The State of Sustainability

- Welcome to another episode of "Supply Chain Frontiers," the MIT CTL podcast where we explore the trends, technologies, and innovations shaping the future of supply chain management. I'm your host for this episode, Mackenzie Berry. Today, we're diving into the world of sustainability and its implications for supply chains. Joining me are members of the MIT Sustainable Supply Chain Lab, hosted in this MIT Center for Transportation and Logistics, Dr. Sreedevi Rajogopalan, a postdoctoral associate at CTL, Martin Staadecker, a research assistant in the lab, and Tori Arnold, a project manager in the lab who is spearheading the Annual State of Supply Chain Sustainability Survey. Here's what I know. The MIT Sustainable Supply Chain Lab aims to support companies and organizations to improve logistics and supply chain operations by creating applied and innovative research aimed at fostering growth while considering environmental and social sustainability. The lab connects research outcomes to practical settings, enabling companies and stakeholders to leverage supply chains as a beneficial force to reach global sustainable development goals. They also seek to improve the visibility of supply chain impacts and develop strategies to help reduce them so companies can better address consumer, political, and shareholder concerns. In this episode, Sreedevi, Martin, and Tori will explore the current state of sustainability across industry, current challenges, and key insights from their work. Welcome, everyone, so glad to have you. If we could just start out by having everyone introduce yourselves and your work in the lab, we can start with you, Sreedevi.

- Sure. First of all, thank you, Mackenzie, for having us. My name is Sreedevi, I'm a postdoctoral researcher at the Center for Transportation and Logistics. I'm associated with two labs at the center. One is a Sustainable Supply Chain Lab, and the other is a Low Income Firms Transformation Lab. My research interests includes sustainable sourcing, diversity, equity, and inclusion in supply chains, and understanding and improving business operations of small and micro firms in developing countries.

- Wonderful. Martin?

- Great. My name is Martin Staadecker, I'm a student in the Technology and Policy Program here at MIT, a master's student in my first year, and I'm also a research assistant in the Sustainable Supply Chain Lab working on trying to understand the ways companies measure their greenhouse gas emissions and the trade-offs there exists with different ways of measuring.

- Tori?

- Yes, I'm Tori Arnold, I'm the project manager of the Sustainable Supply Chain lab, as well as the Low Income Firms Transformation Lab that Sreedevi is also a part of as well. So trying to help wrangle everything together and keep everyone moving forward.

- Yes, no small feat, no small feat. I read a introduction of the lab, but just, Tori, wondering if you can give us a kind of overview of the MIT Sustainable Supply Chain lab and its primary goals, how it started as someone on the inside.

- Yeah, so I think your introduction is great. The lab was really started in 2016, a part of CTL, so it was a few different initiatives. There was a Responsible Supply Chain Lab and then a Sustainable Logistics, and then eventually they kind of merged to become one lab really focusing on sustainable supply chains, both environmental and social, and like you stated, really working on helping companies and organizations gain visibility but also be able to better support their company to move further in the sustainable sector.

- And as I understand it, it was something that industries were really calling for.

- Yeah, so CTL works with a lot of industry companies and they actually kept bringing up sustainability and there was a few different researchers working on one-off type projects with different companies, and then it became realized that it was a much bigger need to actually have a lab focus on that.

- Martin, you do a lot of work with modeling and analysis, how does data help you make the case for sustainability investments when you're speaking with those in industry?

- Yeah, I think there's lots of reasons to be doing investments in sustainability and we're gonna get into those, but I wanted to highlight just one story of how data can really help. So there's a new growth of movements or there's this thing that's called green bonds or green investments, and so, they're getting more and more popular, especially in the European Union, but around the world where investors are saying, "We'll give you money, we'll give you a loan, but you have to meet certain targets." And in fact, two weeks ago the city of Gothenburg in Sweden was one of the first to have to pay a fine because they didn't meet their targets and they were kind of proud of it. They were like, "Oh, we're ahead of the curve," like, we set really ambitious targets and, like, we're paying a fine, but we're doing this because we purposefully set ambitious targets. But it's just giving an example of how data, like, to know if you met those targets or not, and to be able to set realistic targets, you need data. And so, all of these new initiatives that are happening around sustainability are all underpinned by the need for data on your emissions and your sustainability.

