The season for sustainability reporting is on its way and companies and organizations across the world are making big preparations. From engaging with their stakeholders to gathering critical internal and external information, the intensive work of sustainability reporting requires all hands on deck.
A supplier holds a vital role in sustainability reporting, acting as a key stakeholder and support towards the companies and organizations they have worked with. Their sustainability practices and performance can provide companies with relevant insights to steer their business and their stakeholders closer to sustainable development. Their data and insights help build bigger and clearer pictures for their customers. Their performance helps pave the way for sustainability across all industries and sectors.
Strong relationships with suppliers is key in making accurate and transparent sustainability reports. Transparency between suppliers and their customers can help build awareness and immediate action on critical sustainability issues. From mapping out supply chains to understanding emissions impact, suppliers must be prepared for compliance and sustainable action.
As the world continues to be affected by human activity and climate change, new business practices must be set in place to reduce the negative impact made on the environment. Sustainability is now a necessary practice that needs to be deeply embedded into the core of a business’s operations and practices.
Suppliers must ensure that their sustainability strategies are implemented across the business and seen in their day-to-day operations. By aligning strategies, goals, and metrics with international frameworks, suppliers can set the standard for the future of business. Suppliers must also be prepared with key insights and data on ESG issues material to their business and the industries and customers they support. This can help give them a clear picture of how they can strengthen and improve their sustainability initiatives.
A sustainability strategy is also linked to strong stakeholder relationships. By deploying communication mechanisms with their stakeholders, suppliers can better understand their needs and communicate their sustainability performance and practices towards their clients. Since responsible sourcing is also an emerging issue being reported in critical sectors and industries, by disclosing their sustainability practices, suppliers can support their customer’s own sustainability imperatives and even attract other businesses seeking to move forward in their own sustainability journey.
2030 marks an important year for sustainable development as organizations, institutions, and nations worldwide have set goals towards net zero emissions. The Paris Agreement aims to limit global warming to 1.5°C. To do so, greenhouse gas emissions must be reduced by 43% by 2030. Yet as temperatures continue to rise, the world continues to stray further away from this threat against life.
Understanding greenhouse gas emissions helps businesses and organizations take the necessary steps to accelerate emissions reductions. To take part in the action, suppliers must establish and implement systems that collect and track their Scope 1, 2, and 3 emissions. Setting clear and measurable targets and strategies for reducing emissions can also strengthen their overall sustainability performance and improve their relationships with stakeholders. Reporting regulations have also begun to include emissions data in their requirements and others have also required companies to disclose their plans in reducing their impact on climate.
In addition, with companies now strengthening their systems on measuring Scope 3 or indirect emissions, suppliers can help support their clients by providing them with the emissions data on their services and products provided to their customers. This can help suppliers and companies alike create significant positive change to the overall picture of climate impact.
Today, transparency across the entire supply chain is more sought after. Regulations such as the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) ensure companies practice transparency about their social and environmental impact and continue to take responsibility for any harm caused on people and the planet.
Responsible sourcing policies and a supplier code of conduct outlines the expectations on labor standards, ethical practices, and environmental stewardship. By practicing responsible sourcing, suppliers can ensure compliance with regulations, build better relationships with their own suppliers and their customers, and avoid unsustainable practices.
During sustainability reporting season, suppliers need to make sure to have their policies and systems on auditing and monitoring responsible sourcing in place to communicate with stakeholders their practices and also inform clients that their business practices are sustainable.
Negative and unsustainable business practices can greatly impact a business’s reputation. Suppliers need to make sure that their sustainability reports disclose key environmental issues such as water and waste management, pollution control, and energy consumption. These environmental issues will also still depend on the industry of the supplier yet it is important for suppliers to disclose policies or activities related to their environmental stewardship.
Social performance is also a factor stakeholders and even future clients may look into when working with suppliers. Disclosing labor practices, working conditions, and even social contributions and philanthropic activities help boost reputation and strengthen stakeholder relationships.
Suppliers can also highlight their relevant sustainability or ESG-related certifications as this would also strengthen their sustainability performance and attract more attention from potential customers.
Sustainability reports not only show current strategies set in place but also future courses of action to implement or improve sustainability in the company. Suppliers need to look and plan ahead. Optimizing supply chain and manufacturing processes, setting up emissions data management systems, or innovating systems and products through the use of circular business models and energy efficient technology are a few plans suppliers can discuss in their report. By providing detailed action plans, targets, and commitments, suppliers can increase engagement with customers and stakeholders, opening themselves up to stronger partnerships and new opportunities for collaboration.
With plans for sustainability reporting underway, suppliers must be prepared not just for their sustainability reports, but also for inquiries from their customers who are also fulfilling their own reporting requirements. Whether it be questions on emissions data or responsible sourcing policies, suppliers need to make sure they have the data their clients seek. This will strengthen engagement between suppliers and companies and further push organizations closer to their sustainable development goals.
At Keslio, we are deeply passionate about sustainability, equipping us with the expertise and extensive network needed to guide clients through their sustainability journey effectively and efficiently. Our expertise is particularly valuable for companies looking to embed sustainability practices into their businesses and investors looking to integrate ESG and impact into investment portfolios. To learn more about how Keslio can assist your organization in its sustainability journey, reach out to us here or through hello@keslio.com
