Sustainable supply chain management - The Sustainability Management Wiki

Authors: Paula Fuhr, Larissa Sophie Nöthel, Juliane Pieper, Aylin Christin Schindler
Edited by: Patricia Berghoff, Tom Glaeseker, Lennard Hohmeier, Jens Holzkämper, Kristina Karstensen, Luca Thost, Tammo Resener, Pauline Haupt, Luisa Kenkel, Laura Stollenwerk
Last updated: April 8, 2026

Executive summary

Sustainable Supply Chain Management (SSCM) integrates environmental, social, and economic goals across the supply chain. It emphasizes responsible sourcing, production, logistics, and disposal to minimize ecological and social risks while maintaining profitability. Key benefits include cost savings, risk reduction, and enhanced reputation. SSCM uses performance indicators based on the triple bottom line to measure progress. Challenges include complexity, data gaps, and global coordination. Practical steps involve mapping supply chains, assessing risks, setting sustainability goals, and collaborating with suppliers. Drivers include regulatory pressure, market demand, and societal expectations, while barriers often stem from financial constraints and lack of knowledge. Implementing SSCM requires continuous improvement, transparency, and stakeholder engagement to achieve long-term sustainability.

1 Definitions

1.1 Supply chain management

In simplified terms, supply chain management (SCM) can be described as a process in which three or more entities (organizations or individuals) are directly involved in an upstream and downstream flow of products, services, finances, or information from a source to a customer. The process usually starts with unprocessed raw materials and ends with the finished product at the end customer.¹ As defined by the Council of Supply Chain Management Professionals (CSCMP) supply chain management encompasses the management of all activities involved in sourcing and procurement and all other logistics management activities. The coordination with supply chain partners is an essential part of this. Thus, supply chain management links supply and demand management across companies and includes manufacturing operations, marketing, sales, product design, finance, and information technology.²

Figure 1 shows a classic and simplified supply chain process, which is typical for manufacturing industries. The process begins with the purchase of materials from suppliers. The materials obtained from the procurement firm are processed into the final product through production and are then distributed or stored. Through distribution, they usually first reach a seller and then the customer. Finally, most products end up as waste at the end of use.³

Figure 1: Typical and Simplified Supply Chain
Source: Own illustration based on Hoffmann (2020)³.

1.2 Sustainable supply chain

Since supply chains are the origin of a large share of environmental and social impacts of firms, they also hold a great potential to avoid or minimize these risks. As an insufficient supplier management can lead to catastrophes. As the collapse of the Rana Plaza Building in Bangladesh revealed, it is important to address social and environmental issues along the supply chain.⁴

A classical definition of sustainable supply chain management (SSCM) is given by Seuring and Müller (2008) who defined SSCM as “The management of material, information and capital flows as well as cooperation among companies along the supply chain while taking goals from all three dimensions of sustainable development, i.e. economic, environmental and social, into account which are derived from customer and stakeholder requirements.”⁵ SSCM therefore involves integrating environmentally friendly practices in a holistic way into the supply chain lifecycle. Beginning with raw material selection and sustainable production the stream continuous with green packaging and transportation, warehousing, distribution and lastly consumption, return and disposal.⁶ Only looking at the use phase of a product is insufficient, SSCM addresses both the history and the future. Impacts during different life stages of the product (e.g., resource use during production, toxic effects) are included.⁷

The non-sustainability of a focal firm is linked not only to environmental issues that arise in the supply chain but also to social issues. The focal firm is the most powerful firm in control of most of the supply chain or the firm whose perspective is adopted.⁸

Figure 2 shows a simplified sustainable supply chain. It starts with the sustainable sourcing of raw materials and a sustainable supplier management. These materials are obtained by the focal firm which is in charge of sustainable production. This is followed by sustainable distribution, which includes sustainable warehousing, sustainable packaging, sustainable logistics and mobility. Hereafter comes sustainable stakeholder management with retailers and customers. At the product’s end a sustainable disposal must be taken care of or even better the product can be repaired, recycled or reused.⁹

Figure 2: Sustainable Supply Chain
Source: Own illustration based on Schandel et al. (2020)⁹

Beyond reducing their overall carbon footprint, there are many reasons why organizations should address sustainability in their supply chains. Different priorities can be addressed e.g., environmental stewardship, conservation of resources, financial savings and viability or social responsibility.⁶

2 Impact of sustainability and sustainable performance indicators in SSCM

2.1 Importance of measuring sustainability in SSCM

Sustainability refers to the activities of companies to implement sustainable as well as socio-ecological requirements along the entire value chain.¹⁰ Thus, sustainable supply chains are an essential part of a sustainable development. The growing importance for sustainable supply chains is driven by environmental degradation, such as depleting raw material resources, overflowing landfills and rising pollution.¹¹ The pollution and emissions caused by supply chain activities contribute significantly to serious environmental problems, resulting in global warming.¹² However, also substantial social problems arise in relation to supply chain activities such as human rights violations and forced child labour. Changes due to globalization and increasing uncertainty as well as the growing awareness of customers and pressure from regulatory authorities and NGOs are just some of the factors influencing this issue.¹²

With a sustainable supply chain, companies can show their stakeholders that they are aware of their responsibilities and prepared to actively address and counteract substantial sustainability impacts and risks as far as possible.⁴ However, companies can only be sustainable if sustainability issues are addressed at every level of their supply chain.¹³^,¹⁴ Nevertheless every step towards a more sustainable supply chain is significant. A sustainable approach helps a company to maintain its profitability while at the same time fulfilling its responsibility to protect human rights and thereby fulfilling its social responsibility.¹⁵

Improving organizational sustainability is a long-term process that requires internal, social, and environmental efforts.¹⁴ This is where the importance of sustainable performance indicators and their measurement becomes apparent. The measurement of such indicators often serves as an assessment to initiate improvements and to raise awareness about the extent of sustainability issues within the supply chain. Thereby SSCM must meet not only several but conflicting objectives simultaneously, such as maximizing revenue while reducing operating costs.¹⁴ However, if companies design their own processes in a sustainable way, significant cost savings for instance in resource, energy, and transport costs can be achieved. With increasingly efficient processes and systems, the need for other resources falls and so do e.g., manufacturing costs.⁴

