CHAPTER 2

LITERATURE REVIEW
2.1 INTRODUCTION

The Chapter describes the literature review to measure sustainability in the supply
chain management of manufacturing organisations. Section 2.1 and 2.2 in the
chapter elaborates the need of metrics to measure sustainability and various
measures/metrics at a country level and organisation level to measure it. Section
2.4 details the sustainability practices of Indian organisations. The chapter also lists
the work done by researchers and various approaches suggested/used by
practitioners, organisations to measure sustainability.

Further, section 2.4 and 2.5 in the chapter describes the limitations of
different metrics (gaps) to measure sustainability especially in supply chain
management of manufacturing organisations. The limitations are due to the
complexity and dynamics of supply chain. Also, included in the chapter (section
2.5) are various approaches suggested by researchers, which should be included in
the metrics to measure sustainability in the supply chain management of
organisations. And lastly in section 2.6 talks about sustainability reporting
practices by organisations for greater transparency.

2.2 SUSTAINABILITY MEASUREMENT

Sustainable development or sustainability is a way to develop in which present

requirements/needs of today‘s generation is met. This development in present time
should not be by compromising the requirements/needs of the coming generations.
Since the release of Brundtland Report (WCED, 1987) sustainability as a concept
and as a business practice has made a significant transition from a concept to a
global , political, and mainstream business issue (Linton et al., 2007).

24
 Kiron, Kruschwitz, Rubel, Reeves, Katrin & Kehrbach (2013) claim in MIT
Sloan Management Review that ―economic downturn accelerated greater shift
towards corporate focus on sustainability issues particularly those which have
impact on bottom-line profits of an organization‖.

Todays across the globe organisations understand that their sustained

success depends upon the economic, social and ecological contexts in which they
operate (Ahi & Searcy, 2013; Kiron, Kruschwitz, Rubel, Reeves, Katrin &
Kehrbach, 2013). Organisations have to find ways to be more meaningful and
relevant to various stakeholders and this approach can no longer be taken for
granted. To be more relevant and meaningful there is a need to find innovative new
products and business models that achieve transformative efficiency –and create
new market opportunities.

Sustainability is essentially regarded as the combination of environmental,

economic and social factors (Yang, 2013; Ahi & Searcy, 2013). Sathaye et. al,
(2006) ; Mani, Gunasekaran, Papadopoulos , Hazen & Dubey (2016) have outlined
that in developing countries usually the sustainable development discussions lie on
economic trade-off between economic development and conservation of the
environment and social sustainability is not considered much. But evidences and
growing problems are proving the degradation of natural resources like soil,
forests; biodiversity etc is getting aggravated and will enhance more by climate
change.

Measuring supply chain sustainability shall help to evaluate the

sustainability goals, efficiency and effectiveness both qualitatively and
quantitatively. Authors also highlight in the literature that measuring performance
can help in better understanding the processes, bottlenecks, shortcomings and more
insights for future strategies (Ahi & Searcy, 2015)

25
 There is a constant need for a clearer way to understand the nuances or
technical aspects of sustainability for a more inclusive transition into sustainable
futures with changes that transition in everyday life. (Magis & Shinn, 2009;
Vallance, Perkins & Dixon, 2011; Dempsey, Bramley, Power & Brown, 2009).

Authors (Seuring, 2013; Ahi & Searcy, 2015) also suggest that
conceptualizing sustainability in three dimensions of environment, economic and
social sustainability is globally accepted norms as it allows an easy comprehension
of integration of the economic, environmental and social issues. Thus, development
by being responsible for environment through economic prosperity with the social
up gradation of the communities and stakeholders involved.

Nevertheless, triple bottom line (TBL) has guided academicians and

researchers alike as for the implementation of sustainability initiatives (Elkington,
1997; Carter & Rogers, 2008). TBL or the triple bottom line defines sustainability
as concurrent achievement of three objectives—economic viability, environmental
stewardship, and social well-being (Carter & Rogers, 2008; Ahi & Searcy, 2015).

This perspective of sustainability is widely accepted by practicing managers

and academic researchers alike. Adopting this view of sustainability, Yang(2013)
reiterate that sustainability or sustainable development occurs when an
organisation‘s processes, products, and services are aligned in a way that it is
socially, economically, and environmentally responsible.

Beloff & Tanzil (2006); Ahi & Searcy (2015) reason that earlier the three
dimensions of sustainable development were managed separately but now the
adaption, significance of the concept lies in the integration of various concerns.
And the various metrics within each of three dimensions of sustainability
(economic, environment and social) have long been developed and used.

26
 There are metrics and indicators which are used to measure sustainability or
sustainable development. Authors (Ahi & Searcy, 2015; Beloff & Tanzil, 2006)
also clarify the difference between metrics and indicators, which are used at times
interchangeably. According to the authors, metrics is a ―standard for measurement‖
and indicator shows the condition that something exists. So, metrics measure
quantitatively a measure. For example sustainability metrics is the quantitative
measure of sustainability and indicators are used to motivate or compare for the
insights to achieve sustainability goals. So, indicators involve the quantitative
measures and description of important sustainability issues (Tanzil and Beloff,
2006). And the metrics and indicators may involve different complexity.

Ahi & Searcy (2015) in their published work on metrics used to measure
performance in green and sustainable supply chains, talk about the presence of
enormous amount of metrics roughly [Link] authors also mention that in spite of
the presence of numerous metrics, the usage for majority has not been more than
one time. Most of the metrics measure environmental aspect with lesser focus on
other aspects of sustainability.

