Supply chain blindspots impede ESG progress – report

Posted on 1 Apr 2022 by The Manufacturer

The availability and reliability of crucial supply chain data is preventing organisations from operationalising their corporate purpose and meeting their environmental, social and governance (ESG) goals, new research has revealed.

According to the research from Coupa Software, a leader in Business Spend Management (BSM), UK businesses want to improve ESG practices and reduce risk exposure, including improving energy efficiency (94%); reducing greenhouse gas emissions (93%); eliminating modern slavery (92%); improving supply chain diversity (88%); and reducing deforestation (86%).   

However, this research also points to a lack of sufficient visibility into supply chain data and inadequate technology for businesses to fully realise their ESG targets.   

  • Nearly all (95%) businesses agree thata accurate ESG data of their suppliers is important to understand supplier risk.  
  • More than half (61%) did not fully agree that data on their suppliers’ ESG credentials is sufficiently available.  
  • Nearly three quarters (73%) said they do not have strong enough technology capabilities to fully assess ESG risk and compliance of both Tier 1 (third-party suppliers) and Tier 2 suppliers (the suppliers of their third-party suppliers).  
  • Practically all (95%) wish to speed up responses to external disruptive events, yet more than three quarters (77%) lack access to data that enables this type of agility and said it would take weeks to months to find new suppliers that meet their ESG standards.  

“Even with all the will in the world, no business can fully realise their ESG goals and make a meaningful difference if they do not possess accurate and timely data on which to make decisions,” said John Callan, vice president of product and segment marketing at Coupa. 

Overcoming the Data Problem: A Defence Against Disruption  

There are ways to overcome companies’ ESG data gaps, with Coupa’s research finding businesses calling for greater industry-wide data sharing and collaboration:  

  • 100% agree that, if key ESG supplier data were shared openly and instantaneously with prospective buyers, it would help them more accurately assess their ESG risk and compliance.  
  • 97% agree that greater cooperation on key ESG data is needed between businesses and suppliers.  

“Organisations are rightly making ESG a priority and have begun to make changes to their supply chains to become more sustainable. While many are still early in their journey and marching towards net zero goals, it’s clear that quicker access to supplier information can aid supply chain planning and help businesses better respond when disruption arises. With this type of data collaboration, organisations can confidently make choices that reduce costs and carbon, as well as risk,” said Steve Banker, vice president of supply chain services at ARC Advisory Group.   

“It’s reassuring to know that Coupa’s research also found more than two-thirds (64%) of businesses plan to invest in new technology to help them achieve ESG goals,” Callan added. “However, if they truly want to operationalise their ESG strategy and corporate purpose, they need transparency technologies that go beyond mere reporting, and enable buyers and suppliers to collaborate and exchange data as a community for a common cause.”   

To learn more, check out the full global report here: How To Mitigate ESG Risk In Your Supply Chain

Survey Methodology  

The survey was conducted among 800 decision makers who have an overview of, or responsibility for, the supply chain in businesses with 1,000+ employees across Australia, France, Germany, Singapore, the UK, and the US Interviews were conducted by Sapio Research in February 2022 using an email invitation and an online survey.