New Ways to Study Individual Corporations’ Supply Chains

By Benjamin Goldstein and Joshua Newell
Jan 15, 2020 9:00 AM ET

Originally published by the University of Michigan: Erb Institute

Multinational corporations wield immense power. A mere 100 companies control a quarter of global trade. Walmart is the 10th–largest economic entity on the planet. Coca-Cola is the world’s largest consumer of aluminum and sugarcane. In choosing where to invest, what products to develop and push, and what environmental and labor standards to uphold, corporations like these continually shape the global economy’s geography and its effects. 

Because of this influence, corporations are indispensable in shifting toward a more sustainable economy that respects people and planet. By pledging to not source wood from areas of damaging deforestation or by ensuring that upstream suppliers pay their workers livable wages, a single multinational can transform an entire sector, as competitors attempt to match these “green” or “socially accountable” credentials. But, to make this happen, we need to know which companies have environmentally and socially problematic supply chains, and occasionally putting pressure on those companies to redress stubborn sustainability challenges related to their direct and indirect operations. 

We analyzed nearly 11,000 academic articles on supply chains, and we were surprised to find that only a little over two dozen of those studies focused on the supply chains of individual corporations. Our review, recently published in the Journal of Industrial Ecology, shows that most researchers have prioritized studying anonymized supply chains, hypothetical “average” supply chains, and economic sectors. 

Most of the academic work on individual corporate supply chains has focused on how upstream suppliers can enhance their economic value capture, while environmental and labor issues have taken a back seat. Also, the bulk of this work has been largely sympathetic to corporate interests, sidestepping thorny questions of how multinationals’ supply chains contribute to persistent environmental degradation and social dislocation around the globe. By largely not studying the individual corporations with the power to reshape supply chains and sectors more sustainably, and by focusing only on the economic dimension of sustainability, researchers of supply chains have limited the positive potential of their work in the business world. 

Fortunately, we found a second stream of literature in our review that shows how academics can begin addressing this gap. Since the 1990s, NGOs have been holding powerful business interests responsible by associating corporate brands with damaging deforestation, acute pollution, sweatshop factories, child labor and modern slavery. By shining a light on unsavory practices in corporate supply chains, NGOs have compelled large corporations, including global players like McDonald’s, Nike, Unilever and Nestle, to commit to more sustainable sourcing, with positive ripple effects within and across sectors. For instance, when Unilever commits to removing deforestation from its supply chains, this affects both the agriculture and forestry sectors, setting a new bar for their business competitors in both arenas.    

We argue that the time has come for academics to start analyzing the supply chains of individual corporations in the same manner as NGOs have. Our review included 30 NGO “brand activism” campaigns, highlighting how NGOs have been able to reconstruct the normally confidential supply chains of individual corporations and link them to environmental and social change. We have taken these disparate approaches and developed a methodological framework, Tracking Corporations Across Space and Time (TRACAST), that gives researchers the requisite tools to study individual corporate supply chains. Researchers need not become activists in doing this, but our proposal does ask researchers to probe how the current economy fails to produce gains for all players involved and what business can do to change this.   

Recent movements in the business world, specifically the Business Roundtable’s explicit commitment to shareholder capitalism, show that many large, powerful multinationals are prepared to tackle challenges of social and environmental sustainability. But business cannot do this alone. Academics can lend their trusted voices by studying the supply chains of individual corporations, disseminating their findings through journal articles, websites and media, and collaborating with companies to understand where hotspots of negative environmental and social change lie in their sourcing. By revealing individual companies’ sustainability challenges, and sometimes advocating for them to do something about them, academics can help multinationals wield their immense power to reshape the global economy in ways that help both people and planet.    

Read the full review here