There is a lack of reasonable consistent supply chain metrics is due to lack

of agreement on what should be measured and how (Ahi & Searcy, 2015; Ashby et
al., 2012). Authors also claim that the lack of consistent metrics, impede the effort
to compare or benchmark the sustainability efforts of different supply chain in
different organisations.

Literature also identifies that corporate sustainability metrics are shared in

public through disclosure reports and are addressed for triple bottom line approach
incorporating environment, social and economic factors (Searcy, 2012).The metrics
are absolute, relative or contextual metrics. Ahi &Searcy (2015) also highlight that
corporate disclosures are also happening through GRI indicators and key
characteristic of sustainability metric should be that it links to broader
sustainability context of the organization.

27
 Beloff & Tanzil (2006) report in their research work that individually for
each of the sustainability factors viz., the environment, economic and social factors
there are indicators such as Gross domestic product (GDP) per capita, literacy and
poverty rates, concentration of air pollutants, return on investment etc used by
countries and organisations worldwide.

Literature also identify that there are global frame-works, agendas and
agreements such as Agenda 21 and millennium development goals developed by
United Nations Commission on sustainable development (UNCSD, 2001) for
providing framework for sustainability and sustainable development. These
agreements, frameworks are needed and instrumental in the development of
metrics and indicators for measuring and gauging sustainable development (Beloff
& Tanzil, 2006). Such agreements, framework influence regulations and policies of
a country and helps various stakeholders, organisations to strategize and plan their
efforts towards sustainability.

Strategies and sustainability framework differs at country and at an

organizational level. At the organizational level the dynamics changes and so
according to Stewart (2008), in an organization, currently metrics are broadly
classified into absolute and intensity metrics.

Absolute metrics are essential on the overall goals of an organization for

tracking millennium goals, laid out by IPCC scientists for the year 2050. This is
different from Intensity metrics which is used for internal management analysis
and allow managers to take appropriate and relevant decisions without constantly
tweaking the baseline of millennium goals. Absolute metrics could be how much
an organization is using water in its operation and relative/intensity metrics is the
comparison of usage between different departments (Ahi & Searcy, 2015)

McElroy (2012) further helps and clarifies on the use of absolute and
intensity metrics in an organization. The author argues that absolute metrics

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express gross impacts by an organization during a defined period of time, such as
total greenhouse gases (GHG) emitted or total water consumed in a year. Intensity
or Relative metrics express performance in terms of some other variable of interest,
such as GHG emitted or water consumed per unit of production, per dollar of sales,
or per full-time-equivalent employees.

The Millennium goals are emphasized through Absolute metrics and for an
organization disclosures - Global Reporting Initiative Index (GRI, 2002, 2015), the
sustainability metrics (IChemE, 2005), the Dow Jones Sustainability Index (Jones,
2005) and the OECD guidelines for multinational enterprises (OECD, 2005) are
used.

Absolute metrics denoted at the country level, as envisaged by WEF

(World economic forum) has few indicators which are used. Environmental
Sustainability Index (ESI) is a composite index tracking socio-economic,
environmental and institutional indicators that characterize and influence
environmental sustainability at the national scale. The 2005 ESI report, published
at the World Economic Forum‘s Annual Meeting in Davos(Switzerland). The
indicator for sustainable development has ranked 146 countries in order of the
environmental sustainability of their past, current, and projected socio-economic
and institutional development trajectories (Yale Center for Law and Environmental
policy, 2005)

The ESI is a reference framework or as a precursor for the policy makers in

a country for Environment Performance Index. EPI works at government policy
levels and helps in defining the guidelines to gauge environment public health and
ecosystem vitality. The framework is designed with regards to the global
millennium goals which are aligned to achieve growth, reduce poverty and
equitable distribution of income with reduction in carbon emissions (Environment
Performance Index, n.d.)

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 Another indicator, the Sustainability Index Report (2005) has a framework
with comprehensive set of variables. The Sustainability Index Report mentions
seventy six indicators (or variables) grouped under five major components namely,
environmental systems, reduction in environmental stresses, reduction in human
vulnerability, social and institutional capacity and global stewardship.

Munoz et al (2008) based on their research point out that even if there are
no settled policies/processes with respect to sustainability but organisations are
committed to their stakeholders and hence through sustainability want to enhance
their social and financial performance, which is key to long term growth of an
organization.

Along with the need to be more responsible, the impending climate change
is coming at the forefront for many policy/processes changes or improvement.
According to Ernst & Young (2013) report, organisations/countries are aware and
keen to work for the climate change directly or employ the business practices with
respect to climate change. Shrinking natural resource and risk management for
global supply chains is making sustainability an important part of corporate agenda.

Literature and various authors through their research work stress on the
importance of sustainability concept/practice as a risk management strategy. As a
strategy sustainability can help organisations to mitigate and reduce potential
losses, organizational management can be done for a greater employee, customer
engagement and also can help organisations to develop/build opportunities for
business (Yilmaz & Flouris , 2010 ; Dauvergne, & Lister, 2012).

Sustainability is a complex concept and through three pillars is defined

through environment, economic and social context which involves economic
prosperity for the stakeholders, employees, investors, ecological conservation with
practice of social equity. With sustainability as a risk management strategy
organisations can expand globally and still remain relevant for local operations

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through working with three facets of sustainability and hence improvement in
processes/products and external stakeholder management (Yilmaz & Flouris, 2010;
Govindan , Azevedo, Carvalho, Cruz- Machado, 2014)

Literature also identifies that metrics for measuring supply chain

management and the examples of integrated metrics are immense however, the
metrics emphasizes on measuring a single characteristic of sustainable supply
chain management (Ahi & Searcy, 2015; Beloff & Tanzil , 2006; Hassini, Surti,
Searcy, 2012).

