Financial benefits of reimagined, sustainable, agrifood supply networks

(with Tracy Van Holt, Martin Delaroche, and Kevin Eckerle), Journal of International Business Policy

Published

2021-02-26

ACCESS THE PAPER HERE, the ungated pre-print version [coming soon], and the Excel monetization tool

Abstract

Multinational enterprises face challenges to integrate the UN’s Sustainable Development Goals into their supply chains because it requires cooperation outside of their direct control. In global agrifood value networks, companies struggle to engage their suppliers in sustainability. One reason is that key intermediaries, the offtakers, have not been engaged in sustainability strategies in a way that is economically feasible, and thus fail to act as a cooperating link. We developed and applied a return on sustainability investment (ROSI) model of a more strategic supply-chain approach for food commodities (one that values partnerships over transactional relationships). We modeled the coconut supply network in the Philippines, and compared these findings to another agrifood system, Brazilian beef. Categories of benefits included: a stable and sustainable supply chain, long-term contracts, sustainable products, brand value and innovation, and reduction of corporate risk. In addition to the benefit of working with MNEs as a strategic partner, incremental benefits prioritized by stakeholders included intangibles that could generate value from cost savings, avoided costs, as well as new revenue opportunities to establish a more stable sustainable supply chain. Monetizing benefits to offtakers can help incentivize a new type of global value chain governance to a closed, more stable supply-chain configuration that can better address complex social–environmental dynamics, and foster strategic partnerships.

A chart illustrating the relative benefits of sustainable supply networks.

Useful things

  • Presentation at the Bloomberg Data For Good Exchange 2019: poster
  • Slide deck from the Academy of Management Specialized Conference: Responsible Leadership in Rising Economies
  • A prior version was circulated under the title Monetizing Benefits of Strategic Partnership Supply Chain Management for Sourcing Commodities in Emerging Economies