Literature Review – Sustainable Supply Chain Management Practices

Introduction

Supply chains, rather than the individual firm, are now widely accepted as the locus of most corporate environmental and social impact. The greenhouse gas emissions, waste and labour conditions associated with a product are overwhelmingly generated upstream, among suppliers and sub-suppliers that a focal firm does not own and often cannot see. Sustainable supply chain management (SSCM) is the field that governs these impacts, and over the past two decades it has moved from a peripheral concern to a mainstream expectation of large Australian organisations.

Two early contributions continue to frame the field. Seuring and Müller (2008) synthesised almost two decades of research and defined SSCM as the management of material, information and capital flows along the supply chain while integrating goals from all three dimensions of sustainable development. Carter and Rogers (2008) located SSCM explicitly within the triple bottom line, arguing that firms which pursue environmental, social and economic goals together outperform those that treat sustainability as an add-on.

The Australian regulatory setting has sharpened the relevance of this literature. Large entities must now prepare climate-related financial disclosures under the Australian Accounting Standards Board standard AASB S2, which adopts the International Sustainability Standards Board (ISSB) baseline and, for many Australian Securities Exchange (ASX) listed companies, requires disclosure of material Scope 3 emissions (AASB 2024). The Modern Slavery Act 2018 (Cth) obliges large entities to report on the risk of modern slavery in their operations and supply chains, while the National Waste Policy and the National Greenhouse and Energy Reporting scheme add further obligations. What was once voluntary good practice is becoming a compliance expectation.

This review examines the SSCM literature published between 2004 and 2024, organised into six themes: green procurement and supplier management; circularity and reverse logistics; Scope 3 emissions and their measurement; drivers and barriers; performance outcomes; and modern slavery and social sustainability. It synthesises what is known, identifies where the evidence is contested or thin, and draws out implications for Australian firms operating under the emerging disclosure regime.

Search Strategy

Peer-reviewed literature was identified through Scopus, Business Source Complete, Emerald Insight and ScienceDirect for the period 2004 to 2024. Search strings combined (“sustainable supply chain” OR “green supply chain” OR “closed-loop supply chain”) with (procurement OR “reverse logistics” OR “scope 3” OR “modern slavery” OR performance). Grey literature was drawn from Australian government sources, including the Department of Climate Change, Energy, the Environment and Water (DCCEEW), the Clean Energy Regulator, the Australian Bureau of Statistics (ABS) and the AASB, to anchor the international literature in the Australian regulatory and empirical context. Priority was given to highly cited reviews and empirical studies in established operations and sustainability journals. Table 1 summarises the eight studies most central to the synthesis that follows.

Table 1: Summary of key studies included in the review

Green Procurement and Supplier Management

Green procurement, the incorporation of environmental criteria into purchasing decisions, is the most established SSCM practice and the point at which most firms begin. In an early and influential survey of 186 Chinese manufacturers, Zhu and Sarkis (2004) found that green purchasing, supplier environmental evaluation and cooperation with suppliers on environmental objectives were associated with improved environmental and economic performance. Critically, these gains were moderated by a firm’s existing quality and just-in-time management capability, a qualification that recurs throughout the literature: sustainable practices deliver returns when built on operational competence rather than adopted in isolation.

Seuring and Müller (2008) distinguished two dominant strategies within the field. The first, supplier management for risks and performance, uses codes of conduct, sustainability criteria in supplier selection, and audits to manage the risks that suppliers pose. The second, supply chain management for sustainable products, works backwards from product requirements to design cleaner processes across the chain. As shown in Table 1, their review also documented that environmental issues received far more attention than social ones, an imbalance that later scholarship has only partly corrected.

The limitations of supplier management have become clearer over time. Codes of conduct and audits concentrate on first-tier suppliers, yet the most serious environmental and social risks frequently sit further upstream, among suppliers with whom the focal firm has no direct relationship (Carter and Rogers 2008). Audits are also vulnerable to declining returns, as suppliers learn to present compliant documentation without changing underlying practice. Contemporary scholarship therefore emphasises supplier development and collaboration rather than compliance monitoring alone.

Circularity and Reverse Logistics

A second theme reframes the supply chain as a loop rather than a line. Reverse logistics, the movement of products, components and materials back from the point of consumption for reuse, remanufacturing or recycling, is the operational core of the circular economy. In a systematic review of 382 articles, Govindan, Soleimani and Kannan (2015) mapped the maturing literature on reverse logistics and closed-loop supply chains, finding that quantitative network-design and product-recovery models dominated while social dimensions and empirical validation remained underdeveloped.

The Australian policy context gives this theme particular urgency. The National Waste Policy sets the strategic direction for a circular economy, including a headline target to recover 80 per cent of resources from waste by 2030. ABS data indicate that Australia generated approximately 76 million tonnes of waste in a recent reporting year, underscoring the scale of the material flows involved (ABS 2023; DCCEEW 2023). Product stewardship and container deposit schemes are shifting responsibility for end-of-life products back towards producers, requiring firms to operate reverse logistics networks they have not previously run. The barriers are well documented: the uncertain timing and quality of returned goods, the cost of collection and sorting, and the difficulty of establishing viable secondary markets.