There is a lack of comprehensible guidelines and frameworks for measuring

sustainability (Yang, 2013; Hassini, Surti & Searcy, 2012; Gosling,Jia ,Gong, &
Brown , 2016 ; Ahi & Searcy, 2015) and further researchers argue that the macro-
level definition of sustainability has little relevance to practical sustainability issues
(Carter & Rogers 2008). Measuring sustainability at supply chain level involves
not the focal organisation but the upstream and downstream partners as well

Ahi & Searcy (2015) conclude that through research and industrial practice
development of scientifically-sound integrated metrics will help in promoting
stronger linkages among various key characteristics of sustainable supply chain
management and it will also enhance the incorporation of sustainable supply chain
practices.

2.3 SUSTAINABILITY INDICATORS USED AT COUNTRY

AND ORGANISATIONAL LEVEL

Commission on Sustainable Development (CSD):

UN General Assembly in December 1992 set up United Nations Conference on

Environment and Development (UNCED) and Commission on Sustainable
Development(CSD) came up to ensure that the follow up of the conference is
effectively established.

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Commission on Sustainable Development (CSD) objective with respect to
sustainable development is to make indicators of sustainable development at
National or country level available to decision-makers for policy formulation and
strategies for sustainable development. The Commission defines/develops
methodologies, framework to the stakeholders (Commission on Sustainable
Development, 2002). The initiative was a follow up to earth summit Brundtland
report of sustainable development and holistically focuses on four dimensions of
sustainability: social, environmental, economic and institutional.

The Dashboard of Sustainability: The index developed in 1998 is graphic

interface which is used to display and report on a country‘s performance with
respect to sustainability. The indicator specifically talks about a country‘s
performance towards sustainable development thus reports using a graphical
interface.

Further to report the sustainable development, the dashboard divided into four dials
reports on the various dimensions of sustainability. Using the dashboard a
country‘s performance is easily envisaged at a single platform and is thus easy to
comprehend for drawing conclusions with respect to efforts/performance of a
country (Dashboard Sustainability).

The Barometer of Sustainability: Developed by The World Conservation

Institute (IUCN), barometer measures sustainability at local, regional or national
levels via a performance scale of human and environmental factors (Prescott-Allen,
2001).

The Global Reporting Initiative (GRI): It is a voluntary framework for reporting

on an organization‘s economic, environmental and social performance. The Global
Reporting Initiative (GRI, 2002) was launched in1997 by the Coalition for
Environmentally Responsible Economies (CERES) and the United Nation
Environment Program (UNEP).

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 The Global Reporting Initiative (GRI) is a framework to report and include
Sustainability performance by organisations. The framework comprehensively
defines and helps societal stakeholders to understand organizational initiatives for a
holistic development. Using the global reporting initiative framework,
organisations report about their practices and performance with respect to
sustainability. The guidelines as defined by Global Reporting Initiative is used by
organisations to talk about how their practices are impacting the environmental,
societal and economic through quality and transparent sustainability reporting.

As envisaged by Elkington et al 1997, GRI focuses on the triple bottom line

concept by balancing the complex relationships between current economic,
environmental and social needs in a manner that does not compromise future needs
(GRI, 2002, 2015). This framework is used widely by organisations to report their
sustainability.

Institution of Chemical Engineers (IChemE), Sustainability Metrics: The

Sustainability Metrics used and developed by IChemE measure sustainability
performance of process industries. As per the indicator, sustainability is defined
through the triple bottom line approach and hence covers the three components viz.,
the environmental responsibility of process industries the economic returns and the
social uplifting of the societies involved (IChemE2005).

Literature also defines some indicators used to measure sustainability performance,

namely,

 The Dow Jones Sustainability Index (DJSI): Dow Jones Sustainability Index
works in tracking the performance of the top 10 percent of organisations which
leads the efforts and practices to corporate sustainability (Jones, 2005).
According to Dow Jones Sustainability Index, sustainability or sustainable
development is a way to create shareholder value in long term. According to
the index, the long term value for shareholders should be created by

33
 organisations by embracing opportunities and mitigating the risks associated in
the context of economic, environmental and social developments (Jones, 2005).

 The Triple Bottom Line Index (TBL): The Triple Bottom Line Index is an
aggregate index that assesses sustainability performance of organisations. The
indicator calculates the sum total of growth in economy or wealth creation, e
improvement in ecology and equal distribution of the wealth considering the
social welfare (Elkington et al., 1999).

 ISO-14000: ISO 14000 and the standard focus majorly on environmental

aspects and its management in different organisations. It is set of principles and
framework to guide and measure impacts of o organization activities and
practices to identify and control the effect on environment and constantly work
to improve performance.

In the standards namely, ISO 14001:2004 and ISO 14004:2004 focus on

environmental management systems. And in contrast other standards in the ISO-
14000 family are framework with focus on specific environmental aspects such as
life cycle analysis, communication, auditing of environment management systems
(ISO 14000).

2.4 SUSTAINABILITY METRICS/INDICATORS AT PRODUCT

AND SERVICE LEVEL

Life cycle assessment is a key method for evaluating the environmental impact of
products on a cradle-to-grave basis or from initial raw material to its conversion to
final product and further usage (Frankl & Rubik 2001; Ahi & Searcy, 2015).

According to Linton et al., (2007) (as cited in Rebitzer et al. 2004;

Pennington et al. 2004), life cycle assessment is used to assist in the determination

34
of how to design a product to minimize its environmental impact over its useable
life and afterwards (cited in Karna and Heiskanen 1998).

