by Shanay Shah, Advisory Partner
A sustainable supply chain in one that integrates environmentally sound and financially viable practices into the entire supply chain ecosystem, right from product design and development to distribution, consumption, return and disposal. A sustainable supply chain is imperative for the balance of economic development and environmental conservation.
The VW scandal can be considered as the biggest example of an unsustainable system. In September 2015, the Environmental Protection Agency (EPA) found that many Volkswagen cars being sold in America had a "defeat device" in diesel engines that could detect when they were being tested, changing the diesel emission levels and improving performance accordingly to improve results. The German car giant admitted to cheating emissions tests in the USA. This scandal has tarnished the brand name of VW and caused a huge decline in its stock price. It also had to incur huge expenses in terms of replacing faulty cars and also had to compensate heavily (4.3 billion) for environmental damage. Similar incidents damaging the environment have strengthened the need for a sustainable supply chain system.
Growing concerns for the environment will cause companies looking to implement sustainable strategies along its supply chain to look upstream. Companies, having an option to choose from various suppliers, must use their purchasing power to select the ones that comply with green supply chain standards. Environmental laws are also being framed and implemented across various companies to create a balance between economic development and environmental deterioration. Over time, all companies will aim to streamline their supply chain systems, making their system more eco-friendly and sustainable for the long term.
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