UNIDO’s Approach to Supporting Sustainable Supply Chains
- April 03, 2023
- By UNIDO
Domestic, regional and global supply chains play a critical role in facilitating trade, which in turn contributes to job creation and sustainable economic development. However, certain practices within these supply chains, such as the exploitation of child labor, poor workplace safety, large-scale deforestation, and overfishing, have adverse environmental and social implications.
The introduction of new laws governing global supply chains will have far-reaching implications for developing countries that wish to boost their domestic and cross-border trade. While the primary objective of these laws is to enhance economic, environmental, and social conditions, they may also create trade barriers, particularly for small and medium-sized enterprises (SMEs).
UNIDO’s work on sustainable supply chains is guided by the following principles:
• Multidimensional approach: We address the root causes and complexity of supply chains by offering a holistic package that includes value addition, quality infrastructure, skills development, resource efficiency and sustainable investment.
• Immediate action: We raise awareness of new laws and regulations in close coordination with public, private and development partners.
• Sustainable interventions: We tailor our interventions to the local context building on UNIDO’s extensive field network.
UNIDO is committed to delivering the above principles at the global, regional and local levels.
Our mission is to promote the integration of countries into domestic, regional and global value chains in a manner that is socially just, environmentally sustainable and economically inclusive.
We achieve this by empowering youth, women and SMEs with the skills, technology and resources needed to successfully participate in sustainable value chains.
We build institutional and policy-making capacities to foster a conducive business environment and support infrastructure, unlocking investment for lasting growth.
Importance of domestic, regional and global value chains
Around 80% of world trade is now based on global value chains, supporting the livelihoods of more than 450 million people worldwide. The importance of regional and domestic value chains grew during the COVID pandemic and is on the rise due to the need to reduce CO2 emissions. However, the products and raw materials we consume are often manufactured or mined under sub-optimal environmental and working conditions.
Goal by 2030: Improve productivity, increase value-added, and enhance industrial competitiveness and compliance with sustainability standards in domestic, regional and global value chains.
In focus: The government of Peru has declared coffee and cocoa as national flagship products due to their significant role in rural development. To improve the quality and competitiveness of these products, UNIDO has strengthened quality infrastructure and helped disseminate Peruvian Technical Standards. As a result, producers are now able to sell their coffee and cocoa at higher prices, which has improved the livelihoods of rural communities.
Our focus is on youth, women and small and medium-sized companies
The active participation of youth, women, and SMEs is essential to driving supply chain sustainability. SMEs employ over 70% of the world’s workforce and advancing women’s equality could boost global growth by $12 trillion. UNIDO prioritises the economic empowerment of women and youth in sustainable industries. To achieve this, we promote entrepreneurship and enterprise development, provide vocational training targeting women and youth, and offer support to female- and youth-led businesses in value chains. We also work to bridge the technology gap between men and women, which is critical to ensuring equal opportunities for all.
Goal by 2030: Support participation of women, youth and SMEs in sustainable supply chains by strengthening their entrepreneurship and employability skills, increasing their access to markets, financing, and technology, while also promoting sustainable production and responsible business practices.
In focus: UNIDO is providing entrepreneurship training and tailored technical assistance to women-led businesses in Tunisia, helping them to improve their production processes, diversify their product offerings, and obtain ISO certification. This support has improved market access and income generation for rural SMEs, contributing to gender equality and the creation of employment opportunities for young people.
We provide skills for responsible business and fair production
UNIDO works with governments, the private sector, and civil society to enhance the capacity of local industries to adopt sustainable production methods, improve occupational health and safety, and promote responsible business practices. This includes providing training on sustainable resource management, energy efficiency, and environmental management systems, as well as promoting ethical business practices, such as transparency and social responsibility.
Goal by 2030: Improve business practices and promote sustainable production methods that minimize the impact on the environment while also ensuring fair labour practices, providing guidance on best practices for supply chain management and sustainable production.
In focus: Over the past few decades, UNIDO has supported the textile and leather industries in adopting safer and environmentally friendly production practices, while also adding value to their products. These initiatives have included connecting tanneries with local and international markets, providing access to the latest technologies based on international best practices, and improving the occupational health and safety of workers.