Literature and various works by authors hence identify industrial ecology as

an integrative approach in which process plants are designed to consume wastes,
by-products to convert into beneficial products. Life cycle assessment is at the
interface of engineering and product design and takes into consideration the
resource depletion as well as environmental impacts. Further, performing a life
cycle assessment of process, simulation, scaling etc to help the engineers (Linton a
et al., 2007; Sikdar, 2007)

Sikdar (2007) further elaborates through his research work that each
process and every product development should focus with respect to
sustainability‘s pillars of development. And hence, industrial ecology and the
ecosystem should be considered important. Author suggests that in manufacturing
industry process development should be given lots of importance, as this stage
defines the resource usage. In a developed process raw materials convert into
product and produce waste .and so at the development stage the focus should be to
convert this waste into useful products.

The balanced scorecard is an approach used by organisations to identify a

variety of stakeholders, employee, operational, customer, and financial indicators
to measure social and environmental responsibilities (Epstein and Wisner 2001).
Balance Score card is a strategic management system or an indicator in which
performance for sustainability is measured using a set of financial and nonfinancial
indicators.

Sezekely and Knirsch, (2005) through their work on a framework on

Ecological footprint analysis as a tool elaborate a measure to gauge human natural
resource consumption and waste output within the context of nature‘s renewable
and regenerative capacity

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 Literature also identifies hierarchical Metrics, which is designed in a
hierarchy manner in which the goals are linked to each other and flow down or up
depending on the organization. For example according to these metrics the
environmental goals are achieved when one goal at management level is related to
several goals at operation level. If the management goal is to achieve 30%
reduction in fossil fuel use or increase renewable energy usage, the corresponding
metrics will flow down to operational level to meet the criteria (Graedel and
Allenby, 2002).

Michelini and Razzo (2004) through their research work suggest a model to
determine sustainability using TYPUS, which stands for tangible yield per unit of
service to assess resource decay. Using TYPUS metrics organisations can provide
critical means to manage product life cycles. The authors also claim that the
TYPUS metrics can help in deducing the resulting environmental impact for
resources.

Literature specifically points out that in manufacturing industries and in

engineering the focus should be consider the interaction amongst industrial
processes, human and ecological systems. Authors recommend that Life cycle
assessment can help to understand the interaction among various dynamic and agile
systems, processes (Bakshi & Fiksel, 2003).

Linear programming and various mathematical approaches also help

decision makers in life cycle assessment to gauge the sustainability or for
measuring sustainable supply chain (Ahi & Searcy, 2015; Chaabane et al., 2012)

Apart from absolute and relative metrics, McElroy (2012) suggests an

contextual based metrics (CBM) framework. In the contextual based metrics the
performance is expressed relative to contextually relevant social or environmental
thresholds as compared to absolute and relative metrics.

36
 McElroy (2012) elaborates that for example in absolute metrics for
sustainability the emission of total greenhouse gases (GHG) or consumption of
total water consumed in a year can be expressed gross impacts by an organization
during a defined period of time. Relative metrics such as emission of CHG or
consumption of water per unit of production, per dollar of sales, or per full-time-
equivalent employees, express performance in terms of some other variable of
interest used. Context-based metrics and in contrast contextual based metrics will
define for example, that GHG emissions be measured against limits in the Earth‘s
carrying capacity to absorb them without putting the climate system at risk; that
water consumption be measured against the finite limits of renewable supplies; and
that other impacts be measured against thresholds of their own kinds — including
social ones, too.

Azevedo , Govindan , Carvalho & Machado, (2013) suggest in their

research work an Ecosilient Index. The index is a metric for automotive
organisations and their corresponding supply chains to assess the greenness and
resilience. In the Ecosilient Index as per the authors is to indicate the organisations
green and resilient practices. An integrated assessment model is based on Delphi
technique it to obtain the weights of the supply chain practices for measuring the
eco-friendly practices of organisations in automotive sector.

Literature also identifies that for measuring the sustainability performance

and practices of organisations, the three aspects of sustainability viz. the
environment, economic and social should embedded in the performance
management system of an organization (Delai and Takahashi, 2011).

Organisations can also report their performance and practices by

calculating sustainability through accounting procedure. Literature identifies many
approaches for measuring sustainability through accounting perspective such as
economic value added (EVA), balanced scorecard (BSC) and activity-based

37
costing (ABC) to measure their practices and initiatives for gauging their supply
chain performance (Yao and Liu, 2006)

In all, there are numerous metrics for measuring sustainability of organisations.

Some metrics are based for supply chain of specific industries as well but there is a
lack of comprehensive metric for measuring supply chain initiatives of
organisations which involve economic, environment and social aspect.

Literature identifies that sustainability practices of organisations across

sectors can be organized into absolute, relative and contextual based metrics. The
absolute metrics used globally are such as Commission on Sustainable
Development (CSD), The Dashboard of Sustainability, The Barometer of
Sustainability, The Global Reporting Initiative (GRI, 2002), Institution of
Chemical Engineers (IChemE), Sustainability metrics etc. Indicators used for
measuring sustainability used worldwide are such as The Dow Jones Sustainability
Index (DJSI), The Triple Bottom Line Index (TBL), ISO-14000 etc.

For the metrics to measure sustainability the quantitative models specifically

used are such as life-cycle assessment (LCA), applications of the analytical
hierarchy process (AHP), equilibrium models, multi-criteria decision making
(MCDM) models, input–output analysis (IOA) based models, and composite
metrics etc. There are also approaches suggested for accounting perspective such
as economic value added (EVA), balanced scorecard (BSC) and activity-based
costing (ABC) along with metrics specific to sectors like Ecosilent Index for
Automotive sector.