2.2 Sustainable performance indicators for measuring sustainability in SSCM

Sustainability performance indicators (SPIs) are supposed to help companies to measure their performance at least in one of the three dimensions of social, ecological, and economic sustainability, according to the triple bottom line (TBL) approach.¹³ Looking at the various guidelines and standards that have been published in recent years, it can be difficult for companies to get an overview of the latest developments in sustainability measurement. For example, one of the leading retail and tourism groups in Europe the REWE Group, for example, has a highly ranked sustainability report which uses various GRI guidelines as a reference for its SSCM measurements.¹⁶^,¹⁷ Although REWE Group has focused on one guideline, there are others that can be considered to track sustainability metrics. The literature lacks an overarching, standardized methodology as well as transparency, as there is much conflicting information on sustainability performance.¹³ Therefore, a paper by Saeed and Kersten (2017) published in the German Logistics Association BVL aims to provide such an overarching best practice methodology to help companies to understand, measure, and track important SPIs of their supply chain. This is of importance as measuring and managing performance requires the establishment of goals against which the achievement can be measured.¹⁸ For this approach, the authors analyzed the following 12 international guidelines and standards, which provide metrics for assessing supply chain performance in the three sustainability dimensions¹³:

EMAS¹⁹	SCOR²⁰	GRI²⁰	IChemE²¹	ILO²²	ISO 14001²³
ISO 14031²⁴	ISO 26000²⁵	OECD²⁶	OHSAS 18001²⁷	SA8000²⁸	UNGC²⁹

Table 1: Overview of the 12 International Guidelines and Standards considered

To manage and track the sustainability performance, a set of sustainability goals represented by the following categories should be achieved by SSCM.¹³

2.2.1 Sustainable performance indicators for environmental sustainability

Regarding environmental sustainability, i.e. the use of resources by preserving the natural regenerative capacity, the performance indicators are divided into the following subcategories³¹ defined in this section. Energy efficiency classifies total energy consumption from both renewable and non-renewable energy sources. Material efficiency refers to total material consumption as well as the use of renewable, hazardous, and recycled materials. Water management addresses all forms of water consumption as well as total water discharge and the quality of water discharge. Waste management classifies all forms of waste produced and recycled. Emissions include direct and indirect greenhouse gas emissions, ozone depleting substances, VOCs, NOx, SOx, and particulate matter. Land use represents the total area used for an organization’s operations. Whereas environmental compliance to environmental regulations refers. Finally, supplier assessment considers the environmental performance of suppliers and their selection criteria.¹³

#	Indicator	SPI
1	Energy Efficiency	1-2) Total and specific annual energy consumption 3) Total annual renewable energy consumption
2	Material Efficiency	1-2) Total and specific annual material consumption 3) Total annual renewable material consumption 4) Total annual recycled/reused material consumption 5) Total annual hazardous materials consumption 6) Specific annual hazardous materials consumption
3	Water Management	1-2) Total and specific annual volume of water consumption 3) Total annual volume of water recycled/reused 4) Percentage of annual volume of water recycled/reused 5) Total annual volume of wastewater discharged 6) Specific annual volume wastewater discharge
4	Waste Management	1-2) Total and specific annual amount of waste generated 3-4) Total and specific annual amount of hazardous waste generated 5) Specific annual amount of waste recycled/reused 6) Percentage of waste recycled/reused
5	Emissions	1) Total annual amount of direct GHGs (CO2, CH4, N2O, HFCs, PFCs, SF6, NF3) emissions (Scope-1) 2) Total annual amount of indirect GHGs (Scope-2) 3) Total annual amount of other GHGs (Scope-3) 4) Specific annual GHGs emissions (Scope-1&Scope-2) 5-6) Total and specific annual amount of ozone-depleting substances 7) Total annual amount of particulate matter emissions 8) Total annual air emission
6	Land use	1-2) Total and specific size of the operational site/facility
7	Environmental compliance	1) Total annual number of non-compliance with environmental regulations
8	Supplier assessment	1) Percentage of supplier’s subject to sustainability assessment 2) Percentage of local/national/provincial suppliers

Table 2: SPIs for Environmental Sustainability; Source: Own illustration based on: Saeed, & Kersten (2017)¹³

2.2.2 Sustainable performance indicators for social sustainability

The SPIs in the social dimension of sustainability, which considers a company’s responsibility management towards its social and human capital, include the following categories³¹: Human rights and anti-corruption, which addresses all forms of corruption and the violation of basic human rights. The HR indicator addresses all forms of human resource management. To cover the health and safety of all employees, its indicator collects information on occupational health and safety issues. The training and development indicator addresses the training and development opportunities available to employees. Consumer issues such as complaints, product returns, etc. are also captured. Finally, compliance with social regulations is measured.¹³

#	Indicator	SPI
9	Human rights and anti-corruption	Total annual number of: 1) incidents of discrimination 2) incidents where the right to freedom of association and the effective recognition of the collective bargaining are violated 3) incidents of forced labor 4) incidents of child labor 5) incidents of corruption
10	Human resource	Total annual number of: 1) employees; 2) female employees; 3) new male employees; 4) new female employees; 5) male employees from the region; 6) female employees from the region; 7) male employees’ turnover; 8) females employees’ turnover; 9) employees entitled to life insurance, healthcare, parental leaves, dividend, retirement provision, bonuses, injury payments, etc.; 10) employees receiving annual performance reviews
11	Health and safety	Total annual number of: 1) non-fatal occupational health and safety related accidents occurring int the course of work 2) days lost due to occupational health and safety related accidents 3) fatalities due to occupational health and safety related accidents
12	Training and education	Average hours of: 1) training per employee 2) training for female employees 3) training for male employees Total number of: 4) employees given training
13	Consumer issues	Total annual number of: 1) incidents of consumer complaints 2) incidents of engaging in misleading, deceptive, fraudulent of unfair practice 3) products returns (reclaimed products)
14	Social compliance	1)Total amount of non-compliance with social criteria or regulations

Table 3: SPIs for Social Sustainability; Source: Own illustration based on: Saeed, & Kersten (2017)¹³

2.2.3 Sustainable performance indicators for economic sustainability

The third pillar of the TBL approach is economic sustainability which describes the distribution, flow and impacts of an organizations’ financial resources on the environment and society.³¹ It is measured by the following SPIs: First, stability and profitability illustrate the financial health of a company. Income distribution includes salaries and benefits for employees as well as payments to the state and local authorities. Market competitiveness measures an organization’s environmental performance relative to its competitors in the same market. And an organization’s economic performance relative to sustainability spending is measured by the last set of SPIs.¹³

