Did you know that despite heightened interest in the ESG (environmental, social, and governance) agenda from governments, over 70% of businesses are uncertain about whether their suppliers meet any kind of ESG standards – including their own?
This article aims to help you understand how to improve ESG data collection and analysis in the supply chain. We’ll discuss common challenges, as well as how supply chain software can transform data into actionable insight.
ESG encompasses a wide spectrum of ideas, which can be overwhelming for businesses hoping to improve their data collection practices. Understanding where to begin and which aspects to prioritise is a common challenge.
From scope 3 emissions, deforestation, water depletion, waste management, diversity, labour practices, modern slavery, and many more; the data collection list can feel never-ending.
To begin, focus on the issues that are most important to your business operations. Consider how these can be aligned with industry-specific regulations that are already in place or due to be implemented soon.
To make sure data collection requirements are met, it’s important to cover important internal functions like procurement, sourcing, ethics, technical, and IT.
When it comes to ESG, the first hurdle for many is data collection itself. A sizable 57% of businesses have acknowledged a need to enhance their ability to assess risk and compliance in this area – with around 6% lacking any procedure or system to address this challenge.
Even amongst businesses equipped with data collection and supplier management systems, almost 50% identify a lack of data sharing as the primary obstacle to accurately evaluate suppliers’ ESG efforts – but it doesn’t have to be.
Supply chain transparency platforms like Authenticate – which prioritise and facilitate visibility within supplier networks – provide the first strategic stepping-stone in your ESG data journey and can help you stay ahead of the curve in the evolving business landscape.
As highlighted in a recent insight from McKinsey; for a company or organisation to be classified as ‘forward-looking’, they must approach ESG in a ‘rigorous, strategy-driven, socially attuned way’.
If businesses hesitate to implement ESG in meaningful ways, they risk falling behind the competition and missing valuable growth opportunities.
Once a suitable data collection solution is in place, the next pivotal challenge arises:
How can businesses effectively engage with suppliers to understand and prioritise the most pertinent risks and concerns?
This challenge is underscored by findings from global disclosure non-profit CDP, who identified several ECG shortcomings in their 2022 Global Supply Chain Report:
However, this report did detail a general uptake in supply chain data collection and disclosure by companies aspiring to meet ESG demands across the board – signifying a global spike in interest from corporations (when compared to statistics from their 2021 report).
Utilising supply chain management and transparency solutions, like Authenticate, allows businesses to directly compile a range of ESG data points from across their supplier network.
By storing this data in a secure, centralised system, it can be analysed and used to facilitate conversations with direct and indirect suppliers alike. This allows businesses to access the actionable insights they need to introduce impactful improvements within the supply chain and promote a more sustainably focused future.
If your business or organisation aspires to engage with and contribute to ESG initiatives, integrating a quality supplier data collection solution (which encompasses ESG data) is a must.
Our range of scalable digital tools, combined with third-party overlays and seamless IT system integration, supplies the framework to streamline manual processes and consolidate data into one transparent system – serving suppliers and stakeholders alike.
Ready to revolutionise your ESG and Supply Chain data collection?
Chat with us today and request your platform demo to start transforming your supply chain and sustainability goals today.