Despite the heightened interest in the ESG (environmental, social and governance) agenda from governments, consumers and NGOs alike, astonishingly almost three quarters (73%) of businesses cannot tell if their suppliers meet any kind of ESG standards, including their own.
To provide some guidance for organisations seeking to improve the collection and analysis of ESG data across the supply chain, we hope this article will help to explain common challenges relating to this topic, and outline how supply chain software can collate ESG data and transform it into actionable insight for your business.
The ESG data dilemma
The realm of ESG is all encompassing, and understandably, this can seem overwhelming for companies when it comes to knowing where, and what data collection to tackle first.
From capturing data on scope 3 emissions, deforestation risk, water usage, waste, diversity, labour practices, modern slavery, and much more, the list can seem never ending.
Focusing on issues most pressing to your business operations or reputation and current or forthcoming regulatory requirements targeting your industry is often a useful place to start. And of course, discussing organisational strategy with all relevant internal functions including procurement, sourcing, ethics, technical and IT is essential to ensure all data requirements are captured.
ESG data systems absent or disjointed
Collating ESG data is the first hurdle to overcome, with many businesses (57%) believing their ability to assess risk and compliance in this area needed to be improved, while 6% had no ability or system in place to do this at all.
If businesses do have a data collection and supplier management solution in place, almost half (49%) still cite that a lack of data sharing is the top factor preventing them from accurately assessing suppliers’ ESG actions. But it doesn’t have to be.
Considering a supply chain transparency platform, like Authenticate, built on building visibility of your supplier networks in the first instance, can be a useful first step on your ESG data gathering journey and is critical to stay ahead of the curve.
With 65% of top quartile performers scaling data and analytics over the last two years according to the latest McKinsey IT Survey, businesses failing to implement digital data solutions risk being left behind.
Engaging suppliers on ESG data sharing
Once you have a suitable supplier data collection software solution in place, the next challenge can be engaging with them effectively to understand and address the risks and issues that matter.
This is echoed by findings in global disclosure charity, CDP’s, 2021 Global Supply Chain Report, highlighted below:
- Just 38% companies engaging with suppliers on climate issues
- Only 20% are reporting on scope 3 (supply chain) emissions
- Less than half (47%) of businesses working beyond tier 1 to mitigate deforestation risk
By using supplier management and supply chain transparency technology such as Authenticate, businesses are able to capture a range of ESG data directly from suppliers – ranging from product details, company profiles, location and much more to start uncovering risks.
Without housing all this data in a secure, centralised system, and using it to facilitate conversations with direct and indirect suppliers, it can be near impossible to access the actionable insight needed to make positive improvements and reduce impact to build a more sustainably focused future.
Leveraging ESG data analysis solutions
Implementing supplier data capture technology for a range of information, including ESG is essential if your business is keen to accelerate ESG ambitions and initiatives.
Our suite of scalable digital tools, combined with third party data overlays and integrations with other IT systems provide a useful starting point to transform manual processes and disjointed data into a transparent system, accessed both by internal stakeholders and suppliers alike. These include:
- Supply Chain Mapping – uncover indirect suppliers beneath tier 1, all the way back to source for full ESG data and risk visibility.
- Audits & Assessments – create bespoke supplier surveys to monitor compliance, and assess ESG risk from anywhere in the world.
- Certifications – access supplier assurance status at the touch of a button against key ESG schemes including Sedex, Global GAP, Fairtrade, RSPO and much more.
- Document Management – share company and request supplier sustainability policies, modern slavery statements and much more in a secure, audited environment.
- KPIs – capture performance data at defined intervals against bespoke KPIs to monitor supplier progress against company goals and initiatives – from plastics and scope 3 emissions, to animal welfare and waste.
- ESG Maturity Assessment – understand supplier performance against critical ESG issues by requesting and accessing the data contained in our standardised, validated assessment, created in partnership with global sustainability consultancy, Anthesis.
- Dashboards – let our platform do the hard work for you by transforming ESG data, captured across the various modules, into interactive dashboards, to inform decision making.
Interested in optimising your ESG supply chain data collection processes? Contact our friendly team today to request a platform demo and start accelerating progress against your company sustainability initiatives.