In 2019, IUMI committed to raising awareness of environmental, social and governance (ESG) risks and opportunities in the marine insurance sector without binding its members with overarching commitments. ESG factors are central to finding solutions to sustainability challenges and those businesses that enhance their sustainability will enhance their competitive advantage also.
The recent and unprecedented pandemic has encouraged a much faster and greater dependency on data, technology and digitalisation. Because many employees were forced to work remotely, new technologies were rapidly embraced and the world looked more closely at how technology could streamline a range of operations. Supply chains came under the spotlight and it became clear that there was (and is) an opportunity to structure supply chains more sustainably using data and technology through digitalisation. But this is not without its challenges.
Embracing digitalisation
On the one hand, digitalisation is important for transparency and is a great ESG enabler. Digitalising an entire supply chain allows for a traceable set of digital activities, meaning every supply chain participant’s digital footprint would be transparent. This delivers good governance. Transparent supply chains have the potential to inform society about an individual product’s features and origins as well as the production and supply process. In effect, this offers the end user (i.e. the consumer) the choice to pick sustainably sourced and transported goods. Aside from that, digitalisation can deliver cost efficiency, timeliness, continuity, compliance with the law and an indication on how the environment is being impacted.
Balance profitability and sustainability
The challenge, however, is that very few industries currently have their supply chain under comprehensive and digital control. A related issue stems from the silo mentality that is prevalent in parts of a supply chain. This prevents the effective exchange of information and can increase the risk of maintaining an intact chain during times of crisis. But the key supply chain challenge is to maintain a compatible balance of profitability and sustainability. One thing is for sure and that is that the pandemic has exacerbated the weakness of the supply chain. Up until now it was managed on supply chain costs and not on resilience and sustainability.
As we continue to use and rely on increasing amounts of data it is important to understand the benefits of digitalisation and how it can improve business processes. Whilst it certainly won’t happen overnight, digitalising the supply chain would offer a more sustainable future and a deeper understanding of all ESG issues.
