Driving sustainable supply chains: empowering social responsibility and environmental excellence amid uncertainty

Purpose This study investigates how consumer awareness of environmental and social issues affects retail channels. It proposes a win-win contract designed to motivate manufacturers and retailers to produce environmentally friendly products in a socially responsible manner. Notably, this research considers the uncertainty about consumers’ social awareness levels. Design/methodology/approach This study analyzes a model of a supply chain where a retailer procures products from a manufacturer to fulfill fluctuating demand influenced by consumer preferences for eco-friendly and socially responsible goods. The research conducts a comparative analysis between the optimal first-best solution and the suboptimal second-best solution to characterize the inefficiencies within the supply chain. Findings Lack of coordination in a socially and environmentally conscious market can harm profitability. Collaboration among supply chain parties enhances both sustainability and profitability, underscoring the importance of equitable surplus-sharing through appropriate contracts. Practical implications This study underscores the importance of collaboration among supply chain stakeholders to enhance performance for all parties involved. It offers valuable insights into the collective optimization of sustainability, profitability and social responsibility objectives, addressing the challenges of the complex business landscape. Originality/value This study enhances the current body of literature on sustainable supply chain management by integrating green and social initiatives while considering the uncertain reaction of consumers to the social initiatives of the supply chain. Considering the limited exploration of social factors in retail channels, it is essential to incorporate the stochastic aspects of these factors to gain a deeper understanding of their impact.