Early in April, IETP partnered with the Procurement & Supply Chain: Risk & Resilience Conference, by offering our members the opportunity to enjoy high-level case studies and network with a diverse range of fellow professionals. The 2-day hybrid event brought together industry leaders & experts from a wide variety of different industries to discuss the importance of a range of topics within the sphere of Supply Chain & Procurement.
One topic, however, was raised more frequently than any other in both the presentations from speakers and in the questions posed by attendees: the topic of Environmental Sustainability.
A significant challenge - Tracking scope 3 emissions
When we talk about supply chain emissions, we often refer to them by category: scope 1, scope 2 & scope 3. Scope 1 emissions are the Greenhouse Gas (GHG) emissions directly produced from operations that are owned or controlled by the reporting company. Scope 2 are the indirect GHG emissions from the generation of purchased or acquired electricity, steam, heating, or cooling consumed by the reporting company. All the remaining indirect GHG emissions, not included in scope 2, are referred to as scope 3. These are the indirect emissions resulting from the activities of assets not owned or controlled by the reporting organization, but that the organization indirectly impacts in its value chain.
At this year's Risk & Resilience Conference, Mark Perera, CEO of Vizibl, discussed the complexity of supply chain sustainability. He informed attendees of the sheer scale of the carbon crisis in procurement, sharing that 80% of emissions are scope 3. This figure is of concerning size given the lack of insight and direct control organisations have over scope 3 emissions. This makes the tracking, measuring and reduction of scope 3 emissions one of the biggest challenges organisations face today.
Barriers and pressure to take ESG action
Many organisations struggle to make good headway in identifying and reporting on Environmental, Social and Governance (ESG) metrics due to several barriers preventing them to take action, these include: 1) the cost of ESG reporting, 2) the lack of time to be aware of and act with new ESG legislation being introduced all over the world, and, 3) the uncertainty of knowing where to even begin.
At the Conference, Sheri Hinish, IBM Consulting Global Sustainability Services Lead, shared that, although every stakeholder group wants more transparency in sustainability, there is in fact 5x more pressure put on transparency in business operations from governing boards than from customers. Transparency and reporting on the environmental impact of your business operations is no longer by customer request but required by your boards, governments & diverse stakeholder groups.
The critical importance of Supplier Visibility
It is, therefore, more important than ever to gain oversight into the environmental & human-rights impact of your organisation’s entire value chain. Peter Bonney, CEO of Vendorful, spoke about the critical importance of Supplier Visibility. He stressed the difference between Supply Chain Visibility, meaning “where is my stuff?” and Supplier Visibility, meaning “how much do I know about my suppliers?”. Companies must increase their supplier visibility to gain an understanding of their ESG risk factors. A lack of supplier visibility increases risk and reduces the overall performance and efficacy of the supply base. One way businesses can improve supplier visibility is by partnering with an expert organisation to help map their supply chain, gather & house supplier information, and provide expert, local knowledge to help bridge the communication gap between buyer and supplier.
Solutions for effective ESG data gathering
Companies are not expected to be experts in Environmental, Social & Governance reporting, but they are now expected to report and have oversight into these affecting areas. An effective way for organisations to achieve this is through partnering with an expert organisation.
IETP has been developing programs to help buyers and suppliers remove & reduce the barriers preventing businesses to take action on ESG reporting. The Social Impact Assessment is a verified remote-tool companies can use to adopted across 45 countries and is celebrated for increasing supplier visibility and improving supplier transparency. This year, IETP launched an Environmental Assessment enabling companies to gather environmental metrics cost-effectively & efficiently. The Assessment covers a broad scope of environmental metrics, is user-friendly, future-proof & a great way for companies to start their ESG reporting journey.
Data and reports of these sustainability programs are accessible on the Connect Platform - the one-stop responsible sourcing platform. Digitising data & the relationship between businesses and suppliers, as well as housing their ESG information in one place.
The time is ‘now’ to act on sustainability
Sustainability is not a new topic, although changing legislation, climate change, and unprecedented factors present businesses with new challenges relating to social and environmental sustainability. Jan Francis, Head of Procurement Operations & Supplier Management at Visa Europe, reminded us all that “the time [to act on sustainability] has been ‘now’ for the past 50 years!”. He explained that we are now entering a new reality where the time really is ‘now’, with governments beginning to enforce sustainability & require transparency in the supply chain and multinationals promising to transform their operations to become more sustainable, quoting IKEA’s commitment to becoming completely circular by 2030 as well as, IETP member, LEGO’s promise that all their toy bricks will be made from sustainable sources by 2030.
We are optimistic about the future of sustainability in the global supply chain, but companies really do need to act now and make the most of the resources available to them - with digitalisation drastically improving supplier visibility and the ability to gather ESG data metrics for reporting and clarity. To echo Blackrock’s Larry Fink’s question posed in this year’s letter to CEO’s, in this new reality, “will you lead, or will you be led?”. It is time to begin looking at your company’s operations, its impact on the supply chain and start putting sustainability & scope 3 emissions at the top of your organisation's priority list.
For more information and support on how your organisation can measure your ESG performance, advance your sustainability objectives, achieve supplier visibility, and digitise supply chain oversight, contact email@example.com and find out how IETP can support your goals.
Blogs you might be interested:
The secret to achieving responsible sourcing & a larger supplier base
Does Responsible Sourcing mean we need to replace our suppliers? What happens to our supplier base?
Making a difference with social initiatives
Did you know IETP works with many brands, retailers, factories, and other organizations to develop social impact programs tailored to meet the needs of the manufacturing industry?