#	Indicator	SPI
15	Stability and profitability	1) Total annual sales/revenues 2) Operating profit 3) Free cash flow 4) Total number of products produced
16	Income distribution	Total annual: 1) number of wages and benefits given to employees by an organization 2) payments made to the Government (taxes) 3) amount of community investment 4) operating cost
17	Market competitiveness	Ratio of entry-level wage given to: 1) male employees in an organization to the minimum wage in a specific country or industry 2) female employees in an organization to the minimum wage in a specific country or industry
18	Sustainability expenditures	1) Percentage of procurement budget spent on local suppliers 2) Total annual sustainability expenditures 3) Total research and development expenditure

Table 4: SPIs for Economic Sustainability; Source: Own illustration based on: Saeed, & Kersten (2017)¹³

The SPIs can be arranged in sustainability-focused performance measurement systems, whose key priority is to track, communicate and significantly reduce the absolute level of negative ecological and social impacts and thus to contribute to a sustainability transformation of both markets and society.²¹ One possible instrument to visualize this performance measurements is the Sustainability Balanced Scorecard (SBSC). It aims to improve corporate performance in all three sustainability dimensions and thus achieve strong corporate sustainability contributions.³²

2.3 Advantages and disadvantages

There is a vital need for a multidisciplinary and balanced approach to performance measurement for supply chains.¹³^,¹⁵ This need for SPIs also brings many advantages. In general, indicators have a meaning that goes beyond the value of the parameter and thus provide significance and concentrated information that would otherwise require a larger amount of detailed information.³³^,³⁴ SPIs help organizations to assess and monitor their sustainability performance, while supporting them in communicating and implementing strategies at the operational and strategic levels.³⁵ However, compliance with such standards is not only important in internal communication, but can also be a prerequisite factor when collaborating with other companies. For example, Google expects its suppliers to make essential commitments. If Google, one of the world’s largest tech companies, requires additional certifications such as ISO14001 or OHSAS 18001, suppliers must obtain these standards in a timely manner.³⁶ Another advantage of indicators is the comparability and reproducibility of the data.³³ This performance measurement system should also enable companies to evaluate or compare their sustainability performance. With the right set of SPI’s and continuous monitoring, companies benefit from a supply chain-wide competitive advantage.¹³

Besides these advantages, disadvantages or rather challenges of sustainability measurement can also be identified. Since both the environment and supply chains are made up of massive subsystems as well as huge processes, this makes managing their performance fairly complex in general. This complexity in global supply chains means that supplier quality improvement efforts are typically unobservable, making it difficult to measure these SPIs.³⁷^,³⁸ Choosing the right and appropriate SPIs to measure sustainability is also a major challenge. A disadvantage is the potential lack of appropriate data, which can lead to the absence of important information.³³ If the wrong measures are chosen, companies can be misguided and thus act less sustainably than expected.¹³

3 Functions and processes of SSCM

3.1 Sustainable supply chain risk-management

Sustainable supply chain risk management (SSCRM) refers to activities that aim to address and manage a focal firm’s exposure to sustainability-related supply chain risk sources.³⁹ Principally, complex, and multilevel supply chains tend to lack traceability and thus trans-parency, which increases their risk for sustainability-related supply chain issues.⁴ Figure 3 shows a selection of industry-dependent sustainability-related supply chain issues.While ordinary supply chain risks are triggered by a disruption that disturbs the flow of goods, financial resources, or services, sustainability-related risks materialize through adverse stakeholder reactions to a sustainability-related triggering event in or close to the supply chain. Both lead to damaging consequences for the focal firm. Hence, SSCRM must consider both triggering mechanisms: disruptions and stakeholder reactions. Therefore, examining the supply network for sustainability issues that could provoke stakeholder reactions is important to attain and preserve stakeholder legitimacy and is thus a precondition for successful SSCRM. The stakeholders to be considered, include suppliers, local communities, governments, investors, shareholders, NGOs, the media, customers, and employees.³⁹

The ISO 31000 standard provides a methodology for companies to managing risks that can be applied to supply chain risks, but requires adaptation to the specific context of sustainable supply chain management.⁴⁰ The first stage of the risk assessment is the identification of all potential sustainability-related supply chain risks.⁴⁰^,⁴¹ Mapping and visualizing the supply chain helps to create transparency and can serve companies as a starting point for this step.⁴ A pragmatic example is displayed by the computer mice manufacturer Nager IT on its website.⁴² Furthermore, conducting a life cycle assessment of a product allows a company to identify ‘hotspots’ of environmental impacts along its supply chain. ISO 14040 as well as ISO 14044 provide an approach for life cycle assessments.⁴ The risk analysis aims to comprehend the nature of risk and asses their likelihood of occurrence and the magnitude of their potential impact on the supply chain performance, adapted for supply chain-specific contexts.⁴⁰ To identify potential causes and consequences tools as root cause and sensitivity analyses or cause and effect analyses can be conducted.⁴³ The risk evaluation prioritizes the risk according to their relative importance to determine where additional action is required.⁴⁰^,⁴⁴A materiality analysis geared towards the supply chain can support this step by assessing the magnitude of potential impacts on the company itself and on its stakeholders.⁴ After the risk assessment is completed the risk treatment follows.⁴⁰^,⁴³ Four major responses exist to treat sustainability-related supply chain risks, which are explained and illustrated by best practice examples in table 5.⁴⁵

Table 5: Four Major Sustainability-related Supply Chain Risk Treatments; Source: Own illustration based on: Hajmohammad, & Vachon (2015)⁴²; ISO 31000, 2018;³⁹ Hershey, 2019a;⁴⁶ Hershey, 2019b.⁴⁷

The effectiveness of the treatment strategies as well as changes in the dynamic nature of a supply chain or changes in regulations and policies should continuously be reviewed and monitored.⁴⁰^,⁴³ Sustainable supply chain risk management and especially risk treatment strategies are closely linked to Sustainable Supplier Management.

