Sustainability in Practice

• Author: Yossi Sheffi
• DOI: http://doi.org/10.1111/jbl.12193
• Published date: 01 September 2018
• Date: 01 September 2018

Editorial

Sustainability in Practice

Yossi Sheffi

Massachusetts Institute of Technology

Should business lead on environmental sustainability? The article argues that while there are some environmental initiatives that support the

mission of the business, such as energy savings that also reduce costs, business should not go too far. On the one hand, its ability to do so

is limited since most of the carbon footprint is outside its four walls, and even where it can make substantial changes, it should not do it until

consumers will be willing to pay for it and incur minor inconveniences.

Keywords: environment; sustainability; business foot print; responsibility of business; balancing green

In April 2018, I put an exclamation mark on five years of

research into companies and sustainability. My original intent

was to argue, as did others, that business should take the lead

because many governments are paralyzed by discord and politi-

cal calculus. Industry, I thought, being the source of most envi-

ronmental impacts, can and should lead the way. Very quickly,

however, I realized that not only business is not taking the lead

—it really could not and should not do it.

Three of the most revealing results of the research are that: (1)

companies cannot control most of their emissions even if they

wanted to; (2) most consumers are not willing either to pay more

or incur slight inconveniences in the name of sustainability; and

(3) jobs and economic development are more important than sus-

tainability.

IT’S OUTSIDE THE FOUR WALLS

Most of the environmental footprint of nearly every company is

not in its own operations. Instead, it comes from either their

upstream supply chain or from the downstream use phase. Con-

sider, for example, electronic products, many of whom have 15–

20 echelons in their supply chain; yet the companies making and

selling the electronic product are not likely even to be aware of

who the deep-tier suppliers are beyond “Tier 1.”Most suppliers

regard the identities of their subsuppliers are as a trade secret

and a source of competitive advantage.

Even if a manufacturer identifies a subsupplier buried deep in

its supply chain, it has no leverage over it, because it has no

commercial relationship with such a supplier. Furthermore, the

subsupplier may not even know that its own product ends up

used by the manufacturer.

The issue with use-phase environmental impact can be even

more difficult. For some products, it is simply a new design with

no behavioral change required. A more energy-efficient refrigera-

tor or computer might be identical to the model it has replaced;

it simply uses less energy. Others, such as an electric vehicles,

might demand both behavior changes (e.g., learning to manage

the range of the vehicle and find charging stations), as well as

concomitant consumer investments (e.g., installing charging facil-

ities at home).

Because of such difficulties, companies focus on their own

operations and report on their efforts in glossy brochures and tri-

umphant press releases. For example, Coca-Cola tout the reduc-

tion in their water use from 2.7 L of water per liter of beverage

to 1.96 L per liter. Meanwhile, the sugar beet farmers, deep in

its European supply chain, guzzle 28 L of water per liter of

Coke. The point is that in most cases companies cannot really

have a significant impact on sustainability because they have no

control and little influence over their deep tier suppliers or

customers.

SAY VERSUS PAY

In many polls and surveys, consumers claim they want more sus-

tainable products and are willing to pay more for them. Never-

theless, retail data show that very few actually do. Faced with a

choice at the supermarket shelf, the vast majority of consumers

choose the least expensive product regardless of its environmen-

tal characteristics. Apparently, the surveys vastly overestimate

the impact of eco-labels: survey participants tend to respond the

way they think the survey creator wants them to respond, or they

may want to appear progressive and caring. Moreover, while the

majority of consumers in developed countries refuse to pay more

for sustainable products; most consumers in developing markets

cannot even afford them.

Finally, readers who consider themselves environmentally

aware should ask themselves: (1) how many consumers refuse to

purchase items from Amazon because of the wasteful packaging,

which ends up in landfills? (2) How many e-commerce con-

sumers consolidate their purchases and order only once every

week or two in order to save on transportation and packaging?

(3) Finally, how many e-commerce consumers forego the free

two days (or 2 hr in many cities) delivery in favor of longer

time? The answer to all these questions is very few!

The moral of these observations is that companies should not

invest heavily in environmental initiatives until their customers

Corresponding author:

Yossi Sheffi, MIT Center for Transportation and Logistics, 77 Massa-

chusetts Ave., Cambridge, MA 02139, USA; E-mail: sheffi@mit.edu

Journal of Business Logistics, 2018, 39(3): 160–163 doi: 10.1111/jbl.12193

© 2018 Council of Supply Chain Management Professionals