissions are,
and you can then start reporting it.
So until you actually do the work,
you can't determine whichsupplier is the highest emitter,
and maybe work with that supplier
to then put solar panels on their building
or do things in a different way
(36:25):
because you don't haveany visibility to that,
you can't take any sort of action.
- Also, adding to that point,
Scope 3 emissions contribute
to over 75 to 80% of theoverall emissions of a company,
and that's why it's moreimportant to focus on that.
- Yeah, that's incredible.
So up to this point,
it's been a kind of outof sight, out of mind
if you're not aware ofyour Scope 3 emissions
and having to face that first.
(36:45):
Thank you all so much forjoining me this episode.
- Thank you so much
for having us- Thank you so much.
This was great.
- Thank you so much,Mackenzie, for having us
and for all those insightful discussions.
- That wraps up this episodeof "Supply Chain Frontiers."
A big thank you to ToriArnold, Sreedevi Rajogopalan,
and Martin Staadecker forsharing their expertise
and insights into sustainability.
(37:06):
To learn more about the SupplyChain Sustainability Lab
and the research discussed today,
visit sustainable.mit.edu.
"Supply Chain Frontiers" isrecorded on the MIT campus
in Cambridge, Massachusetts.
Our sound editors are Dave Lishansky
and Danielle Simpson atDavid Benjamin Sound.
And our audio engineer today
(37:26):
is Kurt Schneider of MITAudio Visual Services.
Our producer is myself, Mackenzie Berry.
Be sure to check out our previous episodes
of "Supply Chain Frontiers"at ctl.mit.edu/podcast
or search for us on yourpreferred podcast platform.
If you enjoyed this episode,
please subscribe and letus know what you think
(37:46):
and what you'd like to hear in the future
by reaching us at sefrontiers@mit.edu.
Your feedback keeps us motivated
to bring you the latest insupply chain innovation.
I'm Mackenzie Berry, thanks for listening,
and we'll catch you next timeon "Supply Chain Frontiers."
(upbeat music)
- Welcome to another episodeof "Supply Chain Frontiers,"
the MIT CTL podcast wherewe explore the trends,
technologies, and innovationsshaping the future
of supply chain management.
I'm your host for thisepisode, Mackenzie Berry.
Today, we're diving intothe world of sustainability
and its implications for supply chains.
(00:21):
Joining me are members
of the MIT Sustainable Supply Chain Lab,
hosted in this MIT Center forTransportation and Logistics,
Dr. Sreedevi Rajogopalan,
a postdoctoral associate at CTL,
Martin Staadecker, a researchassistant in the lab,
and Tori Arnold, aproject manager in the lab
who is spearheading the Annual State
(00:41):
of Supply Chain Sustainability Survey.
Here's what I know.
The MIT Sustainable Supply Chain Lab
aims to support companiesand organizations
to improve logistics andsupply chain operations
by creating appliedand innovative research
aimed at fostering growth
while considering environmentaland social sustainability.
The lab connects researchoutcomes to practical settings,
(01:03):
enabling companies and stakeholders
to leverage supply chainsas a beneficial force
to reach global sustainabledevelopment goals.
They also seek to improve the visibility
of supply chain impacts
and develop strategies to help reduce them
so companies can betteraddress consumer, political,
and shareholder concerns.
In this episode,Sreedevi, Martin, and Tori
(01:24):
will explore the currentstate of sustainability
across industry, current challenges,
and key insights from their work.
Welcome, everyone, so glad to have you.
If we could just start out
by having everyone introduce yourselves
and your work in the lab,
we can start with you, Sreedevi.
- Sure.
First of all, thank you,Mackenzie, for having us.
My name is Sreedevi,
I'm a postdoctoral researcher
(01:44):
at the Center forTransportation and Logistics.
I'm associated withtwo labs at the center.
One is a Sustainable Supply Chain Lab,
and the other is a Low IncomeFirms Transformation Lab.
My research interestsincludes sustainable sourcing,
diversity, equity, andinclusion in supply chains,
and understanding andimproving business operations
of small and micro firmsin developing countries.
(02:04):
- Wonderful. Martin?
- Great.
My name is Martin Staadecker,
I'm a student in theTechnology and Policy Program
here at MIT, a master'sstudent in my first year,
and I'm also a research assistant
in the Sustainable Supply Chain Lab
working on trying to understand
the ways companies measuretheir greenhouse gas emissions
and the trade-offs there exists
with different ways of measuring.
(02:25):
- Tori?
- Yes, I'm Tori Arnold,
I'm the project manager of theSustainable Supply Chain lab,
as well as the Low IncomeFirms Transformation Lab
that Sreedevi is also a part of as well.
So trying to help wrangleeverything together
and keep everyone moving forward.
- Yes, no small feat, no small feat.