3.2 Sustainable supplier management

Sustainable supplier management refers to the “management of all activities along the upstream supply chain related to the purchased component to maximize the triple bottom line performance.”⁴⁹ This process is important, since the quality of a finished product is to a certain extent already determined through the materials delivered by suppliers, which also holds for sustainable aspects of a product throughout its life cycle.⁵⁰ Within sustainable supplier management the sustainable supplier selection, development, and monitoring are the typical independent but interrelated core processes.⁴⁹ The sustainable supplier selection process usually starts with the identification of needs and specifications, based on which, criteria for the evaluation of suppliers are formulated.⁴⁹ Sustainability performance can be improved at this stage by leveraging the integration of criteria that evaluate potential suppliers with regard to the TBL.⁴⁹ Table 6 lists a selection of those criteria:

Table 6: Sustainability Criteria for Sustainable Supplier Management; *Source: Based on Zimmer et al., 2016*.⁴⁵

Beyond that, certification with social and environmental standards, such as ISO 14000 and ISO 50001, EMAS, SA 8000, as well as IS0 45001 are reasonable indicators to evaluate potential suppliers.⁵⁰^,⁵¹ After a first qualification round a final selection among those qualified suppliers takes place.

Over the lifetime of a contract, the actual performance of the supplier is monitored and evaluated based on the compliance with the predefined minimum criteria and previously stipulated performance improvements (sustainable supplier monitoring). The monitoring process aims to identify areas that require improvement and can thus serve as a trigger for supplier development activities or supplier replacement, but it also aims to reward good practices (sustainable supplier development).⁴⁹^,⁵⁰ Such certifications and monitoring practices strengthen long-term relationships with supplier and provide the basis for continuous improvement.⁵² Supplier monitoring is embedded in due diligence frameworks that follows structured, risk identification, mitigation, tracking and communication. This ensures regulatory compliance (e.g. LkSG, CSDDD) and strengthens supply chain resilience.⁵³ The aspect about the regulatory compliance is further discussed in chapter 4.3.

For monitoring and developing suppliers, certain tools and methods can be applied such as a Sustainable Supplier-Balanced Scorecard (an example is shown in Table 7), supplier visits and audits, supplier workshops and conferences as well as supplier sustainability trainings.⁵⁰^,⁵⁴ An increasing number of companies are also relying on digital platforms such as EcoVadis, Worldly and Achilles. These platforms provide structured sustainability ratings and enable benchmarking across industries. They also facilitate the direct integration of ESG criteria into the procurement decisions and procurement decisions. Another advantage is that companies can continuously monitor their supplier through scorecards, which results make it easier to track and compare supplier performance over time.⁵⁵ Supplier management contributes to corporate decarbonisation strategies, as companies increasingly engage suppliers in reporting and reducing Scope 3 emissions in line with the company’s long term climate goals.⁵⁶ Furthermore, by offering audit support and standardised reporting formats, such platforms reduce information asymmetries and lower transaction costs in global supply chains.⁵⁷^,⁵⁸ Alongside these methods, collaborative approaches to supplier development are becoming more relevant, such as joint sustainability initiatives and forming long-term partnership.⁵⁷

Table 7: Sustainable Supplier Balanced Scorecard; Source: Based on Epstein, & Wisner (2001)⁴⁷

The vendor management of the sports apparel producer Vaude follows the four steps of Sustainable Supplier Management. Among other things, Vaude has developed a special tool that includes international standards as well as local laws for their “performance check” (supplier selection). For the phase of the supplier development Vaude conducts on site trainings, in addition they have created a platform to exchange best practices, expert lectures, and workshops with and among their suppliers, called the VAUDE Vendor Club.⁵⁹

The FSC certification system can be mentioned for this purpose. FSC stands for Forest Stewardship Council and serves as proof of sustainable forestry or plantations. Wood is needed in many areas nowadays, for books, toys or furniture. Therefore, wood suppliers are an integral part of many supply chains. The non-governmental organization was founded in 1993 and represents the interests of all forest stakeholders. Since its founding, FSC certification has gradually been adopted worldwide, although adoption rates vary across regions and industries. FSC sets strict social and ecological guidelines on how forests may be harvested and managed. The aim is to preserve and develop forests in the long term.⁶⁰

There are 1,162 members from 89 countries worldwide. In total, there are 216,294,553 FSC certified hectares. The continents of Africa and Asia account for the smallest share. North America and Europe have the largest contributions. In the context of the sustainable supply chain, it therefore makes sense to choose certified suppliers and producers. In the context of timber and forest harvesting, the FSC certificate, a globally recognized and common certification, is one way of selecting suppliers.⁶¹

3.3 Sustainable production

Main article: Sustainable production & manufacturing

Sustainable Production defines the “creation of goods and services using processes and systems that are non-polluting, conserving of energy and natural resources, economically viable, safe and healthful for employees, communities and consumers, and socially and creatively rewarding for all working people”.] Tools, such as Six Sigma, Value Stream Mapping, Life Cycle Assessment and End-of-Pipe-Technologies along with approaches such as Cradle-to-Cradle or Design for Environment help to lever sustainability in production.⁶²

3.4 Sustainable logistics management (physical distribution and packaging)

Logistics management refers to the planning, implementation and controlling of the forward and reverse flow and storage of goods, including services and related information between the point of origin and the point of consumption to meet customer requirements.⁶³ The main functions in logistics management are transportation and storage, although packaging is usually included as well, due to its function of making goods transportable and storable through logistics unit formation.⁶⁴ Sustainable logistics management (SLM) aims to fulfill these market demands while being as sustainable as possible in order to improve the supply chain sustainability in the logistics system.⁶⁵ The application of three principles leverages the sustainability performance of freight transportation: avoid freight transportation, shift to more sustainable transportation modes, and reduce emissions.⁶⁶ These principles can be addressed through the areas of action and measures presented in Table 8.

Table 8: Measures for Sustainable Freight Transportation; Source: Own illustration based on Schulte (2017)⁵⁵ Belvedere, & Grando, 2017;⁴⁶ Wittenbrink, 2015.⁶⁷

Warehousing interacts with the TBL through the operations itself as well as through the facility that is needed. The sustainability performance of the warehouse facility is already to a large extent predetermined during the development phase.⁶⁸ Thus, design principles of Green Building and criteria from the Leadership in Energy and Environmental Design (LEED – most widely used green building rating system) should be considered. These criteria particularly contribute to achieve a wider use of renewable energy sources and a higher energy efficiency.⁶⁹ Warehouse operations mainly influence environmental sustainability through its energy consumption and thus through the emission of greenhouse gases. The main drivers of energy consumption in this respect are temperature control, lighting, and the use of mechanical handling equipment.⁵⁰ Table 9 summarizes best practices for reducing the environmental impact of warehousing operations and the facility itself.

