The path towards environmental and social sustainability: the case of manufacturing companies and their suppliers

In 2005, the Millennium Ecosystem Assessment reported that two-thirds of the world’s ecosystems were being exploited well beyond sustainable levels. Given that manufacturing firms rely strongly on natural resources to conduct business, it is surprising that many have failed to make their supply chains more sustainable. I believe this occurs not because companies are acting in their own self-interests, but because understanding is still lacking on how to become sustainable. The Key is that good environmental and social performance are not simple to achieve, since ‘new’ practices have to be developed in a coordinated fashion. That is, most companies do not choose to ignore environmental and social harm, but the complexity is such that their knowledge is often insufficient. The goal of this dissertation is to offer practical guidelines which help companies to coordinate the complex bundle of practices which have to be adopted along the pathway that lead to high environmental and social performance in the supply chain. To do so, I develop three distinct but compatible papers. The first looks at the role of a company’s willingness/ability to change, i.e. its innovativeness, as a distinguished factor whose absence may hinder, retard or even constrain the development of sustainable practices. The second paper acknowledges the globalization process that supply chains are undergoing, which creates the need for differentiated approaches to the management of sustainability. Third, the last paper looks at the inter-relationship between internal and external practices (i.e., activities without direct supplier involvement vs. activities that include transactions with suppliers) and at their specific impacts on sustainability performance. Taken as a whole, this dissertation sheds some light on the pathway companies should undertake to boost their environmental and social sustainability while helping suppliers to develop their own capacity to deal with this matter.