- Supply chains are critical to helping the world achieve the UN Sustainable Development Goals by 2030.
- For organizations all along these value chains, the question should no longer be about whether to invest in sustainability, but rather how to ensure workforces and upstream suppliers are prepared to drive sustainability initiatives forward.
- Organizations can use three priorities – skills investment, public-private collaboration and refocusing on long-term value creation – to help address the sustainability skills gap in global supply chains.
Supply chains are critical for achieving the Sustainable Development Goals (SDGs) – the supply chains for eight industries including food, fashion and freight account for more than 50% of global emissions.
And while recent research from the World Economic Forum and Kearney shows 66% of surveyed business leaders prioritize sustainability credentials over price when selecting suppliers, 94% of companies say they lack the necessary people power to implement their environmental, social and governance (ESG)agendas effectively. To reach critical 2030 sustainable development targets, companies may need to train as many as 150 million people with sustainability skills.
Bridging this skills gap will be essential to transforming supply chains to be more inclusive and sustainable.
Which sustainability skills will transform supply chains?
As organizations use more climate-resilient technologies and circular practices, workforces need the necessary skills to drive sustainability in supply chains. This need spans the entire value chain, from the initial sourcing of raw materials to the final product reaching the consumer. The question is no longer whether companies should invest in sustainability, but rather how they can ensure their workforce and upstream suppliers are prepared to drive sustainability initiatives forward.
A recent publication Skills for Sustainable Supply Chains by the United Nations Industrial Development Organization (UNIDO) highlights that collaborative skill development, particularly with upstream suppliers, will accelerate sustainability performance in the supply chain.
The report says workforces along the supply chain need training in how to minimize environmental impact, safely handle hazardous materials, mitigate climate change, promote resource efficiency, prevent biodiversity loss and regenerate nature. Other essential sustainability training should cover social dialogue, collective bargaining, health and safety standards, and promoting workplace gender and social inclusion.
How to bridge the sustainability skills gap
It will take a collective effort from all stakeholders, including governments, financial institutions, businesses and educational institutions, to address the sustainability skills gap in global supply chains. They can use three priorities to counter this growing divide:
1. Invest in reskilling and upskilling
Investment must be scaled up in both technical and soft skills to improve sustainability performance. This includes not only training workers in new technologies and sustainable practices, but also fostering an organizational culture that embraces sustainability and encourages innovation and collaboration.
Helping public and private actors to attract – and measure – more sustainable investments is key to this transformation of global value chains.
2. Scale-up collaboration between public and private sectors
Public-private partnerships provide a structured approach to harnessing all kinds of resources for skills development. The focus here should be on providing early-stage skills and industry-relevant training, while ensuring scalability of results that cannot be achieved with in-company training alone.
3. Enact a paradigm shift
Organizations must shift their focus from short-term profits to long-term value creation. In this new paradigm, sustainability and operational excellence would be more ingrained than ever before, with sustainability driving performance enhancements and financial returns.
To enable this shift, empowering employees and upstream suppliers with sustainability skills must be seen as a strategic business opportunity that generates long-term value for all actors in the value chain.
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Bringing sustainable and ethical products and services to the market will only be possible if smallholders, suppliers, producers, leading firms and states along global supply chains are all equipped with the right skills.”— Gerd Müller, UNIDO
“Global supply chains create millions of jobs and are key to economic growth and poverty reduction,” UNIDO Director General Gerd Müller says. “Bringing sustainable and ethical products and services to the market will only be possible if smallholders, suppliers, producers, leading firms and states along global supply chains are all equipped with the right skills. I am committed to fair globalization, in which neither workers nor our shared natural environment are exploited, but are rightly seen as valuable, essential contributors, providing the foundation upon which all our lives are based.”
Sustainability upskilling in action
To close the skills gap and scale sustainability across the value chain, public-private collaborations should focus on reskilling current workers, upskilling suppliers and preparing future generations to meet the demands of a green economy.
For example, the World Economic Forum’s Centre for Advanced Manufacturing and Supply Chains has collaborated with UNIDO and the University of Cambridge on a series of industrial policy workshops. These events mapped workforce development needs from each sector, identifying the following needs:
Sustainability skills development should be a priority for public and private sector organizations.Image: The New Era of Industrial Strategies: Tackling Grand Challenges through Public-Private Collaboration (May 2024)
Through initiatives like the Learning and Knowledge Development Facility, funded by the Swedish International Development Cooperation Agency, UNIDO also partners with manufacturers such as the Volvo Group, HP, FESTO, Nokia, Hitachi, Komatsu and Epiroc to modernize vocational education and training systems in industrializing countries. Such initiatives foster cooperation and knowledge exchange across sectors to bridge critical skills gaps.
Companies committed to bridging the sustainability skills gap across their value chain can also play a key role in training their own suppliers. The World Economic Forum’s Industry Net Zero Accelerator recently identified 12 opportunities to tackle Scope 3 emissions (those emitted by others in an organization’s value chain), including “Bridge knowledge and technical expertise gaps.” If companies share strategies, knowledge, and technical support with suppliers, they can align on sustainability goals.
For example, electronics company Agilent Technologies has a supplier management programme for Scope 3 emissions, by far its largest source of greenhouse gas (GHG) emissions. It currently provides Agilent suppliers with the highest GHG emissions and lowest ESG performance ratings with resources, knowledge sharing, a supplier code of conduct and progress tracking tools. Agilent is now working on embedding emissions requirements into its procurement process and delivering training programmes for all of its suppliers.
Scope 3 emissions typically account for more than 70% of a company’s carbon footprint, so it’s critical that sustainability skills strategies consider all stakeholders across the value chain. By taking an expansive view, organizations can collaborate to drive the transformation of the entire supply chain and support global efforts to meet critical 2030 sustainable development targets.