- Yeah, absolutely. Sreedevi, how does the lab balance academic research goals with the practical needs of industry partners? I imagine that's always a negotiation.

- Absolutely, very interesting question. Actually, we do not do any theoretical work. Almost all our projects that we have done so far are driven by real needs that have been identified by a company or the industry at large. I can give you some examples of some of our past projects that we have done. For example, we've worked with several companies helping them redesign their supply chain network with a focus on not just reducing cost and increasing service level or improving their operation metrics, but also reducing the CO2 emissions. And another project that we worked was the company wanted us to assess that their sustainable packaging design and wanted to understand if that is resulting in overall emissions. And, interestingly, what we found was while the design per se is largely sustainable in comparison to the old design, but when you looked at the supply chain activities end to end, the new design was actually resulted in a 45% higher emissions than the old design. So what we tell companies is it's important not only to look at sustainability in silos, but to look at it from a supply chain point of view end-to-end. As a researcher, while always be good to find that sweet spot where you can meet academic rigor with practical relevance, but we do not take up any projects that is not driven by real-world needs.

- Yeah, absolutely. And that's a great point too, because some companies could look at just one part of the supply chain, but if you're not looking at it holistically, you can't really measure how impactful the changes that they're making have been.

- I guess just on that note, the companies that are creating the same product can have very different business models and ways of integrating their supply chains so they can be very vertically integrated, which means they own their suppliers. And so, in a way, you can't really compare a company to company which product is more sustainable unless you look at the entire supply chain.

- And I think adding to that, there's so many companies who work in silos and the sustainability team is a small team that doesn't have the same reach as maybe their marketing team that people actually designing new packaging or things like that. So when everything is done in silos and not looked at it from a broad perspective, that's when you can have problems where you think you're lowering emissions and you're actually not.

- Yeah, absolutely. Just to add to that point, very interesting, Tori. So when we look at companies, when we work with companies on meeting their sustainability goals and what we find is the sustainability department completely works in silos. The supply chain team has no clue about what the sustainability team is doing, and vice versa. And this happens in most companies.

- I see. So for a company to really prioritize sustainability, you have to make it a part of every single team.

- Correct.

- And that comes from setting the culture in the company, and that's a big part of it.

- Yeah, absolutely. Transitioning now to looking at industry trends, policy, and public perception, sustainability is a big part of the conversation right now, particularly as we see governmental rollback of investments in sustainability efforts. At the industry level, many companies have quietly rescinded their sustainability goals. Why should companies prioritize sustainability and the sustainability development goals?

- Yeah, I mean, when we think about why companies should prioritize sustainability, I think there's a business case for it, and then there's another case, so I'll start with the business case. The first thing is a lot of sustainability improvements are actually energy efficiency improvements are cost improvements. I mean, if you have visibility in your supply chain, it can also make your supply chains more resilient. It means if there's a geopolitical event in another country, you can adjust your operations. It means that when COVID or something hits, you can react more quickly because you have that visibility, you have that partnership with your suppliers. So there's a lot of, like, good, just simple business reasons to do what's sustainable. The next reason I would say is there's also what we call transition risks where, because in general, the world is moving towards being more sustainable, there is the risk that maybe there's going to be a carbon tax or certain tariffs. We see the EU coming out with the CBAM, which is a tariff for high-emission products. And so, these transition risks basically say that if you don't invest in sustainability now, you might be locked into something that is high mission that is gonna harm your business in the future. And then, finally, I think this is not talked enough in the space often is there's just a moral and ethical reason to go towards sustainability. I think our world needs it. Climate change is gonna have really bad impacts on our world. And so, a lot of leaders and a lot of the leading companies, that is their main driver is that their CEO decided, that, "Oh, this is a priority for me."