(02:46):
I read a introduction of the lab,
but just, Tori, wonderingif you can give us
a kind of overview of the MITSustainable Supply Chain lab
and its primary goals,
how it started as someone on the inside.
- Yeah, so I think yourintroduction is great.
The lab was really startedin 2016, a part of CTL,
so it was a few different initiatives.
(03:07):
There was a Responsible Supply Chain Lab
and then a Sustainable Logistics,
and then eventually they kindof merged to become one lab
really focusing onsustainable supply chains,
both environmental and social,
and like you stated,
really working on helpingcompanies and organizations
gain visibility
(03:28):
but also be able to bettersupport their company
to move further in the sustainable sector.
- And as I understand it,
it was something that industrieswere really calling for.
- Yeah, so CTL works witha lot of industry companies
and they actually keptbringing up sustainability
and there was a few different researchers
working on one-off type projectswith different companies,
(03:51):
and then it became realized
that it was a much bigger need
to actually have a lab focus on that.
- Martin, you do a lot of workwith modeling and analysis,
how does data help you make the case
for sustainability investments
when you're speakingwith those in industry?
- Yeah, I think there's lots of reasons
to be doing investments in sustainability
(04:12):
and we're gonna get into those,
but I wanted to highlight just one story
of how data can really help.
So there's a new growth of movements
or there's this thingthat's called green bonds
or green investments,
and so, they're gettingmore and more popular,
especially in the European Union,
but around the world whereinvestors are saying,
"We'll give you money,we'll give you a loan,
(04:33):
but you have to meet certain targets."
And in fact, two weeks ago thecity of Gothenburg in Sweden
was one of the first to have to pay a fine
because they didn't meet their targets
and they were kind of proud of it.
They were like, "Oh,we're ahead of the curve,"
like, we set really ambitious targets
and, like, we're paying a fine,
but we're doing this
because we purposefullyset ambitious targets.
But it's just givingan example of how data,
(04:55):
like, to know if you metthose targets or not,
and to be able to set realistictargets, you need data.
And so, all of these new initiatives
that are happening around sustainability
are all underpinned by the need for data
on your emissions and your sustainability.
- Yeah, absolutely.
Sreedevi, how does the labbalance academic research goals
with the practical needsof industry partners?
(05:17):
I imagine that's always a negotiation.
- Absolutely, very interesting question.
Actually, we do not doany theoretical work.
Almost all our projectsthat we have done so far
are driven by real needs
that have been identified by a company
or the industry at large.
I can give you some examples
of some of our pastprojects that we have done.
For example, we've workedwith several companies
(05:37):
helping them redesigntheir supply chain network
with a focus on not just reducing cost
and increasing service level
or improving their operation metrics,
but also reducing the CO2 emissions.
And another project that we worked
was the company wanted us to assess
that their sustainable packaging design
and wanted to understand
if that is resulting in overall emissions.
And, interestingly,
(05:57):
what we found was while the design per se
is largely sustainable incomparison to the old design,
but when you looked
at the supply chain activities end to end,
the new design was actually resulted
in a 45% higher emissionsthan the old design.
So what we tell companies
is it's important not only to look
at sustainability in silos,
but to look at it
from a supply chainpoint of view end-to-end.
(06:19):
As a researcher,
while always be goodto find that sweet spot
where you can meet academicrigor with practical relevance,
but we do not take up any projects
that is not driven by real-world needs.
- Yeah, absolutely.
And that's a great point too,
because some companies could look
at just one part of the supply chain,
but if you're not lookingat it holistically,
you can't really measure
(06:39):
how impactful the changesthat they're making have been.
- I guess just on that note,
the companies that arecreating the same product
can have very different business models
and ways of integratingtheir supply chains
so they can be very vertically integrated,
which means they own their suppliers.
And so, in a way,
you can't really comparea company to company
which product is more sustainable
unless you look at theentire supply chain.
(07:01):
- And I think adding to that,
there's so many companieswho work in silos
and the sustainability team
is a small team thatdoesn't have the same reach
as maybe their marketing team
that people actuallydesigning new packaging
or things like that.
So when everything is done in silos
and not looked at itfrom a broad perspective,
that's when you can have problems
(07:22):
where you think you're lowering emissions
and you're actually not.
- Yeah, absolutely.
Just to add to that point,very interesting, Tori.
So when we look at companies,
when we work with companies
on meeting their sustainability goals
and what we find is thesustainability department
completely works in silos.
The supply chain team has no clue about
what the sustainability teamis doing, and vice versa.
And this happens in most companies.
(07:43):
- I see.
So for a company to reallyprioritize sustainability,
you have to make it apart of every single team.
- Correct.
- And that comes from settingthe culture in the company,
and that's a big part of it.
- Yeah, absolutely.