The Literature Review with significant work of researchers for sustainability is also
summarized as given below

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 Author (Year) Comments
Brundtland Commission sustainability as a concept and business practice
report (WCED, 1987); transition from a concept to a global , political, and
(Linton et al., 2007) mainstream business issue
Kiron et. al(2013) economic downturn accelerated shift towards
sustainability issues
Ahi & Searcy, 2015 Measuring supply chain sustainability shall help to
evaluate the sustainability goals, efficiency and
effectiveness both qualitatively and quantitatively.
Ahi & Searcy (2013), Kiron across the globe organisations understand that their
[Link] (2013) sustained success depends upon the economic,
social and ecological contexts in which they
operate
Yang (2013), Ahi & Searcy, Sustainability is essentially regarded as the
(2013), Elkington, 1997; combination of environmental, economic and
Carter & Rogers, 2008; social factors

Sathaye et. al , (2006) ; Mani, Sustainable development discussions lie on

Gunasekaran, economic trade-off between economic
Papadopoulos , Hazen & development and the conservation of environment.
Dubey (2016)
Yang(2013) Sustainable development occurs when an
organisation‘s processes, products, and services are
aligned in a way that it is socially, economically,
and environmentally responsible.

Beloff & Tanzil (2006); Ahi Earlier the three dimensions of sustainable
& Searcy (2015) development were managed separately but now the
adaption, significance of the concept lies in the
integration of various concerns.

39
 Author (Year) Comments
Ahi & Searcy (2015) There are enormous amount of metrics roughly
2555 to measure sustainability but the usage for
majority has not been more than one time.

Ahi & Searcy (2015); Ashby There is a lack of reasonable consistent supply
et al., (2012); Beloff & chain metrics is due to lack of agreement on what
Tanzil (2006); Hassini, Surti, should be measured and how
Searcy (2012)
(Searcy, 2012). Ahi &Searcy Corporate disclosures are happening mostly
(2015) through GRI framework and the metrics are
absolute, relative or contextual metrics.
Munoz et al (2008) , Ernst & Even if there are no settled policies/processes with
Young (2013) respect to sustainability but organisations are
committed to their stakeholders and hence through
sustainability want to enhance their social and
financial performance, which is key to long term
growth of an organization.

Yilmaz & Flouris (2010) ; Sustainability as a risk management strategy

Dauvergne, & Lister (2012)
Table 2.1 - Literature Review describing approaches to Measure
Sustainability; Source: Author Generated

2.5 SUSTAINABLE BUSINESS PRACTICES AND INDIAN

ORGANISATIONS

In India, organisations are making small, consistent efforts in adapting

sustainability as a strategy and business practices. Literature identifies that this
trend is more evident for organisations which are global in characteristic or have
operations in multiple countries (Majumdar, Rana & Sanan , 2015; Kaur & Sharma
2016 ).

40
 Majumdar, Rana & Sanan (2015) also claim in the annual report ―India‘s
top companies for CSR and Sustainability-2015‖ that organisations are spending
more on Corporate Social responsibility due to Company law 2013 which
mandates the CSR activities to be 2% of the profits.

The organisations which are globally interconnected and has presence

across diverse portfolios is working through and with initiatives to reduce their
emissions, have innovative strategies for resource utilization, product and
consumer responsibility and transparency.

Majumdar, Rana & Sanan (2015) also reiterate their finding by claiming
that‖ Indian Organisations are having lesser externally certified (less than 25%)
reports and 41% reports in India do not have carbon disclosures‖.

Dauvergne & Lister (2012) also in their work highlight that branded/global
organisations are working on sustainability for more control over their global
supply chain and globalization enhances the need to manage risks and for
acceptance through local community innovation.

The SME or small/medium enterprises which are significant to India‘s

economy due to massive contribution to local income growth, job generation,
market innovation are ostensibly oriented with the imperatives of globalization,
market strategies, innovation etc. The Indian policies do not match to help the
organisations since the reforms that happened in early 1990s (Das 2008).

Rupa (2013) argues that this is particularly due to the inherent problems
present in small/medium enterprises in India. The sector is unorganized with little
bargaining power and access to different markets. Tough financial conditions and
lack of economic and market prowess make their survival difficult. Hence the
sector needs bolstering from government policies. Sustainability could be a way

41
forward for society and organisations/enterprises wholesome development (Kaur &
Sharma, 2016)

Organisations as envisaged by Yilmaz & Flouris (2010) also use

sustainability as a risk management strategy to reduce the potential losses and to
explore new business opportunities. New technologies are being worked upon,
along with redesigning or products/processes to build sustainable communities.
Authors Yilmaz & Flouris (2010) also through their research work elaborately
define that since past decades Corporate Sustainability has been the interest of risk
managers.

Though it‘s a complex concept but is being defined through environment,

economic and social context for business management through economic
prosperity, social equity and ecological conservation. Sustainability as a risk
management strategy can help organisations to expand globally and still remain
relevant for local operations through working with three facets of sustainability and
hence improvement in processes/products and external stakeholder management
(Yilmaz & Flouris, 2010)

Indian Organisations have started making efforts on sustainability and is

visible through their plethora of initiatives as envisaged in the annual report
―India‘s top companies for CSR and Sustainability-2015‖. Majumdar, Rana , Sanan
(2015, 2016) have listed that mainly organisations which are globally
interconnected and has presence across diverse portfolios is working through and
with initiatives to reduce their emissions, have innovative strategies for resource
utilization, product and Consumer responsibility and transparency. Authors of the
report reveal that Indian Manufacturing organisations are spending more through
mandatory CSR proceeds on the local communities.