- Yeah, and I would add to that, so our lab director, Dr. Josue Velasquez, has had conversations and presentations at many different companies about sustainability. And one company in particular actually came to him and said, "If the world fails, then we can't succeed." So our company cannot succeed and continue to grow if the world is kind of failing and we don't have a livable environment. So it is still like a business case to be able to make those initiatives. Yes, you're doing things that's better for the environment, but in the end, it actually will still help your company thrive.

- Self-preservation, indeed.

- Yeah, exactly.

- So what is the primary pushback that you all see companies make against prioritizing sustainability?

- I think one of the primary reason for a pushback is companies focus on short-term goals. Sometimes they're constrained by the financial pressures or, you know, the pressure on profitability. There are also regulatory and political uncertainty, and they do not know if today's regulations would stand for the next five years or so. But, interestingly, what we found, let me give you some statistics about the current state of affairs in the US. So the Sustainable Supply Chain Lab at the center has joined hands with the Freight Lab, and we are in the process of forming a sustainable transportation consortium of shippers, carriers, and brokers to address some of the common sustainability challenges in that particular space. And recently we held a couple of webinars for these companies to just gauge the interest levels and also to understand where do they stand. And we conducted a poll asking them what is their current stand when the Trump government has pulled the US out of the Paris Agreement, close to 95% of the companies who attended the webinars said that they are significantly committed to their sustainability goals and there is no change in terms of their investments or initiatives despite the US pulling out of the Paris Agreement. So while they have problems with their short-term goals, but with regulatory pressures, I think companies still continue to focus on their sustainability-related initiatives.

- And the vast majority of those companies were US-based as well.

- And so your point, Martin, you spoke about geopolitical upheaval being a reason why a company would invest in sustainability, and we see that right now being the primary concern short-term and long-term, even if companies have traditionally cited that as a reason why they wouldn't invest in it short-term. But anything to add on your end, Martin, in terms of primary pushback you see against prioritizing sustainability?

- Yeah, I mean, we hear a lot of news now with the recent election, and I think people are rightly concerned, but I think also when you look at the world as a whole, the movement towards sustainability is still ongoing. There was a survey recently, they surveyed people across the entire world and they did a representative survey, which means that it's representative of the distribution of people in the world, and they found that 86% of people said that people should try to fight global warming. So that's a pretty high percentage. And in fact, then when they asked, would you be willing to contribute 1% of your household income every month to fight global warming, 69% of the people in the world said that. So we have more than half the world that wants to contribute their income and that believes that people should fight global warming, and they also said that people should be more politically active on this topic. So I feel like the movement is going, and companies are realizing that and it's not going to stop.

- And speaking to another concern that a lot of consumers are having in the current moment is that of greenwashing, which is used to create a facade of sustainable efforts without actually having to take action. And a lot of companies tactics are only getting sneakier around this, it can be difficult for people to distinguish between earnest efforts and deceptive messaging in regards to greenwashing. What are some forms of greenwashing that we often overlook?

- Sure. So this is an interesting question to me. I like to draw historical examples and precedents, and if there's one industry that has been really good at, I guess not greenwashing, but misleading the public, it would be the tobacco industry in the 1950s all the way up to the 2000s, and even a bit recently. So when you look at their mechanisms of how they were able to confuse the public, one of the big ones is that they invested heavily in research and they built a narrative that more researchers needed, and they invested in really good research to be clear, like they invested on research of the specific mechanisms for cancer related to air pollution, et cetera. But it was research that was distracting away from research that was trying to figure out whether cigarettes cause cancer. And so, one of the ways that we see greenwashing in our society today is how companies are funding research activities and directing our attention more so than making a misleading claim per se. And so, we have to be really careful of, well, if there's all this publicity about a specific technology, is our attention being misdirected because it is being promoted by certain special interest groups?