Transitioning now tolooking at industry trends,
policy, and public perception,
sustainability is a big partof the conversation right now,
particularly as we seegovernmental rollback
(08:04):
of investments in sustainability efforts.
At the industry level,
many companies have quietly rescinded
their sustainability goals.
Why should companiesprioritize sustainability
and the sustainability development goals?
- Yeah, I mean, when we think
about why companies shouldprioritize sustainability,
I think there's a business case for it,
and then there's another case,
(08:24):
so I'll start with the business case.
The first thing is a lot ofsustainability improvements
are actually energyefficiency improvements
are cost improvements.
I mean, if you have visibilityin your supply chain,
it can also make your supplychains more resilient.
It means if there's a geopoliticalevent in another country,
you can adjust your operations.
It means that whenCOVID or something hits,
you can react more quickly
(08:45):
because you have that visibility,
you have that partnershipwith your suppliers.
So there's a lot of, like, good,
just simple business reasonsto do what's sustainable.
The next reason I would say
is there's also what wecall transition risks where,
because in general,
the world is moving towardsbeing more sustainable,
there is the risk
that maybe there'sgoing to be a carbon tax
or certain tariffs.
We see the EU coming out with the CBAM,
(09:07):
which is a tariff forhigh-emission products.
And so, these transitionrisks basically say
that if you don't investin sustainability now,
you might be locked intosomething that is high mission
that is gonna harm yourbusiness in the future.
And then, finally,
I think this is not talkedenough in the space often
is there's just a moral and ethical reason
to go towards sustainability.
(09:28):
I think our world needs it.
Climate change
is gonna have really badimpacts on our world.
And so, a lot of leaders
and a lot of the leading companies,
that is their main driveris that their CEO decided,
that, "Oh, this is a priority for me."
- Yeah, and I would add to that,
so our lab director, Dr. Josue Velasquez,
has had conversations and presentations
(09:50):
at many different companiesabout sustainability.
And one company in particularactually came to him
and said, "If the worldfails, then we can't succeed."
So our company cannot succeed
and continue to grow if theworld is kind of failing
and we don't have a livable environment.
So it is still like a business case
to be able to make those initiatives.
Yes, you're doing things that'sbetter for the environment,
(10:12):
but in the end,
it actually will stillhelp your company thrive.
- Self-preservation, indeed.- Yeah, exactly.
- So what is the primary pushback
that you all see companies make
against prioritizing sustainability?
- I think one of the primaryreason for a pushback
is companies focus on short-term goals.
Sometimes they're constrainedby the financial pressures
or, you know, thepressure on profitability.
(10:34):
There are also regulatoryand political uncertainty,
and they do not knowif today's regulations
would stand for the next five years or so.
But, interestingly, what we found,
let me give you some statistics
about the current stateof affairs in the US.
So the Sustainable SupplyChain Lab at the center
has joined hands with the Freight Lab,
and we are in the process
of forming a sustainabletransportation consortium
of shippers, carriers, and brokers
(10:56):
to address some of the commonsustainability challenges
in that particular space.
And recently we held a couple of webinars
for these companies to justgauge the interest levels
and also to understandwhere do they stand.
And we conducted a poll asking them
what is their current stand
when the Trump governmenthas pulled the US
out of the Paris Agreement,
close to 95% of the companieswho attended the webinars
(11:18):
said that they are significantly committed
to their sustainability goals
and there is no change interms of their investments
or initiatives despite the US
pulling out of the Paris Agreement.
So while they have problemswith their short-term goals,
but with regulatory pressures,
I think companies still continue to focus
on their sustainability-relatedinitiatives.
- And the vast majority of those companies
(11:38):
were US-based as well.
- And so your point, Martin,
you spoke about geopolitical upheaval
being a reason why a companywould invest in sustainability,
and we see that right now
being the primary concernshort-term and long-term,
even if companies havetraditionally cited that
as a reason why they wouldn'tinvest in it short-term.
But anything to add on your end, Martin,
in terms of primary pushback you see
(11:59):
against prioritizing sustainability?
- Yeah, I mean, we hear a lot of news now
with the recent election,
and I think people are rightly concerned,
but I think also when youlook at the world as a whole,
the movement towardssustainability is still ongoing.
There was a survey recently,
they surveyed peopleacross the entire world
and they did a representative survey,
which means that it's representative
(12:21):
of the distribution ofpeople in the world,
and they found that 86% of people said
that people should tryto fight global warming.
So that's a pretty high percentage.
And in fact, then when they asked,
would you be willing to contribute 1%
of your household income every month
to fight global warming,
69% of the people in the world said that.
So we have more than half the world
that wants to contribute their income
(12:43):
and that believes that peopleshould fight global warming,
and they also said that people
should be more politicallyactive on this topic.
