The engine that powers sustainable organisations
Sustainability-related disclosure regulations like the Corporate Sustainability Reporting Directive (CSRD) require information on the ESG performance of supply chains.
As regulators increasingly place emphasis on the supply chain, companies are attempting to measure their supplier footprint. This is a monumental task, especially where non-financial reporting is concerned.
Get a step-by-step guide to figure out how to deal with this important task.
The responsibility of ESG data usually falls to the sustainability or communications team to gather. It has to be someone with a solid understanding of ESG and working closely with the procurement team. It is imperative that the team responsible should have a clear view of where each data point lies across the organisation and with whom. Ownership should be traceable to specific persons within each department, and fulfilling data collection should be a part of their KPI.
If you have an extensive supply chain, a supplier materiality assessment will be useful to prioritise the suppliers with ‘high-impact expectancy’. Basically, this includes those that have more material impact in your supply chain, often influenced by size and spend considerations. An assessment of supplier activities mapped to ESG impacts helps to understand what ESG data to collect and from whom.
Once you have an understanding of the ESG impacts that fall along your value chain and the associated data that you need to collect, it is time to develop and initiate the data collection process.
This could be in the form of a spreadsheet, an interview, questionnaires, or a more organised data system. Crucially, supplier training is key to the success of your data collection exercise. Suppliers should be trained on the types of ESG data to collect. This may require setting up their own internal data collection processes to complement yours.
For example, if you require Greenhouse Gas performance data, your suppliers will need to understand the different greenhouse gases, calculation methods, and GHG measurement system. It may prove useful to work with the relevant internal departments on defining specific metrics.
Your data programme needs to be communicated to suppliers not only as a requirement, but also positioned as an opportunity for competitive advantage.
You need to communicate to your suppliers the following:
Determine a main contact point at your suppliers who will be responsible for data collection on their end. Keep in close contact with that person throughout the data collection period, following up periodically to check on progress and accuracy of data.
All that data about ESG in your supply chain needs to be well-organised in a centralised, accessible location. Choose a system that allows you and external suppliers to work on a shared platform.
To ensure traceability and transparency, you should be able to see when data points are updated and by whom. This decision could save you countless hours on work that could easily be automated, eliminating unnecessary follow-ups or disorganised data streams.