- Absolutely. So a lot of the statistics that you all have cited have confirmed that there is tremendous public interest in investing in sustainability, but that doesn't necessarily get us to the challenges that we see in implementing solutions for sustainability. So just curious, if you could speak to, Sreedevi, what's an example of a challenge that you faced implementing a sustainability solution and how you overcame it?

- Sure. So the Director of the Sustainable Supply Chain Lab, Dr. Josue Velasquez, he was part of this project and then eventually I joined him. So we were working with one of the largest retailers in Mexico, and they wanted us to help them with their last mile delivery operations and also the cargo consolidation. And while we were working with them, we asked them what is the strategy they follow to cater to their end consumers? Because for majority of their customers, they do fast shipping. And we said, "Is there any specific strategies?" They said, "No, as and when the order comes, we try to focus on delivering to those customers." And then we asked, like, "Do you think customers really care if we give them the right information about the impact of fast shipping? Do you think they would care and change their decision?" The company said, "Well, I do not know." They were very reluctant basically, and they said they didn't wanna lose out on their consumer base, and they said, "No, we don't want to touch that space." But then we somehow tried to convince them and we did a field experiment with them, wherein consumers, at the time of purchase, were given environmental impact information of fast shipping. And we said, "If you delay your delivery by one day or two days, or five to seven days, this is the savings in terms of emissions." And close to 70% of the consumers actually delayed their delivery, delayed their shipping. So that is one solution that we felt like we had initial resistance, but then when implemented really had fruitful results, which was pretty much in line with what Martin said that a lot of people are really interested in sustainability, they want to bring about a change.

- And willing to make certain sacrifices for it too, which, as you mentioned, a lot of companies were hesitant to explore it at first.

- On that note, I think what was interesting with the survey, which I didn't mention, is they also asked people, "How likely do you think others are to agree with you and think that sustainability is important," et cetera. And people consistently underestimated how much others were on board with what they thought was important. And so, it's exactly what you're saying of the company initially says, "Oh, I don't think our consumers and clients are gonna want this." But then, in the end, they do.

- Let the record show, let the record show. Turning to you, Martin, what are some current sustainability challenges that you would like to address with your modeling to have a real-world impact on the way a company approaches sustainability?

- Yeah, absolutely. So I'll get a tiny bit technical, but it won't be too scary.

- I trust you, I trust you. Take us through it.

- So, currently, the way companies measure their greenhouse gas emissions, their carbon emissions is there is three scopes. They use the greenhouse gas protocol, and so Scope 3 is like category three, it's where most of the emissions come from. And it's really hard to measure because basically you have to look at your supply chain and ask your suppliers, "How much do you emit?" And then that counts as your emissions. And then your suppliers have to ask their suppliers, "Well, how much do you emit?" And that counts towards your emissions, and so on. And so what happens is when companies actually try to measure their emissions in practice, is they're systematically underestimating their emissions, not because they're evil or anything like that, but just because it's really hard to go all the way up the supply chain and take ownership over the emissions from your entire supply chain. And so we have this systematic underestimation in a lot of our emissions. Now, there's other ways to measure emissions too, but they have their own problems. So in my work, what I'm hoping to do is kind of look at these different ways and see can we find a middle ground where we're both able to do something that is feasible for the companies, but maybe have, for example, a baseline that is not an underestimate that companies can start from and then from there improve their estimates. And the whole reason this is really important is that, right now, if you're a company and you wanna do the right thing, and you want to go reach out to your suppliers, suddenly your emission numbers are gonna get worse because you're taking ownership of your supply chain and you're calculating these things that previously you weren't calculating, and now your numbers go up. And so that really drives companies away from investing in their sustainability.