So I feel like the movement is going,
and companies are realizingthat and it's not going to stop.
- And speaking to another concern
that a lot of consumers arehaving in the current moment
is that of greenwashing,
which is used to create afacade of sustainable efforts
(13:04):
without actually having to take action.
And a lot of companies tactics
are only getting sneakier around this,
it can be difficult forpeople to distinguish
between earnest effortsand deceptive messaging
in regards to greenwashing.
What are some forms of greenwashingthat we often overlook?
- Sure.
So this is an interesting question to me.
I like to draw historicalexamples and precedents,
(13:26):
and if there's one industrythat has been really good at,
I guess not greenwashing,but misleading the public,
it would be the tobaccoindustry in the 1950s
all the way up to the 2000s,and even a bit recently.
So when you look at their mechanisms
of how they were ableto confuse the public,
one of the big ones
is that they invested heavily in research
and they built a narrativethat more researchers needed,
(13:47):
and they invested in reallygood research to be clear,
like they invested on researchof the specific mechanisms
for cancer related toair pollution, et cetera.
But it was research that wasdistracting away from research
that was trying to figure out
whether cigarettes cause cancer.
And so, one of the waysthat we see greenwashing
in our society today
is how companies arefunding research activities
(14:07):
and directing our attention
more so than making amisleading claim per se.
And so, we have to be really careful of,
well, if there's all this publicity
about a specific technology,
is our attention being misdirected
because it is being promoted
by certain special interest groups?
- Absolutely.
So a lot of the statisticsthat you all have cited
have confirmed that there istremendous public interest
(14:30):
in investing in sustainability,
but that doesn't necessarily get us
to the challenges that wesee in implementing solutions
for sustainability.
So just curious, if youcould speak to, Sreedevi,
what's an example of achallenge that you faced
implementing a sustainability solution
and how you overcame it?
- Sure.
(14:50):
So the Director of theSustainable Supply Chain Lab,
Dr. Josue Velasquez, hewas part of this project
and then eventually I joined him.
So we were working
with one of the largestretailers in Mexico,
and they wanted us to help them
with their last mile delivery operations
and also the cargo consolidation.
And while we were working with them,
we asked them what isthe strategy they follow
to cater to their end consumers?
(15:11):
Because for majority of their customers,
they do fast shipping.
And we said, "Is thereany specific strategies?"
They said, "No, as andwhen the order comes,
we try to focus on deliveringto those customers."
And then we asked, like,
"Do you think customers really care
if we give them the right information
about the impact of fast shipping?
Do you think they would careand change their decision?"
The company said, "Well, I do not know."
(15:33):
They were very reluctant basically,
and they said they didn't wanna lose out
on their consumer base,
and they said, "No, we don'twant to touch that space."
But then we somehow tried to convince them
and we did a field experiment with them,
wherein consumers, atthe time of purchase,
were given environmentalimpact information
of fast shipping.
And we said, "If you delay your delivery
by one day or two days,or five to seven days,
(15:55):
this is the savings interms of emissions."
And close to 70% of the consumers
actually delayed their delivery,delayed their shipping.
So that is one solution
that we felt like wehad initial resistance,
but then when implementedreally had fruitful results,
which was pretty much inline with what Martin said
that a lot of people are really interested
in sustainability,
they want to bring about a change.
(16:17):
- And willing to make certainsacrifices for it too,
which, as you mentioned,
a lot of companies werehesitant to explore it at first.
- On that note,
I think what wasinteresting with the survey,
which I didn't mention,is they also asked people,
"How likely do you thinkothers are to agree with you
and think that sustainabilityis important," et cetera.
And people consistently underestimated
how much others were on board
(16:38):
with what they thought was important.
And so, it's exactly what you're saying
of the company initially says,
"Oh, I don't think ourconsumers and clients
are gonna want this."
But then, in the end, they do.
- Let the record show,let the record show.
Turning to you, Martin,
what are some currentsustainability challenges
that you would like toaddress with your modeling
to have a real-world impact
on the way a companyapproaches sustainability?
(16:59):
- Yeah, absolutely.
So I'll get a tiny bit technical,
but it won't be too scary.
- I trust you, I trust you.
Take us through it.
- So, currently, the way companies measure
their greenhouse gas emissions,
their carbon emissionsis there is three scopes.
They use the greenhouse gas protocol,
and so Scope 3 is like category three,
it's where most of theemissions come from.
And it's really hard to measure
(17:19):
because basically you haveto look at your supply chain
and ask your suppliers,"How much do you emit?"
And then that counts as your emissions.
And then your suppliershave to ask their suppliers,
"Well, how much do you emit?"
And that counts towardsyour emissions, and so on.