Large manufacturing sectors are spending more than service sectors and with a
greater thrust to ―Make in India‖ concept, business responsibility is increasing. Still

42
the report mandates that Indian Organisations are more involved with activities in
their CSR spend though Sustainability efforts are increasing each year.

In India SME sector is involved with sustainability only in the capacity of

business partners or as a part of supply chain. Mohanty & Prakash (2013) elaborate
through their research that small/medium enterprises have been involved in green
supply chain practices only to the extent of their participation as suppliers,
distributors and in other capacities as business partners.

Small/medium enterprises face external pressure when they are part of

global supply chain and resort to practices only as a part business partner/supplier
(Desouza & Awazu, 2006).Indian Organisations are having lesser externally
certified (less than 25%) reports and 41% reports in India do not have carbon
disclosures (Majumdar, Rana & Sanan , 2015).

Literature also identifies that there are number of organization specific and
environment specific factors which hinder or enhance the organizational efforts to
adopt sustainability based practices. Organizational and environment specific
factors are such as reduction of cost, driving quality, brand building and
recognition, risk management, stakeholder preference, government regulations etc.,
are key factors or enablers for organizational adoption of sustainability (Ahi &
Searcy, 2015; Hassini, Surti & Searcy, 2012)

2.6 RESEARCH GAPS OF SUSTAINABILITY METRIC IN

LITERATURE REVIEW

Lopez et al., (2007) argue in their work that for creation of long term value
sustainability has an effect. This is established by various sustainability based
indexes to cater to financial performance of an organization. Authors concluded
that for firms initially the sustainability initiatives may not be economically very
viable but in long term it creates and delivers value and is not seen to have any
repercussions on performance indicators (Lopez et al., 2007).
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 Gunasekran et al., (2007) in their review concluded that there are no
sustainability indicators measures in 27 major performance measures in supply
chain management that were identified in the literature. There is a scarcity of
research on this subject (Gunasekran et al, 2004; Yang, 2013).

Hassini, Surti & Searcy (2012); Ahi & Searcy (2015) concluded in their
literature review that there is no study that comprehensively addresses the three
dimensions of sustainability in supply chain management. Some studies focus on
environment, other on social aspects and some on economic aspects of
sustainability.

This is further verified as Delai and Takahashi (2011) assert that there is not
even a single analyzed initiative that tackles all the sustainability issues. In fact
there is no consensus around what should be measured and how.

Literature also identifies that huge amount of metrics is available but the
majority of the metrics were used only once or two times (Ahi & Searcy, 2015).
Ahi and Searcy (2015) also highlight that the great range of metrics present in
literature indicates that there is a general lack of agreement on what should be
measured. Despite of numerous metrics there are challenges to adopt these to
measure performance in a particular for supply chain.

Based on the literature it is concluded that main divergences are related to

the following aspects: different criteria are applied by the initiatives to classify
issues between dimensions; same impacts are evaluated at different levels of a
cause-effect relationship continuum by the same initiative, disagreement on the
groups of stakeholders a company should engage with and assessment on the
company‘s impacts that should be taken into account.

Hassini, Surti & Searcy (2012) further assert that there is no shortage of
environmental indicators

44
  but no clarity on which one to use and when,
 no consensus on metrics in different supply chains,
 incompatibility between classical production measures,
 lack of oversight agency which controls the supply chain,
 lack of trust that leads to difficulties in aligning strategies,
 difficulty in coordination,
 Difficulty in streamlining the metrics due to the dynamic nature of the
supply chains.

Beloff & Tanzil (2006) further point out that metrics developed and used
currently focus primarily on the material and the energy flows. There are also
additions of potential impact such as toxicity potential as a part of standard metrics.
But the extension of this approach to supply chain, life cycle, broader sustainability
considerations is limited, especially in progress tracking and management decision
making. This is primarily due to difficulty in obtaining data relative to company‘s
own resource use and environmental release data in supply chain.

Researchers concluded that research for sustainability issues is identified in

every recent study on engineering research (Bakshi and Fiksel cited in Pfister and
AC-ERE 2003; NRC-BCST, 2003). But the challenge is that it has a broad
spectrum and integrates social, environmental and economic aspects of technology
and human activity.

The gaps are further summarized as below,

Author (Year) Comments

Gunasekran et al., (2004, No sustainability indicators measures in 27 major
2007; Yang, 2013). performance measures in supply chain
management identified in the literature. There is a
scarcity of research on this subject

45
 Author (Year) Comments
Hassini, Surti & Searcy No study that comprehensively addresses the three
(2012); Ahi & Searcy (2015) dimensions of sustainability in supply chain
management.
Delai and Takahashi (2011) There is not even a single analyzed initiative that
tackles all the sustainability issues. In fact there is
no consensus around what should be measured and
how.
Hassini, Surti & Searcy There is no shortage of economic indicators but
(2012) which one to use and their adaptability to supply
chain is limited.
Beloff & Tanzil (2006) For measuring sustainability, metrics developed
and used currently focus primarily on the material
and the energy flows. There are also additions of
potential impact such as toxicity potential as a part
of standard metrics. But the extension of this
approach to supply chain, life cycle, broader
sustainability considerations is limited.
Bakshi and Fiksel (2003) research for sustainability issues is identified in
every recent study on engineering research, but the
challenge is that it has a broad spectrum
Table 2.2 – Summary of Gaps to measure Sustainability in Literature;
Source: Author Generated

2.7 SUGGESTIONS FOR FURTHER RESEARCH FROM

RESEARCHERS

According to Szekely & Knirsch (2005) there has been lot of progress in
determining the environmental impact but the performance of environmental
assessment is limited in determining the impact. The assessment of environmental
performance is limited to natural resource depletion, land degradation, pollution,

46
emissions and waste generations and not on the long term impact of the
organization‘s operation.

