How ESG data can give you better visibility of your supply chain 

03 May 2023 

ESG supply chain 1[23]

More and more businesses are looking into their own environmental, social and governance (ESG) performance in order to understand how they can better serve and appeal to their consumers, investors and stakeholders. But how can ESG data be used to better understand the supply chain?  

A holistic view of ESG 

A properly implemented ESG strategy usually begins with a materiality assessment, designed to provide you with a better understanding of where you are as a business so you can identity the areas you need to focus on. And there are many reasons why it’s critical to focus on improving your sustainability credentials; having a structured and proactive approach to monitoring ESG performance can often be linked with better staff retention, happier employees, and an increase in overall company value.  

Reviewing your own performance should always be the starting point on any ESG journey. But while many businesses are now implementing strategies built on their own operational insights, there is an increasing demand from employees, consumers, and investors for companies to be more transparent and accountable across the entire supply chain.  

It’s not enough to say your business is committed to ESG best practices if a large part of your supply chain isn’t. Stakeholders are increasingly switched on when it comes to environmental, social and governance issues and their expectations can often go far beyond your own business.  

ESG & the supply chain 

According to a December 2022 study by the Sustainability Consortium, less than one-fifth of respondents had a comprehensive view of their supply chain’s sustainability performance. One of the contributing reasons for this could be due to the fact that monitoring and reporting on ESG factors across the supply chain can be quite difficult (if you don’t have an established monitoring and reporting system in place).  

Whether you are a global organisation working with multiple suppliers in different locations or a smaller outfit with a shorter supply chain, gathering data can be challenging. Getting a transparent and honest view of all parts of your supply chain will require an open and honest supplier relationship where your suppliers evaluate their impact and share this data with you. Utilising an intuitive technology platform to aggregate and automate some of this data can also increase efficiency and accuracy – something Sustainion can help with. 

How to assess your supply chain 

To successfully integrate ESG into a supply chain management strategy, you need to first assess the potential risks and opportunities across your supply chain.  

You can do this by auditing suppliers, asking for sustainability reporting, and through increased stakeholder engagement. You can then set targets and goals to track progress and identify any areas for improvement.  

With a clearly defined strategy, an engaged supplier list and key stakeholders to gather data (and with ESG goals built around shared values and standards), you can start to get the information you need. This could include everything from good working conditions and fair pay to environmentally-led manufacturing processes, suppliers working within legal and ethical boundaries or low emissions outputs.   

Scope 3 emissions  

Alarmingly, Scope 3 can account for up to 80% of your company’s overall greenhouse gas emissions. Examples include materials and goods you purchase, your investments, waste disposal and transport. With only 25% of companies that report CO2 emissions to CDP saying they had engaged with their suppliers in efforts to reduce emissions, there is clearly a data gap that needs filling.  

It’s important to track and monitor emissions outside of your organisation to both reduce your environmental impact and meet your goals. Taking a holistic approach to ESG reporting can provide you with much better visibility, enabling you to make more informed decisions and find more responsible ways of doing business. 

How to get started 

Monitoring the impact of all ESG factors across your supply chain isn’t without its challenges. But tracking and monitoring these will give you a much wider view of your impact and help you understand the steps you can take to improve it (and in turn improve business efficiency and profitability).  

Not only can reporting help you spot areas for improvement for people and the planet, it can also open up new opportunities to get ahead of the competition in your industry.  

At Turnkey, we have the technology and expertise to help you understand and take action on data from across your entire supply chain. Our advisory team can help you understand what areas you need to look at to meet your goals, and how to interpret the data you collect to make a positive impact.  

Our team is here to guide you through the process alongside our technology platform, which can collate real-time information into easy-to-digest reports so you can clearly see where the risks are in your business and where there are opportunities for improvement. Mitigating risk is essential if you’re looking to attract investment, boost the value of your business and create a roadmap for the future. 

To find out more, contact our team today or try the platform. 

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