Organisations are facing increasing pressure to not only deliver products and services efficiently, but also to do so in a socially and environmentally responsible manner. One key aspect of this responsibility is integrating Environmental, Social, and Governance (ESG) considerations into supply chain management strategies. Supply chain ESG refers to a set of criteria that evaluate a company’s performance in areas such as environmental sustainability, social impact, and corporate governance.
Supply chain ESG is a critical component of sustainable business practices. It encompasses the entire lifecycle of a product or service, from raw material sourcing to final delivery to customers. It involves evaluating and mitigating the environmental and social risks and impacts associated with the procurement, manufacturing, transportation, and distribution processes of a company’s supply chain.
In recent years, there has been a growing recognition of the importance of supply chain ESG. Particularly as businesses face increasing scrutiny from consumers, investors, regulators, and other stakeholders to demonstrate their commitment to sustainability and responsible business practices. This has been further underscored by the growing awareness of global challenges such as climate change, human rights violations, and inequality, which have direct implications for supply chain operations.
In this blog, we will delve into the significance of supply chain ESG and explore why businesses should be prioritising it as part of their overall supply chain management strategy. Through the lens of recent poll results, we will uncover insights into how companies are approaching this issue.
Poll results
In our most recent LinkedIn poll, we asked our social media followers: is supply chain ESG part of your supply chain management strategy?
Supply chain ESG: what we found
Yes, it’s an essential part
In our recent poll, an overwhelming 80% of respondents answered “Yes, it’s an essential part”. This result highlights the growing recognition of the importance of integrating environmental, social, and governance considerations into supply chain operations among businesses today.
The high percentage of respondents can be attributed to several key factors. These results show there is a growing awareness among businesses of the need to align their operations with sustainability and responsible business practices. With increasing global challenges such as climate change, resource depletion, and social issues gaining prominence, companies are under pressure to not only meet their financial objectives, but also to demonstrate their commitment to environmental and social stewardship. Integrating these considerations into supply chain management is seen as a crucial approach to address these challenges and mitigate risks associated with sustainability issues.
There is a growing demand from consumers and investors for businesses to be transparent and accountable for their social and environmental impacts. Customers are increasingly making purchasing decisions based on a company’s sustainability practices. Meanwhile investors are incorporating ESG factors into their investment decisions. As a result, businesses are recognising that incorporating supply chain ESG into their operations can help enhance their brand reputation, build customer loyalty, and attract investment.
Yes, it’s quite important
10% of respondents answered “Yes, it’s quite important” when asked if it was part of their supply chain management strategy. While this percentage is relatively lower compared to those who considered it an essential part, it still reflects a notable recognition of the importance of integrating ESG considerations.
These respondents may recognise the value of sustainability and responsible business practices, but may not have fully incorporated ESG considerations into their supply chain operations yet. This could be due to various factors. For example, limited resources, lack of awareness about best practices, or challenges in implementation.
It’s possible that these respondents are in the early stages of their journey towards integrating supply chain ESG into their operations, and are actively exploring ways to incorporate sustainability and responsible business practices into their supply chain management strategy. They may be in the process of conducting assessments, setting goals, or developing action plans to gradually incorporate this into their supply chain operations.
It’s also important to note that the perceived importance of supply chain ESG may vary depending on the nature of the business, industry, and geographical location. Some businesses may face unique challenges in integrating ESG considerations into their supply chain operations due to factors such as complex global supply chains, regulatory differences across jurisdictions, or unique environmental or social risks associated with their industry.
Nonetheless, the fact that 10% of respondents considered supply chain ESG as quite important highlights that there is recognition among a portion of businesses about the need to prioritise sustainability and responsible business practices in their supply chain management strategy. It underscores the growing awareness of the importance of these considerations in the business landscape and the need for continued efforts to promote sustainable supply chain practices across various industries and regions.
Not yet, but implementing
Interestingly, 0% of respondents answered “Not yet, but implementing”. This result suggests that all surveyed businesses have either already incorporated these considerations into their supply chain operations or are not currently implementing any measures related to supply chain ESG.
While this result may be surprising, it also indicates that businesses are increasingly recognising the importance of integrating sustainability and responsible business practices into their supply chain operations. It suggests that companies are actively taking steps towards incorporating environmental, social, and governance considerations into their supply chain management strategy, either through implementing specific measures or already having them in place.
The fact that none of the respondents answered “Not yet, but implementing” could also indicate that businesses are aware of the need to align their operations with sustainability and responsible business practices, and are taking concrete actions to do so. It reflects a positive trend towards incorporating ESG considerations into supply chain operations. It may also indicate a proactive approach by businesses to address environmental and social issues within their supply chains.
Not yet, and not pursuing
10% of respondents answered “Not yet, and not pursuing”. This suggests that some businesses may not currently have any plans to incorporate this into their supply chain operations.
There could be several reasons why some businesses are not pursuing supply chain ESG. It could be due to a lack of understanding about the value of sustainability and responsible business practices in the supply chain context. It could also be due to resource constraints, competing priorities, or perceived challenges in implementation.
However, it’s worth noting that as sustainability and responsible business practices gain increasing attention and become more mainstream, businesses that are not actively pursuing supply chain ESG may risk falling behind their competitors. Stakeholders such as customers, investors, regulators, and communities are increasingly demanding businesses to operate in an environmentally and socially responsible manner, including their supply chain operations. Ignoring or neglecting supply chain ESG considerations could lead to reputational risks, legal and regulatory challenges, and missed business opportunities.
Businesses that are not yet pursuing supply chain ESG may benefit from further education and awareness-building about the potential benefits and best practices associated with integrating ESG considerations into their supply chain operations. They may also need to assess their current operations and identify areas where measures can be effectively integrated, considering their industry, geographical location, and specific business context.
More information
B2BE’s experience in the supply chain sector allows our customers to build, expand and adapt successfully, enabling greater effectiveness. To engage with B2BE and offer feedback on what matters most to you and your business, make sure to follow us on LinkedIn and across social media. You can also vote in our latest LinkedIn poll. If you’d like to discuss your supply chain strategy, get in touch with us.