When people bring up supply chain sustainability, the financial services (FS) sector is not the first one that comes to mind. Supply chain issues are more often linked to industries with visible and severe impacts—we think of the Rana Plaza factory collapse in Bangladesh, or conflict minerals.
However, there is a compelling business case for FS companies to expand their sustainability efforts to their supply chains, which can be exposed to a number of environmental, social, and governance issues that present significant challenges and opportunities. In fact, many environmental and social impacts in this sector do not come from direct operations, but rather from supply chains. Considering the sector’s purchasing power—for instance, TD Bank spent US$5.7 billion on sourcing in 2014—and the number of suppliers that many of these firms have, responsible choices can have profound impacts.
To this end, we have published an issue brief, “Sustainable Supply Chains in the Financial Sector” that explores these issues, provides current FS sector approaches, and lays out next steps for FS companies on seizing opportunities related to a responsible supply chain strategy.
While not all supply chains are the same, some of the main sourcing categories for FS companies include IT, employment and professional services, energy, and transport and travel, among others. And emerging trends in the FS sector also underline the importance of a sustainable supply chain strategy. These trends include increased outsourcing of services, increased regulation around supply chain responsibility, growth in online and mobile banking, the use of big data, and expansion to emerging markets. With these categories and trends in mind, FS companies should consider how to manage greenhouse gas emissions, human rights, data privacy and security, e-waste and conflict minerals, and sustainable practices in facilities and property management, among others.
The FS industry is well positioned to address sustainability challenges and minimize risks in its supply chains proactively—paraphrasing Jack Welch’s famous advice, to change before they have to.