Table 9: Best Practices in Sustainable Warehousing; Source: Own illustration based on Belvedere, & Grando (2017)⁴⁶ Amjed, & Harrison (2013)⁵⁷

Apart from the environmental sustainability, warehousing also strongly interacts with the social aspects. Warehouse operations must run according to social standards, which means that health and safety of the employees must always be guaranteed. Occupational health and safety (OHS) addresses workplace illness and injuries as well as all forms of paid and unpaid work in all sectors. In warehouses the main hazards are related to vehicle movements, loading and unloading, hazardous substances, noise, fire risk, or manual handling procedures. Accidents and following health issues can be prevented by regular staff training, providing the necessary personal protection equipment (PPE), good organization standards, regular maintenance of MHEs, implementation of rules for warehouse traffic, as well as emergency escape routes.⁶⁸ Furthermore, the implementation of equipment for storage and material handling as well as the implementation of IT systems that support picking, routing and sequencing can reduce unnecessary motion of the employees and thus improve safety and health conditions.⁵⁰

For instance, the courier, delivery and express service provider DHL has launched the ‘Vision Picking’ project, where smart glasses and augmented reality supports employees during the picking process. The smart glasses display information about the location and the number of items, freeing the employees’ hands from paper and thus allowing them to work more efficiently and comfortably.⁷⁰^,⁷¹

The efficiency and sustainability of transportation as well as warehousing processes can also be improved through logistic-friendly packaging, that helps to achieve higher volume utilization of vehicles and warehouses. Three design features of packaging systems play a major role in this regard: (iso)modularity, stackability and weight. A modular dimensioning of the packaging system in relation to the load carrier helps to fully utilize its surface. Beyond that, height utilization of a load carrier or a loading space is important, which is usually determined by the stackability of the load unit.⁷²^,⁷³ The stackability of a cargo unit is determined by the strength properties of the packaging and the stability of the load unit.⁷⁴ Furthermore, different means of transportation are subject to a weight restriction. Thus, light packaging contributes to higher load factors, so that the weight restriction is not reached before the loading space volume is fully utilized.⁷⁵

For instance, the ice cream manufacturer SIA Glass sells ice cream in elliptic plastic boxes. This way, the pallet can hold a maximum of 896 units of 0.5 litre of ice cream. By switching from an elliptic to a brick packaging system (e.g., BC Glace uses it), SIA Glass could increase the volume utilization of the load carrier substantially. One pallet could then hold a maximum of 1,650 packages of 0.5 litres of ice cream. With almost twice as much ice cream on one pallet, SIA Glass could save a high number of transportation processes and thus a substantial amount of CO2 emissions.⁷³

3.5 Closed loop supply chain management and reverse logistics

Closed loop supply chain management (CLSCM) refers to all forward as well as reverse logistics flows in the supply chain to ensure a socioeconomically and ecologically sustainable recovery and is essential for conducting sustainable and responsible business practices. The idea behind ‘closing the loop’ of an ‘ordinary’ supply chain is to address the issue of treating resource extraction and end-of-life waste as externalities that are disregarded in decision-making processes. CLSCM addresses this by coordinating forward and reverse flows in the supply chain to maximise value over a product’s entire life cycle. This entails many sustainable advantages such as a decrease in resource and energy consumption and thus a reduction in emissions and waste.⁷⁶^,⁷⁷^,⁷⁸

The degree to which companies engage in CLSCM is strongly influenced by external pressures, such as regulations, economic incentives, and changing consumer expectations. A concrete example of such pressure are regulatory frameworks in the form of Extended Producer Responsibility (EPR) schemes, which operate under Polluter-Pays Principle (PPP). These schemes hold producers responsible for the collection and proper disposal of end-of-life products. The underlying assumption is that the environmentally friendly treatment (i.e., recycling) of end-of-life products entails a net cost that should be internalised. The threefold aim of EPR is to: 1) encourage companies to design products for reuse, recyclability, and materials reduction, 2) correct market signals to consumers by incorporating waste management costs into product prices, and 3) promote innovation in recycling technology. The idea is to create incentives so that polluters care about the waste they generate.⁷⁷

A well-known example of an EPR scheme in the European Union is the Waste Electrical and Electronic Equipment (WEEE) Directive, which ensures that old electronics are collected, recycled, and disposed of properly. The goal is to protect human health and the environment (e.g., prevent toxic chemicals from leaking into groundwater), prevent the illegal export of electronic waste to developing countries, and encourage the better design of electronics to make them easier to recycle. The WEEE Directive has had cross-tier ripple effects, increasing regulatory pressure, raising consumer awareness, and encouraging businesses to redesign products and improve waste management practices across the supply chain, demonstrating the effectiveness of EPRs.⁷⁸^,⁷⁹^,⁸⁰

Reverse Logistics is the subprocess, that ensures the product flows to, between and in facilities as shown in Figure 4.⁵⁰^,⁸¹ It includes a range of activities from the collection of the product, testing and inspecting its condition, the sortation and selection according to the type of product and the recovery option, over the recovery itself, and onward the redistribution or disposal.⁵⁰ The following are typical recovery options that allow a company to “close the loop”: Resale (asis) and reuse, remanufacturing, refurbishment, repair, parts harvesting, cannibalization, recycling and disposal with energy recovery.⁵⁰ The recovery options can be arranged in a hierarchy in terms of potential value creation and the level of eco-efficiency.⁵⁰

Beyond that, the recovered value depends on the trade-off between speed and the costs for the recovery process. A low-cost recovery process is important, because a recovered product already loses approximately 50 % of its value due to the degradation of the product alone. A fast recovery process is crucial since the product loses value due to its time value depreciation.⁵⁰

Figure 4: Simplified and Schematic Configuration of Reverse Flows
Source: Based on van der Laan, 2019.⁶⁵

Recovering a high value is also closely linked to the production and manufacturing methods used in the first place. Using techniques such as Design for the Environment, Design for Remanufacturing or Design for Disassembling substantially impact the efficiency and effectiveness of recovery options.⁵⁰ For instance, the automobile industry has introduced several projects to facilitate the disassembly and reuse of materials, by reducing the number of parts, abandoning chemical bonds and screws, rationalizing the materials and snapfitting components.⁵⁰ Apart from that, a modular design reduces the process complexity faced in many recovery processes. It allows component substitution without adjusting other components.⁸³

