Sustainability has shifted from a voluntary corporate ambition to a defining factor of industrial competitiveness and business continuity. In the European Union, climate policy and the broader Green Deal agenda have accelerated regulatory developments that increasingly require companies, especially in manufacturing, to collect, manage, and report sustainability information in a structured way. At the same time, sustainability is no longer driven only by legislation. It is also demanded by customers, financiers, and other stakeholders, making responsible operations a prerequisite for legitimacy in global markets.
A central challenge in this transformation lies in supply chains. Manufacturing companies’ most significant sustainability impacts often occur outside their own operations, embedded in upstream supplier networks. My thesis, Sustainability Risks in Supplier Networks in the Manufacturing Industry highlights that supplier network sustainability should be an integral part of a manufacturing company’s risk management. For example, supply-chain (Scope 3) emissions can greatly exceed a company’s direct emissions (Scope 1 and Scope 2), which underscores why supply-chain responsibility has become a core strategic and risk management concern. When sustainability risks in supplier networks are poorly understood or insufficiently managed, they may materialize as reputational crises, weakened customer relationships, and ultimately disruptions to business continuity and value creation.
Despite the rising strategic importance of responsible supply chains, many manufacturing companies face a practical and managerial gap where they do not always have sufficient visibility and structured understanding of the sustainability risks embedded in their supplier networks to systematically identify, classify, assess, and manage them. This gap is intensified by the increasing EU-, customer-, financier- and other stakeholders driven requirements to collect and report sustainability information across the value chain, which makes reliable supplier data and transparent practices essential. As a result, manufacturing firms may be exposed to sustainability risks that are difficult to anticipate and govern, even when they recognize responsibility as strategically important. Furthermore, sustainability risks are often approached primarily as downside threats (“pure risks”), even though a more modern risk management view suggests they can also carry opportunity potential (“speculative” upside) if uncertainty is managed proactively.
The thesis interviews show a strong consensus that sustainability is not an isolated initiative but is increasingly embedded in company values, strategy, and everyday operations, particularly in supplier management. Decision-relevant findings indicate that supplier-network sustainability risks are perceived as material and multi-dimensional, and can be structured into social, economic, and environmental categories to support more systematic management. Social risks center on human-rights and ethical violations and a persistent visibility gap (limitations of remote audits and challenges verifying supplier realities). Economic risks include customer-driven requirements, supplier dependency, supplier financial stability, and supplier reporting capability, all of which can translate quickly into lost business or disruption if unmanaged. Environmental risks emphasize Scope 3 pressures, growing EU documentation/regulatory demands, and climate/location exposure, while logistics constraints can make some impacts difficult to avoid.
Across categories, reputation and value conflicts emerge as cross-cutting, high-consequence risk pathways. Companies respond through supplier selection criteria, audits, Code of Conduct requirements, continuous updates to evaluation practices, and willingness to switch suppliers when severe issues arise. Crucially, interviewees also view sustainability as a competitiveness lever enabling customer trust, deal eligibility, stronger relationships, and future efficiency gains rather than only a compliance burden, and that’s why the sustainable supply chain acts as competitive growth driver for manufacturing industry companies.
Samuli Hämäläinen
Customer Success Manager, Jakamo