- One thing I would add is it might be helpful to define what the scope one, scope two, Scope 3 is for everyone. So scope one emissions is what you as a company are actually using and burning. So if you have machine in your factory and that's using gas or whatever, you're burning that on your location, that's your scope one emissions. Scope two emissions is all of your utilities, so that's very easy to track. You build those most likely. And then Scope 3 is really everything else. So that is all of, like Martin was saying, all of your suppliers, your supplier suppliers, going all the way to the raw material, which is really meant for you to be able to have visibility into what your impact is as a company. And so, if you make shoes, how much are you emitting when you go all the way back to that fabric and dying it, cutting it, all of that stuff, all the way up to the end product, and then beyond as it's getting consumed, and then, can it be recycled or not?

- This episode of "Supply Chain Frontiers" is brought to you by the Annual MIT State of Supply Chain Sustainability Survey. If you work in industry, you can help shape the future of supply chain sustainability, we invite you to respond to the 10-minute survey at sustainable.mit.edu. One of the major projects that the lab undertakes every year is the Annual State of Supply Chain Sustainability Survey, say that five times fast. Wondering if you could walk us through, Tori, what inspired the creation of the lab's Annual Sustainability Survey and how has it evolved over the years?

- So the initial survey was created by Dr. Alexis Bateman, who was a former research scientist, and at the time, she was the head of the Sustainability Initiatives at CTL. So she created the survey with the main intent of capturing best practices that companies around the world, what are their sustainable initiatives, and how do they go about that, with the large focus on sustainable sourcing and social sustainability. So over the course of the years, the survey has captured many political and global disruptions because it was actually launched in 2020. So the survey went live, I think January of 2020, so right before all the craziness of the pandemic. And with that, I think because it has lasted, we now actually have really interesting results based on what happened during the pandemic, the start of it, before things really started to change, as well as afterwards, there are different global wars, the Ukraine and Russia situation, as well as economic fears happening.

- So a lot of rich data to capture uncertainty that doesn't seem to have an end in sight for that.

- Yeah, so it's very interesting when it started and it actually is able to really track pretty interesting results. And since then we've evolved, and are able to add in over time, so it's added in different sustainability initiatives that have become more important based on what regulations are being passed, as well as climate pledges, small and medium enterprises, and many more.

- And can you share a surprising insight or trend just looking at last year's survey, as I know that one covered multiple years of data?

- Yeah, so last year, our report, we did a compilation of all of the surveys together, so we looked at everything holistically. So one of the questions is about your company's commitment to sustainability, and has that grown or decreased over the time or stayed the same? And one thing that came out that was very interesting is during the pandemic, those commitments actually grew. So, globally, everyone was actually more committed to sustainability. The following two pandemic years, as we go into 2022, we have the economic concern. So there was a lot of global concerns about a recession. And at that point, people actually started decreasing their sustainability initiatives. So I think one thing that was kind of interesting is when you look at now companies are a little bit more concerned about their capital and making sure that they have the money to be able to survive. At that point, they're decreasing some of their sustainability initiatives. We've kind of passed the economic concerns and people are actually starting to invest more in their sustainability. And then one other piece in that same bubble is as we looked at the company size, so we did this in two different ways, we looked at it globally, and then we broke those down by company size. And when you look at the company size, the smaller companies always were the ones to actually decrease their sustainability initiatives first, because, again, they have less capital. So you think during COVID, those small companies were ones that were really concerned about failing or really didn't have that longstanding capital to be able to survive.

- Just to add to what Tori mentioned about the last year survey, the highest pressure came from investors followed by governments and regulations. And another key insight, if I were to point out, is that companies that received pressure were 143% more likely to set net zero goals, and 287% more likely to make investments in sustainability-related initiatives.

- So you're saying that consumer pressure works?

- Yes, pressure from external agencies works.

- Consumer pressure, and especially investor pressure.

- Investor pressure, yeah.

