The importance of creating a more sustainable value chain
Organisations are now recognising that consumers are increasingly choosing brands with strong ESG credentials. Consumers are even prepared to pay higher prices compared to those products that have weaker ESG credentials. Research also suggest that creating, reporting and sustaining a strong ESG agenda not only also appeases investor priorities but is also critical in attracting and retaining the best talent as this becomes an increasing priority in employee engagement.
In the organisation looking to implement a strong ESG policy the challenge is to focus bot operational efficiency and waste reduction. Benchmarking those organisations that achieve this show doing so can reduce cost but as much as 10% due to achieving efficiency production and logistics processes and removing unnecessary practices. Two thirds of emissions can come from an organisations supply chain with the multiple tiers of suppliers often experienced in the production of a finished product therefore playing a vital role in providing the ability for the organisation to achieve its ESG goals. Procurement and Supply Chain leadership plays a major role in ESG. Through its purchase decisions, capability due diligence and having a supply chain that provides authenticity of ESG credentials.
The key to achieving a strong ESG agenda are:
· Understand and quantify the current supply chains ESG footprint to set a benchmark
· Define the metrics and policies regarding supplier selection and supplier management
· Continuously track and monitor the supply chain to ensure sustainable procurement practices are being applied
· Authenticate ESG policies and claims
An implementation plan for ESG should include a process such as the one demonstrated below:
The challenges that Procurement and Supply Chain teams experience when looking to implement strong ESG practice references lack of tools and data as a major challenge. It is these challenges that means that suitable technology solution needs to go hand in hand with the successful implementation of an inclusive ESG policy.
Companies must resist the ‘big bang’ approach of removing existing multiple systems – it simply does not support the incremental nature of the shift in legislative and ESG compliance. Far better to implement a digital backbone that enables incremental growth and this is where Distributed Ledger Technology can be a game changer. Better known as Blockchain, such technology enables companies to bring together their siloed internal data while also capturing external 3rd party data in a zero trust environment. The real beauty of Blockchain being its secure, immutable nature which makes the demonstration of legislative compliance fully auditable and tamper proof. By using Blockchain, companies can prove their commitment to ESG implementation. Utilising such a technology can provide additional benefits such as the removal of paper documentation as documentation can be shared digitally thus making the process not only more secure and efficient but also removing paper waste. Due to the multiple benefits of Blockchain technology and the challenges of having a strong and successful ESG policy there is a clear correlation to successful implementation and inclusive technology transformation.
Here at The Vision Chain we have decades of experience in the application of technology and process change to some of the most demanding environments in business and government. Our proven Concept, Assessment, Demonstration, Manufacture, Implementation and Delivery (CADMID) methodology breaks down even the most complex problems and issues into achievable low risk steps to transform your business