Understanding why firms should invest in sustainable supply chains: a complexity approach

This paper explores why firms should include sustainable development considerations in supply chains as a means of improving social and environmental impacts of production systems. The recognition of financial, social and environmental elements however creates greater complexity, which makes optimisation approaches to sustainable supply chain problems infeasible. We frame our analysis using Kauffman's (1993) NK theory, with interactions among financial, social and environmental elements identified through empirical research conducted in Brazilian oil and gas, sugarcane ethanol and biodiesel supply chains. We use a matrix of interactions (Baldwin and Clark 1999) as a template, allowing for the identification of key financial, social and environmental elements and their interconnections within and between supply chains. We contribute by arguing that firms focusing on individual sustainable development elements independently are unlikely to find satisfactory solutions to their sustainable supply chain problems. We further argue that certain sectors have a propensity to be socially exclusive, whereas others are potentially socially inclusive; in such cases, firms operating in exclusive sectors may be able to find satisfactory solutions to their broader sustainability strategies by investing in the social and environmental performance of other supply chains.