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Thoughts from the Field

Sustainserv is a global CSR and sustainability consultancy. This blog will serve to communicate some of our ongoing thoughts and perspectives on the work that we do.

Matthew Gardner

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In the past few years, we have witnessed a wholesale shift whereby businesses in just about every sector realize that sustainability is a topic that they must engage with in a credible and transparent manner. In many cases, it has become a basic expectation in the marketplace.

With this settled, we are now seeing new frontiers being established, areas where leading companies are pushing the envelope and laying the foundation for the next generation of best-practices in corporate responsibility, accountability and sound management. Nowhere is this more apparent than in the case of sustainable supply chain programs. Just as companies recognize that by paying attention to their own environmental and social responsibility they can realize significant benefits, they are now starting to expect the same level of responsibility from those companies with which they do business. In fact, one can reasonably argue that a seminal event in the wave of corporate responsibility was the supply chain scandals of the 1980's, when Nike was pilloried for substandard working conditions in its supply chain.

But what does this mean for companies now? How are companies implementing sustainable supply chain programs? We present here a few "ingredients" that can help a company start to come to grips with the sustainability of its suppliers.

First off, depending on the particular sector a company is in, there are many different frameworks that have been established to provide guidance for corporate social and environmental responsibility. For example, in the electronics industry, the Electronics Industry Citizenship Coalition (EICC) is a membership organization aimed at increasing environmental, social and governance accountability among its members. Interestingly, to be a member in this organization, a company must pledge to ask its own suppliers to also become members in EICC. Thus the premise of the EICC is to promote supply chain sustainability. So if a company is interested in increasing the sustainability of its supply chain, then it is worthwhile to explore what frameworks already exist that could help structure such an approach.

The next element of a solid approach to increasing the sustainability of your supply chain is to formulate a supply chain code of conduct. This is a formal set of requirements and expected behaviors that a company imposes on its suppliers. The elements of such a code of conduct can vary depending on which issues are most material to your sector. Most codes require compliance with basic human rights principles, while others extend to requirements for environmental and social reporting.

The level of rigor of a supply chain code of conduct can vary significantly. In some cases, companies craft some vague language and then bury the code of conduct into the back pages of a long supplier contract or RFP, never to be seen or discussed again. However in other cases, the supply chain code of conduct has real teeth, including the option for unannounced audits, financial penalties or even contract terminations to ensure compliance. Of course there is the risk that a key supplier may not be able to meet the requirements of a such a code of conduct. Some companies phase-in the requirements of their codes over a period of time, allowing their suppliers, especially key suppliers, time to come into compliance.

The bottom line is that it comes down to risk management. Companies want to manage their risk and understand where in their operations the greatest risks are located. With the inclusion of environmental and social factors in the assessment of a company's overall footprint, it now understood that risks in the supply chain can also come from these factors. The time has come for companies to address these risks directly. 

Posted by on in Reporting

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Whoever is tired of the endless surveys, requests for data, questionnaires and other inquiries regarding sustainability related information please raise your hand.

Corporations (and their sustainability managers) are increasingly being asked by a wide variety of stakeholders, including customers, trade associations, the media, academic institutions, NGO’s and others about how they are addressing the topic of sustainability, their performance data, and their goals for the future. While the intentions behind such inquiries are noble, each request has its own specific nuances requiring individual attention (and time!) to complete.

A well planned, integrated sustainability report can be an efficient means of answering these questions. Indeed, what is a sustainability report? It is a document that provides information about what is most relevant (or “material”) to the organization and it stakeholders. While stakeholders are typically thought of as the shareholders, customers, employees and communities where the business is located, stakeholders are also those groups that have an interest in what the business is doing. The needs of these stakeholders should be considered in the report planning process.

The framework of the Global Reporting Initiative is a great place to start. Designed using a participatory process and updated regularly, it is geared towards covering what most stakeholders want to know from a corporation on its environmental and social performance and is commonly seen as the gold standard for corporate sustainability reporting. However, despite this, it does not cover all of the topics that some would consider part of the sustainability landscape. But there are ways to handle these gaps.

The first step is to perform a “Materiality Assessment”. This is a formal process whereby key individuals within the reporting company, as well as key external stakeholders are asked to assess the relevance of different topics as viewed from the perspective of various stakeholder groups. Through this activity, a set of topics is identified that are most relevant to the company and its own definition of sustainability and thus should be addressed in its sustainability report.

As part of this “Materiality Assessment”, we have found it to be very effective to also ask our clients about which surveys, questionnaires, and data requests they have received in the previous year. This list could include requests from commonly known sustainability data-gathering organizations (such as the Carbon Disclosure Project, TruCost, UN Global Compact, customers (for example, WalMart’s now famous questionnaire), or academic/NGO researchers. In our work, we have heard it is not uncommon for corporate sustainability managers to get several such requests per month. But each request takes time to complete, distracting the sustainability manager from his or her daily duties.

Upon closer examination, one will notice that many of these requests for information have common threads throughout them. Many ask for greenhouse gas data and goals, or human resources related data, or policies regarding supply chains. By examining the different requests, and importantly, cross referencing between them, a master list of commonly asked questions or referenced data can be generated. If these commonly asked questions are then included in a company’s sustainability report, then many of these requests can be fulfilled simply by sending the requestor a copy of the report.

This process will not anticipate ALL questions that a company may receive. However, the process outlined here will anticipate those questions that are most relevant to the most important internal and external stakeholders. With this “80/20” approach, the sustainability report prepared through the process described here will address almost all of the questions, and will still provide the sustainability community with much of the information it needs to advance the global knowledge pool farther along.