Scope 3 Emissions and Measurement

Perhaps the most consequential recent development is the shift of attention from a firm’s own emissions to those embedded in its value chain. Under the Greenhouse Gas Protocol, Scope 3 emissions encompass indirect emissions from purchased goods and services, transport, the use of sold products and end-of-life treatment (WBCSD and WRI 2011). For most firms these value chain emissions dwarf the direct (Scope 1) and energy-related (Scope 2) emissions that traditional reporting captures, so a credible decarbonisation strategy is largely a supply chain problem.

Measurement, however, remains difficult. In an Australian study that retains its relevance, Downie and Stubbs (2013) found Scope 3 assessment to be selective and inconsistent: firms set boundaries pragmatically around the categories they could measure and cited poor supplier data availability as the binding constraint. The National Greenhouse and Energy Reporting scheme administered by the Clean Energy Regulator captures Scope 1 and Scope 2 emissions but not the full breadth of Scope 3 (Clean Energy Regulator 2024). That gap is now closing, because AASB S2 requires reporting entities to disclose material Scope 3 emissions subject to phased timing and reasonable-steps provisions (AASB 2024). The obligation surfaces persistent methodological problems, including reliance on spend-based rather than activity-based data, double counting across firms, and dependence on supplier figures of uneven quality.

Drivers and Barriers

Why firms adopt, or fail to adopt, sustainable supply chain practices has generated a substantial literature of its own. In a widely cited study of public and private organisations, Walker, Di Sisto and McBain (2008) distinguished internal drivers, such as organisational values and the pursuit of cost reduction, from external drivers, such as regulation, customer expectations and investor pressure. They identified corresponding barriers, including cost, weak supplier commitment and a perceived lack of legitimacy for environmental initiatives.

In the Australian setting these external drivers have intensified. Institutional investors, including large superannuation funds, increasingly scrutinise the sustainability of the companies they hold, and mandatory climate disclosure gives that scrutiny a standardised evidence base (AASB 2024). For small and medium enterprises, however, the barriers Walker and colleagues identified remain acute: limited resources, thin bargaining power over larger suppliers, and the absence of dedicated sustainability expertise. The balance of drivers and barriers is therefore uneven, weighted towards large listed firms that face the most direct regulatory and investor pressure.

Performance Outcomes

A recurring question is whether sustainability in the supply chain pays. The most robust synthesis is the meta-analysis by Golicic and Smith (2013), which pooled results from 31 studies and found a consistently positive relationship between environmentally sustainable supply chain practices and firm performance across market-based, operational and accounting-based measures. The relationship was positive in direction but variable in magnitude, which suggests that the business case is real yet contingent rather than automatic.

That contingency echoes Zhu and Sarkis (2004), whose results depended on complementary management capabilities, and it cautions against the simple win-win rhetoric that characterised early advocacy. The performance benefit appears strongest where sustainable practices are integrated with existing operational strengths, where they reduce genuine resource costs or risks, and where markets or regulators reward them. The practical implication is that SSCM is a capability to be developed over time rather than a set of projects with guaranteed short-term returns.

Modern Slavery and Social Sustainability

The social dimension of SSCM, long the junior partner to environmental concerns, has moved sharply up the agenda. Seuring and Müller (2008) had already observed that social issues were comparatively neglected, and Gold, Trautrims and Trodd (2015) crystallised the most confronting element of that neglect in their analysis of modern slavery. They argued that forced labour and exploitation typically occur in the lower, least visible tiers, where first-tier auditing cannot reach, and that meaningful detection and remediation require multi-tier visibility, community engagement and supplier capability building rather than audit alone.

Australian regulation has responded directly. The Modern Slavery Act 2018 (Cth) requires entities with annual consolidated revenue of at least A$100 million to publish an annual statement against six mandatory criteria, including the modern slavery risks in their operations and supply chains and the actions taken to address them. Statements are lodged on a public register, a transparency mechanism intended to drive improvement through reputational accountability. Commentary has been mixed: the model has raised awareness and prompted internal risk mapping, but its reliance on statements without financial penalties for inaction has drawn criticism, and the statutory review of the Act recommended strengthening its enforcement provisions. The broader social agenda, encompassing living wages, work health and safety and the rights of vulnerable workers, remains less theorised and measured than its environmental counterpart.

Synthesis and Gaps

Figure 1 draws the six themes into a single framework. External drivers and Australian regulation exert pressure on the focal firm, which responds through four interlocking practice areas: green procurement, circularity and reverse logistics, Scope 3 measurement, and social sustainability including modern slavery due diligence. These practices shape performance across the triple bottom line, and the outcomes feed back into the firm’s drivers and capabilities through investor, regulatory and market responses.

