Toward environmentally sustainable supply chains: How contract management can help companies along their transformation journey

Abstract

With the European Union having set ambitious environmental policy targets, company executives face mounting pressure to reach their sustainability goals. While expanding the contract-management process's utilization may hold promise for accelerating sustainable development throughout the contract lifecycle (from the pre-award through the post-award phase), the literature has afforded it little attention. Building on contingency theory and a qualitative multiple-case-study method, the paper examines how the contract-management process could proactively enhance the necessary shift to environmentally sustainable supply chains. Further, the authors explore whether contract management as a contingency variable could exert a positive influence on the sustainability practices followed in supply-chain relationships and, thereby, on sustainability performance. The preliminary findings indicate that, while expanded utilization of contract management remains modest, it already shows potential as a future success factor for companies on their journey of transformation in pursuit of sustainable supply-chain relationships. As a contingency factor, contract management might be able to make an impact by embedding sustainability in the contract process from the supplier-selection phase onward while also contributing to the final contract's solid inclusion of sustainability-related duties for the parties, whether in the main contract or via appendices. Accordingly, the authors suggest multiple, parallel avenues for future development.