The demand for accountability and transparency in sustainability from customers and investors has grown over the years. Investors have placed an increased emphasis on sustainability when assessing the value and resiliency of an organization, and customers want to know they are spending their money in a responsible manner that incorporates their own values and goals.
Due to the size and complexity of global supply chains, they can have one of the largest impacts on a company’s sustainability. Members of the United Nations (UN) Global Compact rank supply chain practices as the biggest challenge to improving sustainability performance. If suppliers and contractors are not performing sustainably, the companies that do business with them are exposed to serious risks.
Best Practices in Supplier Management
While every supply chain is unique, supplier management best practices can help reduce risk across all industries. Organizations should determine which of their sustainability goals suppliers can most actively contribute to or directly affect. There are numerous ways to engage the supply chain in furthering an organization’s own sustainability goals; however, both the Massachusetts Institute of Technology Center for Transportation and Logistics (MIT CTL) and the Council of Supply Chain Management Professionals (CSCMP) agree requiring a Supplier Code of Conduct is an important first step. This facilitates alignment between a company’s expectations and a supplier’s approach to conducting its own business. Engaging in consistent supplier audits and reviewing certifications of sustainability practices are common next steps.
It is also necessary to engage suppliers at all levels. Many companies focus their efforts on the first tier of suppliers, but it is often those at lower levels of the chain that create the most risk. Monitoring sustainability targets, sharing best practices and providing training on sustainability standards to all suppliers throughout the chain can play important roles in managing risk throughout the supply chain.
Reporting on Sustainability in the Supply Chain
Transparency, open communication and clear expectations are key to managing supply chain sustainability goals and to collecting and reporting sustainability metrics.
Many organizations look to third-party sustainability reporting standards to determine the best strategies for supply chain management. These can provide clear direction on how and what metrics to track.
There are multiple other standards available to choose from for reporting practices. The choice of which standards to follow depends upon which matches best with the interests of an organization and its stakeholders. A company’s leadership can create metric-driven sustainability goals for both the organization and its supply chain that best represent its mission and business practices.
Industry Feedback
In a survey of more than 200 ISN Hiring Clients across various industries, 41% expected outsourcing to increase over the coming years. This increase, paired with the shifted focus to sustainability and ESG, highlights the need for companies to manage suppliers’ sustainability performance.
ISN recently hosted a global, multi-industry roundtable on sustainability. Attendees who provided feedback in a post-event survey indicated their top three focus areas in sustainability tracking for 2021 include:
In addition, 30% indicated they felt contractors and suppliers were not prepared to embrace their companies’ sustainability practices. Setting realistic priorities and expectations, combined with clear communication and contractor involvement, can support an improved, more sustainable supply chain.
How ISN Can Help
When tracking supply chain sustainability standards, most companies start with data collection. This provides a strong picture of how contractors and suppliers are performing today and allows the company to set goals to improve.
ISN’s global platform, ISNetworld, supports an extensive network of nearly 700 Hiring Clients that leverage the platform’s tools and data to capture and review sustainability information on more than 75,000 contractors and suppliers.
If you are a current ISN Hiring Client subscriber, contact your account representative about incorporating sustainability into your contractor and supplier information management program.
If you are a Hiring Client interested in learning more about ISN’s contractor management system to help you reach your sustainability goals, request a demo of ISNetworld.