Read together, the literature supports several conclusions. First, the field has matured well beyond its environmental origins, yet the environmental pillar, and particularly first-tier supplier management, remains far better developed than the social pillar. Second, the recurring frontier across every theme is visibility: whether the concern is Scope 3 emissions, circular material flows or modern slavery, the binding constraint is the focal firm’s limited sight of, and influence over, suppliers beyond the first tier (Downie and Stubbs 2013; Gold, Trautrims and Trodd 2015). Third, the performance case is genuine but conditional, dependent on complementary capabilities and supportive market and regulatory signals (Golicic and Smith 2013).

Several gaps warrant attention. Multi-tier research remains scarce despite widespread agreement that lower tiers carry the greatest risk. Social sustainability lacks the measurement infrastructure that environmental reporting now enjoys. Australian-specific empirical evidence is limited and, for Scope 3, somewhat dated, given how rapidly the disclosure landscape has changed since Downie and Stubbs (2013). Evidence on small and medium enterprises, which make up the bulk of most supply chains, is thin. Finally, whether disclosure-based regulation actually changes conditions in upstream tiers is an open empirical question of direct relevance to the Australian regime.

Implications for Australian Firms

For Australian firms the practical message is that the previously separate strands of SSCM are converging into a single, increasingly mandatory agenda. Climate disclosure under AASB S2, modern slavery reporting, and waste and energy reporting obligations collectively require firms to see, measure and act upon conditions deep in their supply chains (AASB 2024; Clean Energy Regulator 2024). The literature points to several priorities. Firms should invest in supplier data systems capable of activity-based rather than crude spend-based Scope 3 measurement. They should integrate the procurement, sustainability and risk functions that have often operated separately, since the same supplier relationships underpin emissions, circularity and modern slavery outcomes. They should extend due diligence beyond the first tier, using collaboration and capability building where audit cannot reach, and prepare for external assurance of sustainability data. The best-positioned firms are those that treat these obligations not as discrete compliance tasks but as a single supply chain visibility capability.

Conclusion

The sustainable supply chain management literature has developed from broad conceptual framings into a differentiated body of work spanning procurement, circularity, carbon measurement and social sustainability. Its consistent lessons are that sustainability is realised or lost in the supply chain rather than at the firm boundary, that the persistent obstacle is limited visibility beyond the first tier, and that the performance benefits are real but contingent on capability and context. In Australia, a maturing framework of mandatory disclosure has begun to codify these insights, turning what the literature long recommended into regulatory expectation. The most valuable future research will be multi-tier, socially inclusive and empirically grounded in the Australian setting, testing in particular whether the country’s disclosure-based regime produces measurable improvement in the upstream conditions it seeks to govern.

References

Australian Accounting Standards Board (AASB) 2024, AASB S2 Climate-related Disclosures, AASB, Melbourne.

Australian Bureau of Statistics (ABS) 2023, Waste Account, Australia, experimental estimates, cat. no. 4602.0.55.005, ABS, Canberra.

Carter, CR & Rogers, DS 2008, ‘A framework of sustainable supply chain management: moving toward new theory’, International Journal of Physical Distribution & Logistics Management, vol. 38, no. 5, pp. 360-387.

Clean Energy Regulator 2024, National Greenhouse and Energy Reporting scheme: published data 2022-23, Australian Government, Canberra.

Department of Climate Change, Energy, the Environment and Water (DCCEEW) 2023, National Waste Report 2022, Australian Government, Canberra.

Downie, J & Stubbs, W 2013, ‘Evaluation of Australian companies’ scope 3 greenhouse gas emissions assessments’, Journal of Cleaner Production, vol. 56, pp. 156-163.

Gold, S, Trautrims, A & Trodd, Z 2015, ‘Modern slavery challenges to supply chain management’, Supply Chain Management: An International Journal, vol. 20, no. 5, pp. 485-494.

Golicic, SL & Smith, CD 2013, ‘A meta-analysis of environmentally sustainable supply chain management practices and firm performance’, Journal of Supply Chain Management, vol. 49, no. 2, pp. 78-95.

Govindan, K, Soleimani, H & Kannan, D 2015, ‘Reverse logistics and closed-loop supply chain: a comprehensive review to explore the future’, European Journal of Operational Research, vol. 240, no. 3, pp. 603-626.

Modern Slavery Act 2018 (Cth).

Seuring, S & Müller, M 2008, ‘From a literature review to a conceptual framework for sustainable supply chain management’, Journal of Cleaner Production, vol. 16, no. 15, pp. 1699-1710.

Walker, H, Di Sisto, L & McBain, D 2008, ‘Drivers and barriers to environmental supply chain management practices: lessons from the public and private sectors’, Journal of Purchasing and Supply Management, vol. 14, no. 1, pp. 69-85.

World Business Council for Sustainable Development & World Resources Institute (WBCSD & WRI) 2011, Corporate value chain (scope 3) accounting and reporting standard, WBCSD & WRI, Geneva.

Zhu, Q & Sarkis, J 2004, ‘Relationships between operational practices and performance among early adopters of green supply chain management practices in Chinese manufacturing enterprises’, Journal of Operations Management, vol. 22, no. 3, pp. 265-289.