And so what happens is when companies
actually try to measuretheir emissions in practice,
is they're systematicallyunderestimating their emissions,
not because they're evilor anything like that,
(17:40):
but just because it's really hard
to go all the way up the supply chain
and take ownership over the emissions
from your entire supply chain.
And so we have thissystematic underestimation
in a lot of our emissions.
Now, there's other waysto measure emissions too,
but they have their own problems.
So in my work, what I'm hoping to do
is kind of look at these different ways
and see can we find a middle ground
where we're both able to do something
(18:02):
that is feasible for the companies,
but maybe have, for example, a baseline
that is not an underestimate
that companies can start from
and then from thereimprove their estimates.
And the whole reasonthis is really important
is that, right now,
if you're a company and youwanna do the right thing,
and you want to go reachout to your suppliers,
suddenly your emissionnumbers are gonna get worse
because you're takingownership of your supply chain
and you're calculating these things
(18:23):
that previously you weren't calculating,
and now your numbers go up.
And so that really drives companies
away from investing intheir sustainability.
- One thing I would addis it might be helpful
to define what the scope one, scope two,
Scope 3 is for everyone.
So scope one emissions
is what you as a company areactually using and burning.
So if you have machine in your factory
(18:45):
and that's using gas or whatever,
you're burning that on your location,
that's your scope one emissions.
Scope two emissions isall of your utilities,
so that's very easy to track.
You build those most likely.
And then Scope 3 isreally everything else.
So that is all of, like Martin was saying,
all of your suppliers,
your supplier suppliers,
going all the way to the raw material,
(19:07):
which is really meant
for you to be able to have visibility
into what your impact is as a company.
And so, if you make shoes,
how much are you emitting
when you go all the way backto that fabric and dying it,
cutting it, all of that stuff,
all the way up to the end product,
and then beyond as it's getting consumed,
and then, can it be recycled or not?
(19:30):
- This episode of "Supply Chain Frontiers"
is brought to you by the AnnualMIT State of Supply Chain
Sustainability Survey.
If you work in industry,
you can help shape the future
of supply chain sustainability,
we invite you to respond
to the 10-minute surveyat sustainable.mit.edu.
(19:51):
One of the major projects thatthe lab undertakes every year
is the Annual State of SupplyChain Sustainability Survey,
say that five times fast.
Wondering if you couldwalk us through, Tori,
what inspired the creation
of the lab's Annual Sustainability Survey
and how has it evolved over the years?
- So the initial survey
was created by Dr. Alexis Bateman,
(20:12):
who was a former research scientist,
and at the time,
she was the head of theSustainability Initiatives at CTL.
So she created the survey
with the main intent ofcapturing best practices
that companies around the world,
what are their sustainable initiatives,
and how do they go about that,
with the large focuson sustainable sourcing
(20:34):
and social sustainability.
So over the course of the years,
the survey has captured
many political and global disruptions
because it was actually launched in 2020.
So the survey went live,I think January of 2020,
so right before all thecraziness of the pandemic.
(20:55):
And with that, I thinkbecause it has lasted,
we now actually havereally interesting results
based on what happened duringthe pandemic, the start of it,
before things really started to change,
as well as afterwards, thereare different global wars,
the Ukraine and Russia situation,
as well as economic fears happening.
(21:16):
- So a lot of rich datato capture uncertainty
that doesn't seem to havean end in sight for that.
- Yeah, so it's veryinteresting when it started
and it actually is able
to really track prettyinteresting results.
And since then we've evolved,
and are able to add in over time,
so it's added in differentsustainability initiatives
that have become more important
(21:37):
based on what regulationsare being passed,
as well as climate pledges,
small and mediumenterprises, and many more.
- And can you share asurprising insight or trend
just looking at last year's survey,
as I know that one coveredmultiple years of data?
- Yeah, so last year, our report,
we did a compilation of allof the surveys together,
(21:58):
so we looked at everything holistically.
So one of the questions
is about your company'scommitment to sustainability,
and has that grown ordecreased over the time
or stayed the same?
And one thing that came outthat was very interesting
is during the pandemic, thosecommitments actually grew.
So, globally,
everyone was actually morecommitted to sustainability.
(22:21):
The following two pandemicyears, as we go into 2022,
we have the economic concern.
So there was a lot of globalconcerns about a recession.
And at that point,
people actually started decreasing
their sustainability initiatives.
So I think one thing thatwas kind of interesting
is when you look at now companies
are a little bit moreconcerned about their capital
(22:41):
and making sure that they have the money
to be able to survive.
At that point,
they're decreasing some of theirsustainability initiatives.
We've kind of passed the economic concerns
and people are actuallystarting to invest more
in their sustainability.
And then one other piecein that same bubble
is as we looked at the company size,
so we did this in two different ways,
(23:02):
we looked at it globally,
and then we broke thosedown by company size.