Sustainability practices are key to unlock investment for lasting growth
SME suppliers will face soft and hard upgrading requirements to establish newly configured fairer local production systems; UNIDO can build capacities among SMEs to develop proposals that clearly elaborate the investment requirements along the “compliance journey” and map out related financial requirements and their mix (grant, loan and equity); Institutional ecosystems and platforms will be established so that SME suppliers can present their investment proposals to socially and environmentally-minded (impact) investor groupings or those pursuing gender-lens investing.
Goal by 2030: Mobilize additional financial resources for SMEs in developing countries from multiple sources to stem the costs of a just and socially and environmentally balanced transition towards more sustainable supply chains.
In focus: ACP Business Friendly. African, Caribbean, and Pacific (ACP) countries Business-Friendly strengthens investment promotion and facilitation practices and productive capacities and value chains in ACP countries. Based on a portfolio of more than 900 investment opportunities it also improves the linkages between multinationals and domestic suppliers in terms increasing transaction volumes and mainstreaming quality and Environmental, Social and Governance (ESG) issues.
UNIDO’s tools for sustainable supply chains
Value Chain Development
• Agro-industrial parks: by promoting sustainable production, enhancing competitiveness, and increasing value addition along the supply chain, as well as facilitating linkages between small farmers and agribusinesses.
• Cluster development: by developing clusters and networks of SMEs for inclusive economic growth.
• Industrial Upgrading and Modernization Programme (IUMP): to improve the industrial performance of manufacturing SMEs by strengthening their competitiveness and environment.
• Leather and Leather Products Industry Panel: technical assistance, capacity building, and promoting sustainable and ethical practices in the leather industry to improve product quality, increase productivity, and enhance competitiveness.
• Conformity assessment: standards and traceability are powerful tools to ensure compliance with requirements, helping to ensure products meet international standards for quality, safety, and environmental performance.
• Global Quality and Standards Programme: promote sustainable supply chains by improving the quality and standards of products and services in developing countries.
• Quality infrastructure, quality policy, quality management and good governance in quality infrastructure: designed to support quality infrastructure practitioners and policy makers to design, robust, holistic and demand-driven quality infrastructure systems along value chains and facilitate the implementation of quality management at SME level.
• Quality infrastructure assessment: tools for quality infrastructure institutions and conformity assessment bodies such as LabNet – The Laboratory Network.
• Quality infrastructure observatory: tools for policy makers such as Trade Capacity Building Resource Guide, Standards Compliance Analytics and Quality Infrastructure for Sustainable Development Index (QI4SD).
• Entrepreneurship tools: HP LIFE, IDEA App, Entrepreneurship Curricula Programme.
• Learning and Knowledge Development Facility: a platform that promotes industrial skills development among young people in emerging economies.
• Market Systems Development (MSD) approach: providing sustainability and systems change in skills development programmes.
• Public Private Development Partnership (PPDP) approach: providing public services with wider development impact.
Resource Efficiency and Circular Economy
• Global Eco-Industrial Parks Programme: establishing eco-industrial parks, which integrate businesses and communities to use resources more efficiently, reduce waste and pollution, and create more sustainable economic growth.
• Transfer of Environmentally Sound Technologies: help reduce the negative environmental impact of industrial processes and products, and promote more sustainable production and consumption patterns via technology assessments, capacity building, and policy support.
• Investment packaging and feasibility analysis: support through instruments such as COMFAR to enhance bankability of SME supplier investment gaps; Physical and digital platforms to connect sustainable SMEs with international investors, leveraging the ITPO Network.
• Gender lens investment: integrating gender considerations into investment decisions and supporting women’s economic empowerment in the supply chain, thereby contributing to long-term sustainability and social development.
• Sub-contracting and Partnership Exchange (SPX) programme: promotes sustainable and inclusive business practices, foster innovation and technology transfer and access to finance by facilitating partnerships between large enterprises and smaller suppliers in developing countries.
For more information, please contact: PST@unido.org