The computer technology company Dell has changed its product design to enable easy repair and recyclability from the start through the use of a modular product design and postponement as strategies. Furthermore, the multinational company has started its Global Takeback program, which helps customers dispose of old electronics.⁸⁴^,⁸⁵

4 Drivers and barriers

4.1 Internal perspective on SSCM

4.1.1 Internal drivers

The internal motivation of companies to optimize their supply chains towards sustainability has increased continuously over the past years. Two reasons are found to be particularly relevant for this development. The first is the company’s desire to obtain a competitive advantage through the sustainable alignment of its business strategy and the optimization of its operational efficiency, including the motivation of cost reduction.⁸⁶ Various studies have shown that investments in sustainability can promote the competitiveness and long-term profit of companies.⁸⁷^,⁸⁸ The second is the motivation to acquire reputational gain and societal legitimacy, since businesses are facing increased pressure regarding the social and environmental needs of stakeholder groups.⁸⁶^,⁸⁷ In addition to the two main drivers, other important internal factors (shown in Table 10), that drive sustainability in the supply chain can be identified.

These can be broadly divided into two subcategories: instrumental and normative factors.

The instrumental dimension assumes that the company is a wealth-creation asset, and that sustainability is seen as a strategic tool to enhance economic goals. The normative dimension, in contrast, is driven by the ethical and moral values of a company’s managers.⁸⁶ Long-term profitability, for example, can be classified under the instrumental drivers. As mentioned above, investments in sustainability initiatives can make a company competitive and profitable in the long term. An increasing number of consumers want to purchase sustainable products and the company can thus position itself in a growing niche.⁸⁷ According to the International Panel on Climate Change, companies that have already adapted sustainability measures in their value chain, are better prepared for the consequences of a more severe climate change.⁸⁹ Furthermore, sustainable companies are rated as less volatile by the financial industry and thus have the opportunity to obtain better loans.⁹⁰ Resources are bundled more effectively through an SSCM; thus, operations can be streamlined and costs can be avoided. For instance, costs for energy, waste and water can be reduced.⁹¹ Increased green innovativeness can also be labelled as a driver. Another driver is the demand for a transparent supply chain, which in turn reduces the sustainability related supply chain risks.⁹²

The normative dimension includes organizational culture and employee commitment. A strong organizational culture with motivated employees can be enhanced by SSCM, as can a convinced top management with a strong corporate strategy. The normative dimension also includes an improved occupational health an safety program and a solid training and development agenda.⁹²

4.1.2 Internal barriers

Internal barriers include organizational aspects that can hinder the implementation of a sustainable supply chain and are shown in Table 10. Studies suggest that while there are several factors that can prevent companies from adopting SSCM practices, theoretical and empirical research on SSCM barriers is relatively scarce compared to motivators of SSCM implementation.⁸⁶ Top- and middle management support and commitment are important factors influencing the implementation of a SSCM strategy in companies.⁹¹^,⁹² However, a lack of interest from top management can significantly hinder the ability of companies to engage in sustainability initiatives.⁸⁶.Implementing a SSCM requires the development of infrastructures, systems and processes in the supply chain, which can increase operational costs. Thus, due to financial constraints, companies often struggle to implement SSCM.⁹³ Legal and administrative complexity, risk-averse behavior, lack of awareness and motivation or negative perceptions of green procurement are some of the main factors that hinder a company’s sustainable procurement efforts.⁸⁶ A complex supply chain that is spread across the globe can lead to problems due to its regional scope, as well as communication problems. In addition, different stages of development as well as varying motivations of supply chain partners can cause difficulties. Various internal stakeholders may have different expectations and demands that need to be addressed in diverse ways. For example, employees are more interested in work-related health and safety conditions, while supply chain partners are more interested in efficient logistics.⁹² Several specific factors within the supply chain can pose barriers. These include the position in the chain, the industrial sector, the size, the geographical location, the degree of internationalization and the current level of sustainability involvement.⁹²

However, organizations can find a way to overcome internal barriers. Even if there is no one-fits-all solution, a best practice example by Patagonia, a supplier for outdoor clothing, illustrates how to overcome limits like transparency, communication, and involvement across the supply chain. Especially in the fashion industry, sustainability in the supply chain is a topic that is demanded by an increasing number of stakeholders. At the same time, the internal barriers are particularly high due to cost pressure, long supply chains and the resulting communication and transparency problems.⁹⁴ Nevertheless, Patagonia has managed to establish itself to overcome these challenges. Among many other sustainability-related measures, in 2001 the company became a founding member of the Fair Labor Association, a nonprofit organization dedicated to improving working conditions worldwide. In 2011, the company moved further to the beginning of the value chain, joining Fair Trade USA’s apparel program in 2014 to monitor working conditions in the factories that produce its fabrics.⁹⁵ In 2017, a study conducted with 10 companies in the fashion industry showed that textile companies that collaborate with stakeholders or even competitors save resources and can keep up with sustainability improvements on the supplier side by conducting audits together. In addition, sharing knowledge about sustainability issues is a widespread incentive to collaborate with other companies.⁹⁴

Table 10: Drivers and Barriers in Sustainable Supply Chain Management; *Source: Own illustration.*

4.2 External perspective on SSCM

4.2.1 External drivers

The implementation of sustainability within the supply chain can also be triggered by drivers outside the company. As the influential groups vary, Saeed and Kersten (2019) differentiated them into three categories, also displayed in Table 10: regulations/government, market pressure and societal pressure.⁹²

Regulations/Government

Regulatory measures set by the government are among the most common and efficient drivers of sustainability within the supply chain. They can differ in their degree of hardness, from non-regulatory approaches, over market-based regulations up to command-and-control measures.⁹⁶