And when you look at the company size,
the smaller companies always were the ones
to actually decrease theirsustainability initiatives first,
because, again, they have less capital.
So you think during COVID,
those small companies were ones
that were really concerned about failing
or really didn't havethat longstanding capital
(23:23):
to be able to survive.
- Just to add to what Tori mentioned
about the last year survey,
the highest pressure
came from investors followedby governments and regulations.
And another key insight,if I were to point out,
is that companies that received pressure
were 143% more likelyto set net zero goals,
and 287% more likely
(23:45):
to make investments insustainability-related initiatives.
- So you're saying thatconsumer pressure works?
- Yes, pressure fromexternal agencies works.
- Consumer pressure,
and especially investor pressure.
- Investor pressure, yeah.
- I see.
And after you get all thisinformation on this data
from the companies that you survey, Tori,
how does the survey shape
how industry approaches sustainability?
(24:07):
- Yeah, so when we launchedthe report afterwards,
so we do all of our analysis,and look at everything,
and then we share that out with companies,
anyone can have access to it,
you can find all of thepast ones on our websites,
but you can go back and see those results,
so then you can evaluate,
I think one thing that's very interesting
is we also have a question in the past
(24:29):
about how much companies
are actually investing in theirsustainability initiatives,
which all companies areactually investing less
than they need to be toactually be meeting their goals.
But as you look at it,
environmental has more moneyput against it than social.
So social, you're a lot farther away
from reaching that goal
(24:50):
where environmental we'rea little bit closer,
and those are kind of working together.
I think social is a little bit harder
for people to realize the amount of money
that takes to meet some of those goals,
you just think maybe
they'd need to make a new commitment
inside their organization
versus actually puttingmoney towards that.
- And when you say social sustainability,
what kinds of things does that entail?
(25:11):
- So it basically points out
to how you treat your employees,
what kind of suppliers you deal with,
is your supplier complyingwith some labor regulations,
preventing child labor,
and fair trade practicesand things like that.
And also, companies are obliged to work
with diverse suppliers,minority-owned businesses,
women-owned businesses,
businesses in different regions
(25:31):
that otherwise would not getany kind of business at all.
So big companies are expected to work
with such small companies,
and that's part of their ESG rating.
So all those contributeto social sustainability.
- And this year's surveylaunched on March 1st,
it's open until May 30th, 2025.
What is different about this year's
State of Supply ChainSustainability Survey?
(25:51):
- So this year we wanted toget a deeper understanding
of some of the topics that arerelevant for sustainability.
One is in terms of thesustainability initiatives,
we wanted to understand
what sustainability initiatives
companies are prioritizing and why,
and does it vary fromindustry to industry?
And is there any difference
between industry leader and a follower?
The other thing thatwe wanted to understand
(26:13):
was related to Scope 3 emissions,
particularly we wanted toknow how companies prioritize
which Scope 3 categories to focus on,
and also to understand
if that varies by industry,and from company to company,
and to what extentcompanies have visibility
in their supply chains
to effectively track Scope 3 emissions.
We also focused on understanding
(26:34):
what third-party platformsor tools companies use
to measure Scope 3 emissions,
and the challenges they face
and the kind of engagementmethods and levers they use
to deal with their suppliers
both to measure and managethe Scope 3 emissions.
And the third emphasis is on small
and medium-sized businesses
where we wanna not onlyunderstand the challenges,
(26:55):
but whether the customers
who are dealing with these smalland medium-sized businesses
are asking forsustainability-related information
and what kind of support they're getting
from these big customers and big buyers
to manage their sustainability efforts.
These are some broad topics
that we are covering in this year.
- Absolutely.
So every year you take the information
and seek to improve it
based on the responsesthat you're getting.
(27:16):
Martin, if you were to makeyour case to our listeners,
for those who are working in industry,
why should people in industry
complete the survey and whocan, who are you looking for?
- Yeah, I mean, I'llstart with the second,
who can is really everyone.
Everyone who's working in acompany can complete the survey.
We want information notonly from the companies
that are from the sustainabilitydivision of companies,
(27:37):
but from people working inlogistics or transportation,
and all these othersections of the companies
where we really don'thave that much visibility
into how they're viewing sustainability.
As to why they should do it,
I think anyone who's found ourreports in the past helpful
should definitely do it
because we're gonna makeanother one of those reports.
And importantly, this year,
our report is quite different
(27:58):
in that we've dialed in onto some of the,
I guess gaps in our knowledge
about how sustainability works.
We've looked specificallyat how can companies
better share data among each other,
we've looked specifically
at what are the biggestchallenges they face
in terms of measuring Scope 3 emissions.
And so, these are thingsthat the companies themselves
will be really interestedin seeing the results,
(28:19):
and that will only be possible
if we have a lot of peoplefill out the survey,
so please go fill out the survey.
