The main goal of a sustainability report is to identify the priorities of a company, reporting on the work undertaken to achieve those goals. The report should also be made available for the public.
Supplier information is just one of many aspects of a business that is now reported on, as we better understand the significant environmental and social impacts which are made by many companies throughout their chains.
Here is a selection of common information which is expected in a sustainability report, as well as discussing the importance of transparency, and the consequences of non-disclosure.
The importance of transparency
The main goal of a sustainability report is to identify the priorities of a company, reporting on the work undertaken to achieve those goals. The report should also be made available for the public.
Transparency is a key cornerstone of any sustainability report. In a time in which sociopolitical trust is at an all-time low, it is important for companies to be able to show that they are making a real effort to make a difference in a number of key areas. It may be tempting to hold back when it comes to slightly compromising information, but it is only likely to get worse if you attempt to hide negative feedback, or act in a way that could be perceived to be dishonest.
In fact, transparency should be a key aspect of your corporate culture, and will help to foster trust at all levels. This should seep down into your supply chain, helping to increase your reputation while lowering many of the associated risks.
Common metrics for suppliers
You can track metrics for suppliers in a number of ways. The Sustainable Development Goals (SDGs) provided by the United Nations are some of the best ways to do so, tackling a variety of issues with 17 objectives, and a further 169 targets. Much will depend on the nature of your business, but here are some which are typically applicable to supplier metrics.
For example, the seventh goal focuses on affordable and clean energy, the ninth is for industry, innovation, and infrastructure, Goal 12 looks at responsible consumption and production, and the eighth is for decent work and economic growth. The targets can be used to further specify these metrics, while other frameworks such as GRI continue to improve with each iteration, and can also be useful.
Globally, the percentage of companies engaging with suppliers has increased by an average of 30 percent since 2014. That is a significant increase, and one that has been helped by the emergence of the SDGs, as well as Agenda 2030 which sets a clear deadline for goals to be achieved.
A 2020 State of Green Business report found that; ‘Corporate reporting on sustainability — including environmental, social and governance (ESG) performance and achievements — has grown more than fivefold in the past 10 years.’
It is a growing trend to track metrics for the purpose of reducing business risks, as well as helping to curb any threats to the environment and human well-being.
You can track data such as energy consumption, emissions, savings, or environmental benefits, while social data will also have a role to play. This includes information such as an educational and gender breakdown for employees, the total hours of training they receive, or any benefits derived from corporate social responsibility projects, to give some examples.
Further examples of common frameworks used to measure supplier performance include:
- Code of conduct approval
- Social Criteria (GRI 414-1)
- Environmental Criteria (GRI 308-1)
- Environmental Impacts & Potential Negative Supply Chain Risks (GRI 308-2)
- Social Impacts & Potential Negative Impacts Identified (GRI 414-2)
For example, the GRI 414: Supplier Social Assessment sets out reporting requirements on the topic of supplier social assessment. ‘This Standard can be used by an organisation of any size, type, sector or geographic location that wants to report on its impacts related to this topic.’ These can all be qualified if you have enough information about your suppliers and their internal procedures.
Valuable information for stakeholders
The better a business is in terms of stakeholder engagement, the more likely they are to understand their respective supply chains. The origin of sustainability complaints is changing. Customers used to be a key driver in terms of raising awareness about climate risks, but it now manifests through all areas of a value chain. This includes stakeholders, as well as staff employed by the business.
For gaining information that will be relevant to stakeholders, understanding supplier behavior is what you will be aiming to achieve. To that end, collecting information about their practices is helpful. For example, you can get a better grasp on carbon emissions, or you could engage with suppliers over water issues which could be rectified over a set period of time.
It depends on your sector, but supplier statistics should be considered as baseline information, which should be shared with stakeholders if relevant to your sustainability report. Another method to gather information is via the use of compliance and onboarding to ensure regulatory alignment, which is further aided by a transparent approach. This is used by various companies, who may also hire professionals who help to optimize their procedures.
The consequences of non-disclosure
The consequences of non-disclosure can be devastating, especially if they are left to fester over a long period of time. The SDGs and public pressure has helped to bring sustainability to the forefront of the discussion in many countries, and it could have a negative effect on the business if an issue is left unchecked.
Consider the ‘Dieselgate’ emissions cheating scandal which first broke back in 2015. Volkswagen saw their stock price fall by a third in the days following the news that they had installed illegal software on cars to evade standards on diesel emissions, while a US federal judge ordered the company to pay a $2.8 billion criminal fine for "rigging diesel-powered vehicles to cheat on government emissions tests".
It ended up affecting their bottom line, as well as the obvious reputational damage that comes with the accusation of falsifying data.
Failure to be transparent about what is happening upstream is a common mistake made by companies of all sizes. It can also be tempting to overemphasise or falsify results, as seen in the example given above. Instead, it’s better to plan to rectify any issues, and be open about doing so if possible.
A sustainability report should give you the chance to detail the benefits of the business, and any good work that has been done over a set period of time. Supplier information is key to providing a transparent account, and should work to reduce associated risks in the long-term.
If you’re curious about how to follow-up on relevant metrics and to scale up your supply chain transparency, Worldfavor Sustainable Sourcing or Supply Chain Visibility might be the solution for you. We help you to conduct an extensive risk assessment on your suppliers in different areas and industries.
Read more and compare our plans on our web page, or book a personal demo today.
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- 5 Sustainability Reporting Frameworks to Help Your Organization Set Priorities
- More Businesses Needs to Report Their Climate Impact, Here’s why
- Why and How to Ace Your Sustainability Report This Year