- I see. And after you get all this information on this data from the companies that you survey, Tori, how does the survey shape how industry approaches sustainability?

- Yeah, so when we launched the report afterwards, so we do all of our analysis, and look at everything, and then we share that out with companies, anyone can have access to it, you can find all of the past ones on our websites, but you can go back and see those results, so then you can evaluate, I think one thing that's very interesting is we also have a question in the past about how much companies are actually investing in their sustainability initiatives, which all companies are actually investing less than they need to be to actually be meeting their goals. But as you look at it, environmental has more money put against it than social. So social, you're a lot farther away from reaching that goal where environmental we're a little bit closer, and those are kind of working together. I think social is a little bit harder for people to realize the amount of money that takes to meet some of those goals, you just think maybe they'd need to make a new commitment inside their organization versus actually putting money towards that.

- And when you say social sustainability, what kinds of things does that entail?

- So it basically points out to how you treat your employees, what kind of suppliers you deal with, is your supplier complying with some labor regulations, preventing child labor, and fair trade practices and things like that. And also, companies are obliged to work with diverse suppliers, minority-owned businesses, women-owned businesses, businesses in different regions that otherwise would not get any kind of business at all. So big companies are expected to work with such small companies, and that's part of their ESG rating. So all those contribute to social sustainability.

- And this year's survey launched on March 1st, it's open until May 30th, 2025. What is different about this year's State of Supply Chain Sustainability Survey?

- So this year we wanted to get a deeper understanding of some of the topics that are relevant for sustainability. One is in terms of the sustainability initiatives, we wanted to understand what sustainability initiatives companies are prioritizing and why, and does it vary from industry to industry? And is there any difference between industry leader and a follower? The other thing that we wanted to understand was related to Scope 3 emissions, particularly we wanted to know how companies prioritize which Scope 3 categories to focus on, and also to understand if that varies by industry, and from company to company, and to what extent companies have visibility in their supply chains to effectively track Scope 3 emissions. We also focused on understanding what third-party platforms or tools companies use to measure Scope 3 emissions, and the challenges they face and the kind of engagement methods and levers they use to deal with their suppliers both to measure and manage the Scope 3 emissions. And the third emphasis is on small and medium-sized businesses where we wanna not only understand the challenges, but whether the customers who are dealing with these small and medium-sized businesses are asking for sustainability-related information and what kind of support they're getting from these big customers and big buyers to manage their sustainability efforts. These are some broad topics that we are covering in this year.

- Absolutely. So every year you take the information and seek to improve it based on the responses that you're getting. Martin, if you were to make your case to our listeners, for those who are working in industry, why should people in industry complete the survey and who can, who are you looking for?

- Yeah, I mean, I'll start with the second, who can is really everyone. Everyone who's working in a company can complete the survey. We want information not only from the companies that are from the sustainability division of companies, but from people working in logistics or transportation, and all these other sections of the companies where we really don't have that much visibility into how they're viewing sustainability. As to why they should do it, I think anyone who's found our reports in the past helpful should definitely do it because we're gonna make another one of those reports. And importantly, this year, our report is quite different in that we've dialed in onto some of the, I guess gaps in our knowledge about how sustainability works. We've looked specifically at how can companies better share data among each other, we've looked specifically at what are the biggest challenges they face in terms of measuring Scope 3 emissions. And so, these are things that the companies themselves will be really interested in seeing the results, and that will only be possible if we have a lot of people fill out the survey, so please go fill out the survey.

- And it's in five languages. So seeking accessibility is a priority here too. Turning now toward looking forward and the future of sustainability, how should industry approach designing systems that are resilient and adaptable as climate science evolves?

