Question: analysis and comment for the below Question 1 The Tragedy of the Commons in supply chain sustainability describes the situation in which individual companies prioritize
analysis and comment for the below
Question
The "Tragedy of the Commons" in supply chain sustainability describes the situation in which individual companies prioritize their own shortterm gainsfor example, cutting costs by engaging in unsustainable sourcing practices or overusing environmental resourceswhile the longterm environmental and social costs are borne by all, by depleting shared resources like clean air and water and biodiversity. Companies operate under a builtin defense since, in a global supply chain, no one company bears the full burden of environmental injury, which lessens the incentive to change to a sustainable outcome without intervention.
In order to address this problem, it is important to implement mutually coercive mechanisms to induce the private incentive to engage in the good of the public. Mutually coercive mechanisms include, among other things, governments regulating environmental or labor standards; using marketbased mechanisms such as carbon taxes or capandtrade schemes that create a cost for pollution and then reduce the overall pollution; or the development of industrywide sustainability certification schemes that at least guarantee a minimum environmental or social performance as part of their standards. These mutually coercive mechanisms also help to incentivize unsustainable practices that entail costs, or unsustainable practices that provide benefits, in addition to improving the business and environmental landscape of the entire supply chain operation longterm, while enhancing overall sustainability principles and shared responsibility.
Question
Apple Inc. has improved supply chain sustainability by using renewable energy at all corporate facilities and financially supporting its suppliers' commitment to renewable energy through its Clean Energy Program. They have strict sourcing standards, which they enforce through audits, and are developing packaging design that minimizes emissions associated with transportation activities. Apple leverages strong data systems to track sustainability metrics. However, the company does face challenges in social sustainability, with some difficulty recognizing and tracking compliance among lowertier suppliers in developing countries in regard to labor and human rights practices.
Unilever fully embeds sustainability into the way it sources materials and the way it operates its facilities and manages inventory. Unilever sources key raw materials, including palm oil and tea, in a sustainable manner, decreases its emissions and waste through manufacturing, and aims for zero waste to landfill. Unilever engages in social sustainability initiatives relating to health and gender equity. Unilever's challenge is the consistent measuring and reporting of sustainability of their sustainability initiatives across their countless suppliers which also limits transparency and verification.
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