Sezekely & Knirsch (2005) further assert that the biggest drawback of
metrics remains is that the organisations don‘t understand what to do with the
emission and natural resources data that they are generating in line with the
international standards. And the review of sustainability reporting done by GRI
guidelines shows that organisations differ greatly in terms of scope and range of
what is measured and reported. And hence this needs wider research by
academicians and industry practitioners.

Different kinds of models are applied to measure economic and

environmental effects in supply chain management; it is evident that the social side
of sustainability is not taken into account (Sezekely & Knirsch, 2005; Mani,
Gunasekaran, Papadopoulos, Hazen, Dubey, 2016).

Hence, the sustainability metrics should utilize social along with environmental
aspect of sustainability that should deduct the impact of organization‘s operations
on long term sustainability. An organization should be able to profile the risk and
sustainability issues as leading indicators to make more informed choices and
metrics for supply chain management should go further to report on the risk
profiling and costing of the decisions.

There are also suggestions for a concept called preference index.

Sustainability metrics and specific indicators are useful tools but their utility in
making project choices and policy decisions remain limited.

Consequently, an exploration of superimposing concepts related to

preference index is suggested to deduce and decide between multiple projects and
decisions. This way, making project choices and making policy decisions can

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provide a more comprehensive framework and can help address multiple objectives
and competing priorities related to sustainability. (Jain, 2005)

Further , Context-based metrics which differ from absolute and relative

metrics in that they express performance relative to contextually relevant social or
environmental thresholds, needs more research for its adaptability to supply chain
dynamism and respective organization operations and strategy.

CBMs dictate, for example, that GHG emissions be measured against limits
in the Earth‘s carrying capacity to absorb them without putting the climate system
at risk; that water consumption be measured against the finite limits of renewable
supplies; and that other impacts be measured against thresholds of their own kinds
— including social ones, too (Mark Mc Elroy, 2012)

2.7.1 METRICS/ INDICATORS SHOULD INCLUDE SOME CRITERIA

According to Olugu et al (cited in Handfield & Nichols , 1999), green supply chain
management should address three interrelated task areas i.e. upstream, internal
stream and downstream of the organization. Upstream of organization‘s supply
chain involves the inclusion of environmental criteria in the evaluation and
selection of suppliers and in the specification of the components. The internal
stream will be concerned with operations within the manufacturing company itself.
Downstream of the organisations supply chain should be charged with the
responsibility for disposal and sale of excess stock, including opportunities for
after recovery and recycling of materials.

As sustainability is a characteristic of many dynamic systems , hence the

Yale Center for Environmental Law and Policy report (Environmental
Sustainability Index, 2005) suggests that the agile and changing systems should
maintain themselves overtime and should not be viewed as a fixed endpoint.
According to the Yale Center for Environmental Law and Policy report
(Environmental Sustainability Index, 2005) environmental sustainability refers to
the long term maintenance of natural resources and the environment in a dynamic

48
human context. Thus, the metrics used for practice/reporting should respond to the
interconnectivity and temporal variations as well in the dynamic and changing eco-
system.

Gopal & Thakkar (2012) through their research work summarize that the
supply chain metric/sustainability developed should have some of the following
characteristics.
1. Supply chain management metrics should be able to handle long and short
product life cycles.
2. Supply chain management metrics should also consider the push, pull and
push-pull supply chains.
3. Supply chain management metrics system/model should be mathematically
valid.
4. Supply chain management metrics should be sector agnostic and thus
should be cross functional fit across various industries.
5. Supply chain management metrics should also incorporate measures to
address continuous improvement in metrics.
6. Supply chain management metrics should customize the measures for
complex supply chain networks in present network era.
7. Supply chain management metrics should be agile to help organisations to
understand and respond to the rapidly changing value addition curve.
8. Supply chain management metrics should have clear KPIs to handle
assorted supply chain collaborations and partnerships.
9. Competitive environment demands empirical measures and case study
approaches for measuring the supply chain.
10. Supply chain management metrics should also help organisations to
classify the metrics based on long and short term strategies of supply
chains.

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2.8 SUSTAINABILITY REPORTING BY ORGANISATIONS

Many organisations have responded to stakeholder expectations by publishing

annual CSR and Sustainability reports that communicate the activities and
strategies being used to address social and environmental issues. These reports are
often referred to as sustainability reports.

The sustainability reports serve as a barometer of an organization's attitudes

toward social and environmental responsibility, strategic planning and the level of
integration in the organization's business strategic plans, both at the corporate level
and functional levels such as supply chain management (Tate et al, 2009).

Various research works also reiterate the fact that organisations with
presence across countries are involved in Sustainability based practices. MIT Sloan
Management review (Kiron et al., 2013) elaborate in their report that nearly two-
thirds of respondents rate social and environmental issues, such as pollution or
employees health, as ―significant‖ or ―very significant‖ among their sustainability
concerns. Yet only about 40% report that their organisations are largely addressing
them. Even worse, only 10% say their organisations fully tackle these issues.

Interestingly, MIT Sloan Management Review (Kiron et al., 2013) further state
that organisations that perceive sustainability issues as significant, thoroughly
address them and share distinct characteristics. For example, Kiron et al. (2013)
claim that,

 Organisations which perceive Sustainability important, 90% of respondents

have developed a sustainability strategy.
 These organisations top management give lots of importance to
Sustainability and 70% of respondents placed sustainability as one of their
important strategy agenda, compared to an average of 39%.
 69% of organisations with sustainability agenda have developed their
sustainability business case. This statistic in the report is in comparison to
37% of all respondents.