- Yeah, I like your question because I think it reflects a sentiment that a lot of people have when they listen to podcasts like ours or when they talk to scientists, that there's a lot of things that are evolving in this space, and in a way that's true. And I think when you ask scientists about what they do, the first thing they go towards is like all the things they're working on, which is of course at the edge where there's still a lot of uncertainty and things that we don't know. But at the same time, I think climate science has been an established field for decades, and the fundamentals are no longer evolving. It's a fact, it's established. And so when a company looks at how they can build resilient and adaptable systems for dealing with climate change and mitigating climate change, I think the strategies are already out there. I think what needs to happen is leaders in companies to go into their company and say, "Okay, I'm gonna do this. Let me learn about it, read the things that are already out there, and then build a program," build initiatives in their company to move themselves towards those goals.

- And one of the things that can feel overwhelming for people approaching sustainability is how impossible it may feel to make a difference. But, just curious, as someone within the field, what technologies or tools are you most excited about for improving sustainability outcomes over the next, say five to 10 years?

- So there's lots of exciting things happening right now. So right now, the European Union is passing a Carbon Border Adjustment Mechanism called CBAM. And this is a policy, it's basically a tariff, but it will be proportional to your emissions, and it's for raw materials. And the reason they did this, is in Europe, they have a system where if you emit a lot, and if your factory or your big business emits a lot of greenhouse gas emissions, you have to pay a fine or a fee. But what they saw was happening is a lot of companies were just leaving the European Union because they didn't wanna pay those fines. So now what's gonna happen with this Carbon Border Adjustment Mechanism is even if you leave the European Union, if you still wanna sell products to the European Union, you're gonna have to pay that fee anyways at the border. And so, on one hand, it prevents companies from leaving the European Union, but on the other hand, it's this really cool mechanism where it's what we call a race to the top, where now other countries are incentivized to be more sustainable, to be able to sell to the European Union, and they're also incentivized to start measuring their sustainability. So you see this ripple effect across the entire world thanks to this policy. So that's a really exciting policy. And I'll give one more, which is a lot more niche, but when we talk about companies sharing their information about their sustainability, companies have thousands, sometimes tens of thousands of products, so you can't be sending emails or Excel spreadsheets, you have to have a software system to do this. And so, when you're talking about, okay, how can we interface these software systems of all these different companies so they can share data about their products and their sustainability, well, you need a standard language to do that. You need a protocol that says, "Okay, when my field is named carbon emissions with an S, and that's the field I'm gonna look at, and I'm not gonna start looking for a field that looks for carbon emission." And so, this protocol is being built right now by a consortium of companies in the European Union called Pact, And so, that's a really exciting thing as well.

- If there's any constant, especially nowadays, it's uncertainty. So just curious how you approach this from a modeling standpoint. How do you think about uncertainty when modeling environmental scenarios, especially in the face of climate change?

- So I think we can divide uncertainty in like a few different buckets. There's some forms of uncertainty that no matter what you do in terms of the modeling, you can't resolve. We won't know the price of fuel in 2050, that is just not something we can know. And so I think as a modeler, it's important to recognize sometimes there are things we cannot model, and then there's uncertainties that we maybe could find if we have the right information. As a modeler, it's really important to be able to understand what type of uncertainties you're dealing with and then when it's important, work and look at what data you can find to be able to reduce that and be able to communicate it clearly.

- And, Sreedevi, I wanna speak to something that's important to your work. Can you talk about the intersection of sustainability with equity and justice in your work and how they all work together?

- Sure, very interesting questions, it's something that's very close to my heart. So sustainability has three pillars, economic, environmental, and social. All three pillars are very important. A company cannot say that I want to focus on economic prosperity but not wanna focus on other things. And at the same time, a company cannot invest in environmental and social sustainability-related initiatives if they do not have a business model that is economically viable. So all these three pillars are important, and I strongly believe that it's important to link environmental conservation with reducing inequalities and elevating poverty. And before I joined MIT, I worked on a project that focused on over 25,000 women micro enterprises in India. Our objective was to bring in policy level changes that will basically help these women micro enterprises to thrive despite all the setbacks and challenges they face. You know, as part of the LIFT Lab, which is also called the Low Income Firms Transformation Lab, our focus is on small and micro firms in developing countries, and we develop technology and training solutions for these companies so that they increase their productivity and survival rate. And what is interesting is the Director of the Sustainable Supply Chain Lab, Dr. Josue Velasquez, is also the founder of the Lift Lab. And that clearly sums it all, how important it is to not just focus on environmental sustainability, but on social sustainability as well, and it's together.