- And it's in five languages.
So seeking accessibilityis a priority here too.
Turning now toward looking forward
and the future of sustainability,
how should industry
approach designingsystems that are resilient
and adaptable as climate science evolves?
- Yeah, I like your question
(28:40):
because I think it reflects a sentiment
that a lot of people have
when they listen to podcasts like ours
or when they talk to scientists,
that there's a lot of things
that are evolving in this space,
and in a way that's true.
And I think when you askscientists about what they do,
the first thing they go towards
is like all the things they're working on,
which is of course at the edge
where there's still a lot of uncertainty
and things that we don't know.
(29:02):
But at the same time,
I think climate science
has been an established field for decades,
and the fundamentalsare no longer evolving.
It's a fact, it's established.
And so when a company looks athow they can build resilient
and adaptable systems fordealing with climate change
and mitigating climate change,
I think the strategiesare already out there.
I think what needs to happenis leaders in companies
(29:24):
to go into their company and say,
"Okay, I'm gonna do this.
Let me learn about it,
read the things thatare already out there,
and then build a program,"
build initiatives in their company
to move themselves towards those goals.
- And one of the thingsthat can feel overwhelming
for people approaching sustainability
is how impossible it mayfeel to make a difference.
(29:44):
But, just curious, assomeone within the field,
what technologies or toolsare you most excited about
for improving sustainability outcomes
over the next, say five to 10 years?
- So there's lots of excitingthings happening right now.
So right now,
the European Union is passing
a Carbon Border AdjustmentMechanism called CBAM.
And this is a policy,it's basically a tariff,
(30:05):
but it will be proportionalto your emissions,
and it's for raw materials.
And the reason theydid this, is in Europe,
they have a systemwhere if you emit a lot,
and if your factory or your big business
emits a lot of greenhouse gas emissions,
you have to pay a fine or a fee.
But what they saw was happening
is a lot of companies werejust leaving the European Union
because they didn't wanna pay those fines.
So now what's gonna happen
with this Carbon BorderAdjustment Mechanism
(30:27):
is even if you leave the European Union,
if you still wanna sellproducts to the European Union,
you're gonna have to pay thatfee anyways at the border.
And so, on one hand,
it prevents companies fromleaving the European Union,
but on the other hand,
it's this really cool mechanism
where it's what we call a race to the top,
where now other countries are incentivized
to be more sustainable,
to be able to sell to the European Union,
(30:47):
and they're also incentivized
to start measuring their sustainability.
So you see this ripple effect
across the entire worldthanks to this policy.
So that's a really exciting policy.
And I'll give one more,
which is a lot more niche,
but when we talk about companiessharing their information
about their sustainability,companies have thousands,
sometimes tens of thousands of products,
so you can't be sendingemails or Excel spreadsheets,
(31:08):
you have to have asoftware system to do this.
And so, when you're talking about, okay,
how can we interfacethese software systems
of all these different companies
so they can share dataabout their products
and their sustainability,
well, you need a standardlanguage to do that.
You need a protocol that says, "Okay,
when my field is namedcarbon emissions with an S,
and that's the field I'm gonna look at,
and I'm not gonna startlooking for a field
(31:29):
that looks for carbon emission."
And so, this protocolis being built right now
by a consortium of companies
in the European Union called Pact,
And so, that's a reallyexciting thing as well.
- If there's any constant,
especially nowadays, it's uncertainty.
So just curious how you approach this
from a modeling standpoint.
How do you think about uncertainty
(31:49):
when modeling environmental scenarios,
especially in the face of climate change?
- So I think we can divide uncertainty
in like a few different buckets.
There's some forms of uncertainty
that no matter what you doin terms of the modeling,
you can't resolve.
We won't know the price of fuel in 2050,
that is just not something we can know.
And so I think as a modeler,
it's important to recognize sometimes
(32:10):
there are things we cannot model,
and then there's uncertainties
that we maybe could find ifwe have the right information.
As a modeler, it's really important
to be able to understand
what type of uncertaintiesyou're dealing with
and then when it's important,
work and look at what data you can find
to be able to reduce that
and be able to communicate it clearly.
- And, Sreedevi, Iwanna speak to something
(32:31):
that's important to your work.
Can you talk about theintersection of sustainability
with equity and justice in your work
and how they all work together?
- Sure, very interesting questions,
it's something that'svery close to my heart.
So sustainability has three pillars,
economic, environmental, and social.
All three pillars are very important.
A company cannot say
that I want to focuson economic prosperity
(32:52):
but not wanna focus on other things.
And at the same time,
a company cannot invest in environmental
and social sustainability-relatedinitiatives
if they do not have a business model
that is economically viable.
So all these three pillars are important,
and I strongly believe
that it's important to linkenvironmental conservation
with reducing inequalitiesand elevating poverty.
