- Few have a comprehensive ESG tracking system in place
- 5 in 6 (84%) currently don’t monitor the full supply chain
- 3 in 4 (70%) are unclear what data to track
Despite progress on ESG reporting and data capture, supply chain monitoring remains a major challenge, new research found.
In its inaugural research, market-leading Health, Safety and ESG risk management provider Alcumus analyses ESG adoption among businesses in the UK, US and Canada.
The survey revealed that accessing and collecting data from its supply chain is one of the most significant challenges for businesses when it comes to ESG reporting, named by two in five (38%) respondents.
Currently, over half (60%) the companies surveyed are monitoring their supply chain and try to collect ESG data and performance information, covering crucial areas like compliance with modern slavery and forced labour legislation, Scope 3 carbon footprinting, safety permits and the creation of social value. Nearly as many already invest in technology to support their supply chain management (56%) and over a third (37%) have plans to do so.
Yet, relatively few say they currently have or plan to have a comprehensive third-party data visibility and tracking system in place for ESG – 11% for environmental, 14% for social and 15% for governance performance. The reasons are two-fold. Firstly, most companies don’t monitor the full supply chain (84%); and secondly, the vast majority (73%) find it challenging to determine which data to track.
Among those that have systems in place or plan to establish these, only 17% are looking at all suppliers when it comes to capturing and verifying data. For the large part of companies, however, supply chain verification is restricted to main suppliers and those of large size, named by 39% and 33% respectively.
Helen Jones, COO, Enterprise at Alcumus, says: “ESG has become a major concern for many organisations. To be truly sustainable, supply chain operations must be assessed appropriately. Visibility through the full supply chain is not only key to combat rising greenwashing accusations which now threaten companies of all sizes and sectors. The ability to manage these risks will determine which companies will have customers, investors and staff in the future.”
Challenges to data collection biggest hurdle
The most prominent challenges when it comes to supply chain monitoring are that suppliers themselves are not able to report performance data (46%) and don’t have the systems in place to automate data collection (42%). This is predominantly down to the fact that those suppliers who don’t report don’t collect such data (78%). However, what is also hindering progress is that 54% of suppliers are not willing to disclose their data.
David Picton, SVP of Sustainability at Alcumus, says: “As businesses and other organisations start to recover from the disruption of the past few years, they are facing significant risks and ‘blind spots’ across supply chains in areas like brand impact, climate action, ethics and operational disruption. Effective information intelligence and data visibility will be key for organisations to demonstrate progress on ESG and prove that they take their responsibility to protect their people and our planet seriously.
“At Alcumus we help companies detect, measure and manage risks across 11 areas related to ESG to support them in their endeavour to meaningfully incorporate ESG into their business model, to protect their reputation and business operations. Companies must start to collect, manage and act on such data to demonstrate they are serious about their sustainability claims, their reputations and their long-term operational effectiveness.”
About Alcumus
Alcumus helps organisations create a safer and more sustainable world through market-leading integrated products and services that anticipate, manage and mitigate risks to protect people, organisations and our planet. It supports global clients – many of whom are on the FTSE 100 index and Fortune 500 indexes. Through an integrated approach to managing Health, Safety and ESG across industries, locations, contractor and supplier networks, Alcumus contribute to the continued success of 45,000 around the world. The in-house team of specialists also provide HR consultancy and workplace monitoring services, training and UKAS accredited certification and accreditation support. For further information visit www.alcumus.com.