- And really looking to make that long-term difference and give people autonomy in that regard. Thinking about not just the future of sustainability, but the lab in particular, Tori, what's next for the lab in terms of research focus or new initiatives?

- So we actually have two pretty exciting projects that we're working on. So one is, Sreedevi actually mentioned it earlier, we're partnering with the Freight Lab to create a sustainable transportation consortium. So that's working directly with people in the transportation field, so shippers, brokers, carriers, and actually looking at initiatives that we can do to actually make them become more sustainable. Is it different types of vehicles or fuel, or is it changing the network design of how our fuel is built and shared throughout the US? So that's one area that we're looking at that we're pretty excited about. Our other one that takes up so much time in the best way possible is our Scope 3 challenge consortium. So we're partnering with the CDP, which was previously known as the Carbon Disclosure Project, and that's an organization that most companies are actually disclosing their emissions on. So they have over 23,000 companies globally disclose their emissions. We're working with them as well as different high tech industry to create this consortium to help them lower their Scope 3 emissions, so different ways that they can actually get accurate information to be able to properly reduce those emissions.

- And what is the priority on Scope 3 versus the others? I know you all explained the difference before, but why a focus on Scope 3?

- Scope 3 is really the focus because it's the hardest to do. So it's very hard for companies to, like we were saying before, they actually even know what their Scope 3 emissions is because they don't have those close relationships with their suppliers, and maybe they only know their tier one suppliers, the ones that they're directly working with, but they don't know anywhere past that, so they don't know their supplier suppliers. And because this goes all the way down to the raw material, really a company, your company is responsible for those emissions. You wouldn't be mining some mineral if it wasn't to make that product. So your company has a responsibility to learn and to know what those emissions are, and you can then start reporting it. So until you actually do the work, you can't determine which supplier is the highest emitter, and maybe work with that supplier to then put solar panels on their building or do things in a different way because you don't have any visibility to that, you can't take any sort of action.

- Also, adding to that point, Scope 3 emissions contribute to over 75 to 80% of the overall emissions of a company, and that's why it's more important to focus on that.

- Yeah, that's incredible. So up to this point, it's been a kind of out of sight, out of mind if you're not aware of your Scope 3 emissions and having to face that first. Thank you all so much for joining me this episode.

- Thank you so much for having us

- Thank you so much. This was great.

- Thank you so much, Mackenzie, for having us and for all those insightful discussions.

- That wraps up this episode of "Supply Chain Frontiers." A big thank you to Tori Arnold, Sreedevi Rajogopalan, and Martin Staadecker for sharing their expertise and insights into sustainability. To learn more about the Supply Chain Sustainability Lab and the research discussed today, visit sustainable.mit.edu. "Supply Chain Frontiers" is recorded on the MIT campus in Cambridge, Massachusetts. Our sound editors are Dave Lishansky and Danielle Simpson at David Benjamin Sound. And our audio engineer today is Kurt Schneider of MIT Audio Visual Services. Our producer is myself, Mackenzie Berry. Be sure to check out our previous episodes of "Supply Chain Frontiers" at ctl.mit.edu/podcast or search for us on your preferred podcast platform. If you enjoyed this episode, please subscribe and let us know what you think and what you'd like to hear in the future by reaching us at sefrontiers@mit.edu. Your feedback keeps us motivated to bring you the latest in supply chain innovation. I'm Mackenzie Berry, thanks for listening, and we'll catch you next time on "Supply Chain Frontiers."