And before I joined MIT,I worked on a project
(33:14):
that focused on over 25,000
women micro enterprises in India.
Our objective was to bringin policy level changes
that will basically helpthese women micro enterprises
to thrive despite all thesetbacks and challenges they face.
You know, as part of the LIFT Lab,
which is also called
the Low Income Firms Transformation Lab,
our focus is on small and micro firms
in developing countries,
(33:34):
and we develop technologyand training solutions
for these companies
so that they increase theirproductivity and survival rate.
And what is interesting is the Director
of the Sustainable SupplyChain Lab, Dr. Josue Velasquez,
is also the founder of the Lift Lab.
And that clearly sums it all,
how important it is to not just focus
on environmental sustainability,
but on social sustainabilityas well, and it's together.
(33:55):
- And really looking to makethat long-term difference
and give people autonomy in that regard.
Thinking about not just thefuture of sustainability,
but the lab in particular,Tori, what's next for the lab
in terms of researchfocus or new initiatives?
- So we actually have twopretty exciting projects
that we're working on.
So one is, Sreedevi actuallymentioned it earlier,
we're partnering with the Freight Lab
(34:16):
to create a sustainabletransportation consortium.
So that's working directly with people
in the transportation field,
so shippers, brokers, carriers,
and actually looking at initiatives
that we can do to actually make them
become more sustainable.
Is it different types of vehicles or fuel,
or is it changing the network design
(34:36):
of how our fuel is built andshared throughout the US?
So that's one area that we're looking at
that we're pretty excited about.
Our other one that takes up so much time
in the best way possible
is our Scope 3 challenge consortium.
So we're partnering with the CDP,
which was previously known asthe Carbon Disclosure Project,
and that's an organizationthat most companies
(34:59):
are actually disclosingtheir emissions on.
So they have over 23,000companies globally
disclose their emissions.
We're working with them
as well as different high tech industry
to create this consortium
to help them lowertheir Scope 3 emissions,
so different ways
that they can actuallyget accurate information
to be able to properlyreduce those emissions.
(35:22):
- And what is the priorityon Scope 3 versus the others?
I know you all explainedthe difference before,
but why a focus on Scope 3?
- Scope 3 is really the focus
because it's the hardest to do.
So it's very hard for companies to,
like we were saying before,
they actually even know whattheir Scope 3 emissions is
because they don't havethose close relationships
(35:42):
with their suppliers,
and maybe they only knowtheir tier one suppliers,
the ones that they'redirectly working with,
but they don't know anywhere past that,
so they don't know theirsupplier suppliers.
And because this goes all theway down to the raw material,
really a company,
your company is responsiblefor those emissions.
You wouldn't be mining some mineral
if it wasn't to make that product.
(36:04):
So your company has aresponsibility to learn
and to know what those emissions are,
and you can then start reporting it.
So until you actually do the work,
you can't determine whichsupplier is the highest emitter,
and maybe work with that supplier
to then put solar panels on their building
or do things in a different way
(36:25):
because you don't haveany visibility to that,
you can't take any sort of action.
- Also, adding to that point,
Scope 3 emissions contribute
to over 75 to 80% of theoverall emissions of a company,
and that's why it's moreimportant to focus on that.
- Yeah, that's incredible.
So up to this point,
it's been a kind of outof sight, out of mind
if you're not aware ofyour Scope 3 emissions
and having to face that first.
(36:45):
Thank you all so much forjoining me this episode.
- Thank you so much
for having us- Thank you so much.
This was great.
- Thank you so much,Mackenzie, for having us
and for all those insightful discussions.
- That wraps up this episodeof "Supply Chain Frontiers."
A big thank you to ToriArnold, Sreedevi Rajogopalan,
and Martin Staadecker forsharing their expertise
and insights into sustainability.
(37:06):
To learn more about the SupplyChain Sustainability Lab
and the research discussed today,
visit sustainable.mit.edu.
"Supply Chain Frontiers" isrecorded on the MIT campus
in Cambridge, Massachusetts.
Our sound editors are Dave Lishansky
and Danielle Simpson atDavid Benjamin Sound.
And our audio engineer today
(37:26):
is Kurt Schneider of MITAudio Visual Services.
Our producer is myself, Mackenzie Berry.
Be sure to check out our previous episodes
of "Supply Chain Frontiers"at ctl.mit.edu/podcast
or search for us on yourpreferred podcast platform.
If you enjoyed this episode,
please subscribe and letus know what you think
(37:46):
and what you'd like to hear in the future
by reaching us at sefrontiers@mit.edu.
Your feedback keeps us motivated
to bring you the latest insupply chain innovation.
I'm Mackenzie Berry, thanks for listening,
and we'll catch you next timeon "Supply Chain Frontiers."
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