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 The Ceres roadmap (Ceres, 2014) for Sustainability report also stresses that
with presence across multiple locations are leading with their efforts like Beverage
Organisations. The report particularly highlights that organisations have
substantially accelerated and broadened their sustainability efforts. Global
organisations are embracing sustainability efforts to create long term shareholder
value.

Authors Hedberg and Malmborg (2003) further claim that organisations are
disclosing information on sustainability to enhance their legitimacy and
responsibility in the view of stakeholders. And thus disclosure practices following
for example such as GRI guidelines is getting more prominence on the lines of
accepted national or international reporting standards.

GRI or the Global Reporting Initiative (GRI) is a multi-stakeholder process,

which, of late, has been gaining acceptability worldwide. It is an independent
institution whose mission is to develop and disseminate globally applicable
sustainability reporting guidelines. These guidelines are voluntary in nature but
becoming popular among organisations for reporting on the economic, social, and
environmental dimensions of their activities (processes), products and services.

GRI or the Global Reporting Initiative (GRI) disclosures for sustainability

incorporates the active participation of representatives from business, accountancy,
investment, environmental, human rights, and research and labor organisations and
is one of the standardized regulatory frameworks to talk about sustainability
practices (Tata Sustainability report, 2013).

Started in 1997 by the Coalition for Environmentally Responsible Economies

(CERES), the GRI became independent in 2002. It is an official collaborating
centre of the United Nations Environment Programme (UNEP) and works in
cooperation with the Global Compact (UNIDO et al., 1999). (Sahay, 2004)

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 Authors and researchers such as Hedberg & Malmborg (2003), Majumdar
(2013) claim through their research work that organisations produce sustainability
reports/disclosures and have Corporate Social responsibility (CSR) missions
mainly to seek organizational legitimacy in the eyes of various societal and
community stakeholders. And this becomes the main reason for use of the GRI
guidelines.

As organisations face multiple reporting pressures there is an emerging need

for consolidation, along the lines of accepted national or international reporting
standards. The Global Reporting Initiative (GRI), an effort to develop a frame
work for consistent sustainability reporting by organisations worldwide, is fast
becoming the recognized standard for sustainability reporting (GRI, 2002)
(Majumdar, 2014)

GRI facilitates transparency and accountability through a worldwide, multi-

stakeholder network with close to 3,000 global organisations using the GRI
framework to report their progress in sustainability (Tata sustainability report,
2012-2013)

The GRI uses a hierarchical framework in three focus areas, namely social,
economic, and environmental. The hierarchy consists of categories, aspects, and
indicators. The framework of GRI indicates the categories and aspects which
should be considered by organisation for reporting at an operational and project
level in an organisation with respect to sustainability principles (Labuschagne et al,
2007).

Also, it is been identified that the main challenge of following sustainability

based practices or to adopt sustainability is to make Brundtland definition
operational and thus it can help managers/decision makers to guide their decisions.

52
 Thus, metrics and measurement of performance is needed to gauge how
sustainability as a practice is being implemented across the organization or
performance of decisions which effect organizational sustainability (Hutchins &
Sutherland, 2008).

Ahi & Searcy (2015) further highlight that organizational reporting merely
using absolute and relative metrics will fail to address the issue of sustainability
context. The author reiterate through GRI notes ― that performance should be
assessed -in the context of the limits and demands placed on environmental or
social resources at the sector, local, regional, or global level‖. And the supply chain
is an integral part of this.

The factors which are considered in GRI framework disclosure (GRI, 2002)
reports are defined in the Table-2. The GRI framework is used in the thesis to
measure sustainability initiatives in the supply chain management of manufacturing
organisations.

The factors of sustainability as per GRI framework has been used further to
test the hypothesis to measure sustainability initiatives of supply chain
management of manufacturing organisations.

Sustainability Parameters Variables

 Economic Performance
Economic  Market Presence
 Indirect Economic Impacts

 Materials
 Energy
Environment factors
 Water
 Biodiversity

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Sustainability Parameters Variables
 Emissions
 Effluents and Waste
 Products and Services
 Compliance
 Transport
 Overall
 Supplier Environmental Assessment
 Environmental Grievance Mechanisms

 Employment
Social factors :  Labor/Management Relations
Labor Practices and decent  Occupational Health and Safety
work  Training and Education
 Diversity and Equal Opportunity

 Investment
 Non-discrimination
Social factors Human Rights  Freedom of Association and Collective
Bargaining
 Child Labor
 Forced or Compulsory Labor
 Security Practices

 Local Communities
 Anti-corruption
 Public Policy
 Anti-competitive Behavior
Society  Compliance
 Supplier Assessment for Impacts on
Society
 Grievance Mechanisms for Impacts on
Society

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Sustainability Parameters Variables

 Customer health and safety

 Product and service labeling
Social Factors
 Marketing Communication
Product Responsibility
 Customer Privacy

Table 2.3 - List of GRI Variables and Factors, Source: GRI framework (2002)

2.9 CHAPTER SUMMARY

The Chapter is a literature review to measure sustainability in the supply chain

management of manufacturing organisations. The chapter details the approaches
and methods/ metrics to measure sustainability in organisations. The chapter also
summarises the sustainability practices of Indian Organisations and limitations of
different metrics (gaps) to measure sustainability especially in supply chain
management of manufacturing organisations. The chapter also details sustainability
reporting practices by organisations for greater transparency. The research gaps
form the basis for research objectives of the thesis.

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