The use of command-and-control measures is a mandatory tool that all involved market players must comply with.By not doing so, companies risk paying additional fines or having trade barriers imposed against them. One particular and rather vigorous way of regulating supply chains is through bans.⁹⁶ A common example is the Restriction of Hazardous Substances (RoHS), currently restricting ten hazardous substances within electronic applications in the EU.⁹⁷ The effects of bans are more extensive, as imported pieces from foreign suppliers also have to comply; consequently, operations outside the EU are also influenced.⁹⁸ Other forms of complying regulatory measures are technology-based or performance standards. Technology-based approaches determine a precise measure which has to be applied by companies, such as implementing new machinery.⁹⁹ In contrast, performance standards do not define, for example, the way that pollution reduction is achieved but sets a level of emissions permitted, giving companies more flexibility. Like bans, these regulatory measures have an impact on the supply chain, as a necessary reduction of emissions or an increase of efficiency will partially be forwarded to suppliers.⁹²

In June 2021, the German Bundestag has launched the new Supply Chain Act (Lieferkettengesetz), a regulatory measure focusing precisely on the supply chain. Its intention is to protect and improve human rights within the global supply chain. Therefore, focal firms are determined to bear more responsibility for their suppliers. The closer the supplier is and the more impact the focal firm has, the more responsibility it carries. In case of violations, fines are incurred.¹⁰⁰ The law initially came into effect in 2023 for companies with at least 3,000 employees. Since 2024, it has also applied to businesses in Germany with 1,000 employees or more.¹⁰¹ Even though the Act has been received positively, organizations have also criticized it for not going wide enough. For instance, Oxfam, WWF, and Germanwatch have denounced that workers at plantations are not able to sue the German focal firm at German court for violating human rights. Furthermore, they only must look after their direct suppliers, which are their connections to areas where human rights are violated.¹⁰²^,¹⁰³^,¹⁰⁴

A review of the scientific literature allows for a multifaceted examination of the implementation of the Supply Chain Act. The law and the broader debate on supply chains have had a noticeable impact, as many companies have adopted policy statements, revised risk analyses, appointed officers, and strengthened monitoring processes, increasing transparency and clarifying responsibilities.¹⁰⁵^,¹⁰⁶^,¹⁰⁷ Importantly, the law’s effects cannot always be clearly isolated from other factors, and gaps in information and resources continue to limit effective implementation.¹⁰⁶ Implementation is often superficial, with more transformative measures, such as insourcing or terminating supplier relationships, remaining rare, and the law’s focus on direct suppliers leaves violations in deeper tiers insufficiently addressed.¹⁰⁵^,¹⁰⁸ In September 2025, the German Federal Cabinet approved a draft bill to amend the Supply Chain Act, proposing the abolition of the reporting obligation regarding compliance with due diligence requirements to reduce bureaucratic burdens on companies.¹⁰⁹ The effects of this amendment will become apparent only over the coming years.

On the European level, the Corporate Sustainability Due Diligence Directive (CSDDD), launched in 2024, aims to harmonize and extend requirements across the EU for companies above a certain size. The directive is the first region-wide due diligence legislation and expands the scope of due diligence to cover the full value chain, integrates climate transition planning, and introduces explicit civil liability for violations (European Commission, 2025). The CSDDD must be transposed into national law by July 2027.¹¹⁰ When implemented in Germany, the CSDDD This tightens the regulations currently in force in Germany.¹¹¹ Currently, the Directive is being renegotiated at European level in an omnibus procedure.¹¹²^,¹¹³

Vice versa market-based measures focus on the self-regulation of the market by introducing incentives such as taxes, subsidies, or emission trading policies. These measures are still compelling for all participants but offer more flexibility and adapt to the market. The resulting higher or lower costs cause companies to reduce emissions by adapting their operations due to the principle of economic efficiency. These adaptions not only affect the primary company but also all its suppliers, even leading to a possible change of suppliers. Another non-monetary but still mandatory market-based measure is the utilization information policies like the European Non-Financial Reporting Directive (NFRD), which obliges larger companies to publish information about their sustainable activities. As companies must publish their corporate data, they have become more concerned about acting sustainably for various reasons, such as keeping up appearances with stakeholders.⁹⁶^,¹¹⁴^,¹¹⁵ However, more transparency does not only benefit consumers at the end of the supply chain but also companies within the supply chain, as information about their suppliers are available more easily.¹¹⁶

On the voluntary level information-based measures, such as eco-labels and Sustainability Reporting (SR) or Sustainability Assessment Reporting (SAR), are a very common driver of sustainability. The relevance of these labels depends on the interest of stakeholders in sustainability, as they are mostly used to convince customers about companies’ sustainable Actions, as is also the case with SR.¹¹⁴ An example is the Fairtrade label, which promotes stable prices, long term trade relations and e.g., good working conditions within the supply chain, especially for smallholder farmers.¹¹⁷ Additionally, the Rainforest Alliance certification discloses products which comply with standards for environmental and social sustainability in the supply chain. In 2007 Unilever decided to adapt the Rainforest Alliance standards for its tea supply chain, with the intention of making their sustainable activities visible for consumers and to increase credibility.¹¹⁸ With the implementation of the certificate, tea famers of Unilever have been evaluated and audited and were provided with technical assistance, motivation, and skills.¹¹⁹ In some cases, certification schemes also require sustainability reporting or disclosure, which links these information-based drivers even more closely.

Sustainability reporting itself has become a key external driver of sustainable supply chain management (SSCM) mainly through societal pressure. Drafting a report allows companies to account for and communicate sustainable practices in their own operations and among suppliers. In this way, SR increases transparency for stakeholders, who demand reliable information on ecological and social performance.¹²⁰ Such transparency can protect companies from reputational damage caused by societal pressure or media scrutiny and at the same time enhance legitimacy. At the same time, reporting also creates an incentive for firms to engage more actively in sustainability initiatives, as documenting progress publicly requires tangible action. In other words, once organizations commit to disclosing their environmental and social performance, they are simultaneously compelled to implement concrete practices that demonstrate responsibility. These dynamics turn sustainability reporting into a driver for SSCM, since credible disclosure presupposes the adoption of measures that improve conditions across the value chain.⁹² Furthermore, as regulations such as the abovementioned German Supply Chain Act demonstrate, reporting obligations are increasingly embedded in legal frameworks, reinforcing SR as both a voluntary and mandatory external driver of SSCM.

Moreover, SR is not only a tool for external communication but also a starting point for the implementation of SSCM practices, helping firms to assess their current state, benchmark performance over time, and identify risks and impacts along their supply chains as illustrated in Figure 5 as the initial step of SSCM.⁹² In this case, SR serves as internal driver by fostering awareness of sustainability performance, enhancing the internal information base, and advancing organizational SSCM.¹²¹ All in all, SR is increasingly recognized as a vital mechanism to align supply chain actors, respond to external stakeholder expectations, and drive continuous improvement in SSCM.

