By Dennis Bouley
Government regulators and consumers are requiring a higher level of transparency from corporations, leading brands and their supply chains regarding how sustainability initiatives are being driven. Unfortunately, many companies are struggling to meet this demand, and the consequences for negligence in this area sometimes results in hefty fines from regulators and in damage to corporate reputations. Over recent years, lapses in the Food & Beverage, Chemical, Oil & Gas and Pharmaceutical industries have resulted in millions of dollars in fines being paid out.
In this environment, companies will require a higher degree of sophistication and detail around the data they gather and the information they report surrounding their progress in sustainability, environmental performance, safety and overall social responsibility.
Large “Tier 1” companies, consisting of the 200 leading brands are now moving forward in their measurement and evaluation of sustainability performance. Associations such as the “Together for Sustainability” group (represented by 20 of the largest chemical companies across the globe) are building sustainability strategies around establishment of a single evaluation platform, a standard for audits, and a sharing of information. Chief Procurement Officers (CPOs) are playing key roles in helping their organizations to join forces to address common sustainability challenges. In addition, “Tier 2” and “Tier 3” organizations further down the supply chain are also being evaluated because their sustainability behaviors have a direct impact the sustainability performance of the “Tier 1” companies.
Sustainability “Big Data” information flows can now be aggregated
The recent explosion in “big data” makes it paramount that leading corporations, and their supply chains, have the proper tools in place to gather the data required, to consolidate that data, and to provide the kind of analysis that allows for the generation of appropriate sustainability reports. These “score cards” can then be used to inform both regulators, customers and concerned citizens regarding corporate sustainability performance.
“Sustainability score cards consist of ratings of total performance, social performance, human rights performance, all the sub components of sustainability and social responsibility,” says Pierre-François Thaler Co-Founder and Co-CEO of EcoVadis (www.ecovadis.com), a leading provider of collaborative supplier sustainability ratings platforms. “These score cards also identify gaps, best practices and opportunities for improvement,” he said.
“We discovered that the areas of sustainability and social responsibility are very complex for procurement teams to report on,” said Thaler. “A multitude of regulations and certification levels exist and there are different risk areas depending on the spend categories. In order to make it easy to imbed sustainability-friendly options in the decisions that procurement professionals make, it was necessary to create easy-to-understand reports and quantitative scorecards. Only then can companies begin to really benchmark, measure and compare the sustainability records of the various vendors in their supply chain,” he said.
The scorecards that Thaler generates on behalf of his customers serve procurement staffs in several ways. They can be used as part of their supplier pre-qualification process, they can contribute to their Request for Proposal (RFP) processes, and they also can be used as part of the performance management process (tracking sustainability initiative impacts on a quarterly or yearly basis including data on quality, delivery, innovation, cost, sustainability and social responsibility).
“Since we work with 40,000 customers across industries, our sustainability tracking systems collect millions of pieces of documentation such as certifications and reports, and other data from buyers and suppliers,” said Thaler. “We have 400 people who are analysts that are processing all of this new data along with the 10 years of previous data we’ve gathered from customers. We leverage artificial intelligence (AI) to now perform our sustainability analysis in a more scalable way. This provides our customers with the ability to measure their sustainability success in a more and more precise manner,” he said.
EcoVadis (www.ecovadis.com) is the first collaborative platform providing sustainability ratings and performance improvement tools for global supply chains. EcoVadis’ CSR ratings and scorecards are used by procurement teams to monitor environmental, social and ethical risks across 150 purchasing categories and 110 countries. In addition to RBI members, over 175 industry leaders such as Nestlé, GSK, Heineken, Michelin, Johnson & Johnson, Schneider Electric, Salesforce, BASF, JLL, and Subway use EcoVadis to reduce risk, drive innovation and foster transparency and trust among over 40,000 trading partners.
Dennis Bouley is Editorial Director of MyPurchasingCenter.com and special advisor to MediaSolve Group, a strategic B2B marketing services firm focused on helping companies and institutions leverage the web and social media to achieve business goals. He spent 18 years at Schneider Electric as Managing Editor of Global Publications, and was responsible for cross-division management of the corporation’s white paper and customer success story processes. Prior to that, he spent 10 years working for IBM managing both small and large accounts. He holds a Bachelor of Arts in Journalism from the University of Rhode Island and holds a Certificat Annuel from the Sorbonne in Paris, France.
George E. Krauter
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