A new approach to risk, and how to rethink supply chains
Reflections on SDI2020 — Day Two:
Author: Alain Bejjani — CEO, Majid Al Futtaim — Holding
What does better business mean? Does it truly make a difference, is it a pipe dream, is it limited to more stable, larger corporations to act on? Is it whitewash or greenwash, a temporary fix created to respond to and draw more consumers?
I was reminded of all these questions — and given answers to them — during Day Two of the World Economic Forum’s Sustainable Development Impact Summit. Here is some of what stood out for me:
Regional Perspective: The ‘Risk Reset’ session earlier in the day was also absorbing, not least for the perspective offered by H.E. Rania Al-Mashat, Egypt’s Minister of International Cooperation.
She spelled out two realities that all of us in the region must be aware of: First, that that multi-stakeholder collaboration is no longer a nice to have but a must have. Whether the next crisis comes in the shape of a cyber-attack, environmental or climate crisis, the onus of protecting, preserving and propelling society forward cannot be on one player alone.
Second, resilience and risk must live in the DNA of corporates and governments, and no longer be exiled to silo departments but be a central part of our shared psyche. We need to have a societal risk compact to ensure that both the government and private sector have resilience all the time, because that is what will make us stay relevant and avoid future crises.
Building better supply chains: As the participants in the SDI’s ‘Building Resilient Global Value Chains’ reminded us, COVID19 has brought disruption on both the supply and demand side.
This is a critical distinction: It’s not only that we cannot get what we used to get the way we used to get it, it’s that we also do not want what we previously wanted. The last several months have reordered our priorities and desires as customers from within and without, and the knock-on effects are significant.
As we reevaluate and reengineer our supply chains, we must do this with sustainability in mind, for the simple reason that the next global crisis is likely to be climate change and we must act to prepare for, postpone and try to prevent that.
Panellist Joshua Hoffman articulated it best when he said we must reexamine what gets produced, how, where, as well as how do we get it from Point A to Point B. How do we change and restructure our local, regional and international manufacturing capabilities and satellite systems, how do we combine technology and incentives to speed up sustainability and change what gets produced?
His example of the microplastics in beauty care products issue is worth noting. Environmental concerns launched consumer pressure and ultimately government sanction, leading to a ban on microplastics in beauty products and an impact on the supply chain involved in those products. The consumer focus on sustainability — in this case ocean safety — drove change.
Hoffman also shared his company’s experience with rethinking how we produce: Do we still need large, fixed-cost factories in areas where transportation and energy costs are high or can we use technology that leads to smaller, more mobile manufacturing?
This idea — that we can and should change the foundation of how things are done, and not just the periphery — is crucial. We must stop thinking about the incremental value that updates a process and instead rewrite the process in the first place.
As the panellists said, we should be looking for opportunities to move the frontier of what we think is possible. We should take entire industries — not just companies — forward. There is challenge here, but there is also opportunity.
To my earlier questions, then, yes, better business matters for not just our individual health and well-being but that of our companies, communities, nations and ultimately our shared planet and interdependent livelihoods. It is within each of our grasp and within our sphere of influence — whether we are SMEs, corporations, or individual consumers.
Keep watching the SDI20 with me to be as inspired and challenged as I have been.