Last, also public procurement is considered as a driver of SSCM, as global expenditures on public procurement account for between 13 % and 20 % of the GDP, being nearly $9.5 trillion.¹²²

Market pressure

Market pressure is another important issue, as the relevance of sustainability in the market is increasing.¹²³ Concerning the specific drivers on the market, competition is pressuring the company either to achieve a competitive advantage or at least keeping up with the competitors. On the monetary level, companies are dependent on their shareholders as well as banks and financial institutes, which are also increasingly demanding sustainable actions.⁹⁶ In 2019 the US retailer Walmart partnered with the international financial institute HSBC with the intention to promote sustainable supply chains, by introducing a sustainable supply-chain financing program. The program addresses Walmart’s suppliers, granting them better credit rates based on their environmental and social performance.¹²⁴

Other important drivers of sustainability overall are the costumers along with the company’s image.¹²⁵ However, the effect on the supply chain is conceived not only indirectly from the demand for sustainability in the focal firm, but also directly from the demands of customers for sustainability within the supply chain.¹²⁶

Although suppliers are often pressured to react to the demands of the focal firm, they can also act as drivers that provide the main company with a variety of sustainable products it can purchase.¹²⁷ This coincides with the overall term of globalization, since different markets worldwide are available, making the purchase of specific products easier and accordingly increasing the flexibility of companies.¹²⁸

By implying IT solutions within and between companies the management of processes and communication is facilitated. Digital information as such makes planning more precise, enabling quicker reactions.¹²⁹ Furthermore, real-time process controlling optimizes performances, reducing unplanned downtime and increasing quality through means such as tracking and tracing to identify and prevent failures within the supply chain. Specific examples are the usage of tags such as barcodes or RFID.¹³⁰

Societal pressure

As sustainability has an influence on the brand image¹³¹ and public awareness of sustainable actions has grown over the last years, also societal pressure is an increasing driver for SSCM.¹³² Organizations are trying to influence companies’ sustainable activities by raising consumer awareness towards their non-satisfactory actions, which may lead to a bad reputation and a bad image or even fines for not adhering to set standards. Common players are NGOs, the media, and the press, as they have the range to reach a great number of people.¹²⁷

4.2.2 External barriers

Similar to how SSCM can be driven by different variables, it can also be hindered or even prevented by certain barriers. These barriers (Table 10) can be based on regulatory measures in relation to useful technology and knowledge or market-based measures.

Regulatory measures

Regulatory measures can be a driver as well as a barrier for sustainability, depending on the measure and the given situation.¹³³ If they are not adapted adequately and do not fit the needs of a certain industry, they might not fulfill the intention appropriately. Overall, regulations often come with an excessive amount of bureaucracy, which may overwhelm firms with too much paperwork. As incentives, such as tax exemptions, are drivers, they can similarly be barriers if they are non-existent.¹³⁴ Another problem supply chains face are the differences in regulations depending on the countries in which they operate. This disparity makes it difficult for companies to adjust.¹³⁵

Technology and knowledge

Introducing sustainability activities often induces the implementation of new technologies. However, in certain cases, industries might suffer under a lack of supply¹³⁶^,¹³⁷ or a lack of support, to adapt technology to company-specific needs.¹³⁷ Besides the specific scarcity of technology, also a general lack of knowledge about sustainability, as well as the missing availability of consultancies are a barrier of SSCM.¹³⁴^,¹³⁷ Some branches might even suffer under the shortage of qualified personnel.¹³⁸ Aside from internal information needed, companies are depending on the information their suppliers provide them with. If they are not willing to communicate the information or to implement sustainability in their company, it is harder to implement sustainability within the own company.¹³⁹

Market-based barriers

Finally, the market itself might impose some barriers. Even if the attention towards sustainability is increasing, some sectors are still missing the demand and the knowledge related to the correlation of certain goods or services and sustainability. Additionally, some companies are still unsure about the future of sustainability within the industry, which makes them a little more cautious and less innovative. In the end, even if sustainability is considered, it might not be reflected adequately in the price, as certain externalities are not included in its full costs, such as the pollution of free commodities.¹³⁴

5 Practical guide to SSCM

In the following section a practical guide to Sustainable Supply Chain Management is presented. It does not claim to be a complete instruction towards SSCM including all necessary activities. Rather, it is supposed to serve as a starting point for companies. The sequence of steps is based on the Step-by-Step Guide to Sustainable Supply Chain Management from the Federal Ministry for the Environment, Nature Conservation Building and Nuclear Safety (BMUB) and the Federal Environmental Agency (UBA), which are linked to the content of the previous chapters.

Figure 5: Practical Guide towards a Sustainable Supply Chain Management
*Source: Based on BMUB (2017)*⁴

Mapping and visualizing the supply chain, including the activities of suppliers and sub-suppliers, allow a company to gain an overview of its essential processes. It lays the groundwork to identify potential and actual sustainability impacts and risks and to understand the impact chain behind it (step one). In step two, the identification of sustainability impacts, a risk assessment, and the determination of action areas for the entire supply chain, including supplier and sub-suppliers, follows. For this purpose, a company can follow the stages of the risk assessment based on ISO 30001. EMAS and ISO 14001 provide helpful frameworks and processes for this step as well. Subsequently, a materiality analysis allows a company to prioritize sustainability topics and action areas. In step three, a gap analysis can be conducted to identify areas that require improvement. Based on the materiality and the gap analysis, a company can start to adjust existing internal structures and processes in order to improve its sustainability performance (step four). For this purpose, measures and practices from Sustainable Logistics Management, Closed Loop Supply Chain Management and Reverse Logistics or Sustainable Production can be applied. In addition to internal structures and processes, external structures and processes must be adapted. Steps five and six include the formulation of supplier requirements and the evaluation of the sustainability performance of suppliers. In this context, the processes and tools of sustainable supplier management can be useful. It is likely that certain barriers must be overcome, while certain drivers accelerate these adjustments. Lastly, a company can report its sustainability engagement through the use of meaningful indicators. For this purpose, common reporting standards as well as meaningful sustainability reporting indicators can be used (step seven). By disclosing information, companies build transparency and respond to the increasing demand for information on sustainability.⁴

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