Creating synergy between business and sustainability goals: the rise of supply chain sustainability management platforms

The climate crisis is absolutely a supply chain crisis. “Supply chains are responsible for up to 90 percent of consumer and manufacturing companies’ social and environmental impact”, writes ESGGo, an Israeli ESG analysis platform. “One third of global deforestation is linked to international trade”, writes the Center for Sustainable Palm Oil Studies, a Malaysian think tank.

Technology startups have tackled the supply chain sustainability double-issue from different vantage points. First, there are the supply chain management platforms turned climate accountants. The most salient of these is Flexport, a next generation freight forwarder, which in 2017 launched Flexport.org, a broad company-wide social and environmental initiative which included introducing a carbon offsets feature to the Flexport platform. One of Princeton’s own – Virginia Woolworth, Class of 2008 – was a Lead on Flexport.org during its launch. Under leaders like Ms. Woolworth, several supply chain management platforms have introduced various supply chain sustainability solutions.

Leadership on supply chain sustainability has also emerged from the climate technology side. Climate technology startups previously offering products without specific supply chain features have begun to sell custom solutions. In October 2022, Watershed, a carbon accounting platform, announced a new “Watershed Supply Chain” product line focused exclusively on clients managing supply chains. This move distinguishes Watershed from competing carbon accounting platforms like Persefoni, which offers a customized platform for financial services customers, but no supply chain product. Watershed’s success, both financially and as a thought leader in the supply chain sustainability space, ought to be another bright spot for Princeton students. Watershed’s founder, Taylor Francis, was class of 2014.

I want to dwell further on the success of supply chain sustainability products, describing why you should be optimistic about their rise, while also demanding more. I mentioned Watershed’s success, which has materialized not only in the form of funding from top private investors like KKR and Kleiner Perkins, but also through market leadership in a climate tech space that ought to have offered custom supply chain products sooner.

Persefoni and Flexport.org have also been very successful. Persefoni recently announced a partnership with Bain & Company, a consultancy, which will improve Bain’s sustainability services and, on Persefoni’s side, offer a vast new customer base. Flexport.org, aided by the broader boom in Flexport technologies during the supply chain crisis of 2021, also looks strong.

At this point, your assumption may be that this widespread success of supply chain sustainability products is great, perhaps even ideal, for combatting the supply chain climate problem. If so, you are not wrong. Big players, like Flexport launching innovative initiatives to turn supply chains green, capitalizes on these firms’ existing market power and allows supply chain sustainability products to go to market quickly.

That being said, I believe that the current market situation falls short of ideal. The main flaw is that the amount of startups focused exclusively on supply chain sustainability is very low – near zero. Without these focused startups, supply chain sustainability will continue to be the ESG side hustle of supply chain management platforms or a mere product line within a few climate technologies, rather than the billion dollar industry it needs to be. That is why I applaud startups like Clearly, an Israeli supply chain sustainability startup focused on carbon data transparency for maritime transport. Clearly hopes to drive carbon emissions from maritime transport to zero.

I applaud because in order to combat deforestation and carbon emissions from trade, we must be focused. I applaud because we deserve better.