Investing in ESG and a more sustainable supply chain

Why businesses and organizations need to step up on ESG issues

Investing in ESG and a more sustainable supply chain
COVID-19 has had a huge impact on organizations and their supply chains.

Supply chain concerns have been rife during the pandemic, pushing businesses and organizations to take a closer look at business continuity planning and supply chain management.

COVID-19 has had a huge impact on organizations and their supply chains:

“Our clients – and therefore their supply chains – have certainly become hyper focused on [the pandemic],” says Danny Shields, VP of Industrial Relations at Avetta.

Indeed, over the last year or so, the focus has been around pandemic preparedness and safe return to work protocols.

But as we slowly exit the pandemic, Shields predicts that organizations will once again go back to having a more all-encompassing approach to supply chain sustainability to build resilience across the board.

So, what do we mean by supply chain sustainability?

Supply chain sustainability is “a holistic view of material environmental, social and governance issues within an organization’s supply chain – and which can affect the company’s financial or operating performance,” says Shields.

Environmental footprint

And when it comes to environmental, social and governance (ESG) issues, the environmental piece has been gaining traction in the last few years.

“There has been certainly a growing appetite […] for organizations and their supply chain to be much more transparent with environmental concerns,” says Shields.

Concerns around greenhouse gas emissions (GHG) or climate changes have been a massive trend worldwide, and includes questions around air quality, energy management, water and waste water, etc.

Shields says that when it comes to the supply chain, organizations are concerned about their footprint and the impact that it can have globally.

All industries are affected in some way; though with regards to environmental concerns, heavy industry is certainly facing a number of challenges in meeting sustainability goals – notably with regards to GHG.

Growing demand

Despite difficulties, supply chain sustainability is a hugely important part of a company’s ESG program and shouldn’t be skipped.

“There's a growing demand from regulators, investors and consumers for supply chain sustainability,” says Shields. “Businesses are increasingly expected to understand and manage their exposure to supply chain risk and its impact on the community.”

“The more intricate a supply chain is, the more an organization is prone to those uncertainties and hidden ESG risks,” says Shields.

One of the biggest dangers, he says, is that failure to manage those risks “could trigger reputational losses and threaten a business's continuity. But the good news is supply chain sustainability drives long term value.”

Avetta has a number of resources available on the topic, but some key ESG supply chain best practices include: setting supply chain sustainability targets; compliance to those targets within some formal contracts; integrating sustainability assessments; deploying ESG; risk management processes; and monitoring and engagement.

“It’s something that is very important to us,” says Scott Nelson, Director, Global Marketing at Avetta.

We ramped up very quickly on COVID – the minute that it came out we were able to put together a lot of different kinds of resources for our customers, both on the client side and the supplier side.”

More recently, this includes a number of materials around ESG and implementing best practices.

“It's one of those things that is becoming more and more important, and we're going to be there to support our customers,” says Nelson.