Читать книгу ESG Investing For Dummies - Brendan Bradley - Страница 71

Companies can’t always control indirect environmental factors, such as those in the supply chain, but they can influence suppliers and users to reduce, minimize, or eliminate the impacts that are caused. Sustainable procurement is firmly on the agenda, and companies don’t want to be linked to suppliers with questionable business models, as this generates negative media coverage. Many firms have implemented a supplier code of conduct that requires suppliers to follow the core principles of the UN Global Compact (see Chapter 1) within the areas of human rights, labor standards, environment, and anti-corruption. Suppliers are obligated to impose similar principles on their suppliers.

In many industries, the vast majority of issues around sustainability are external and related to providers across the supply chain. In particular, for companies in some industry sectors, suppliers’ operations are responsible for over two-thirds of a company’s total CO₂ emissions. Large, multinational companies are the ones looking to improve on this the most, as they realize the importance and weight that supply chains have, and their priority is in finding ways to hold their suppliers accountable. Many have begun to apply a risk-based approach, where they focus efforts on areas with the greatest impact, recognizing that supplier subdivision is an ongoing process. Potential suppliers are prescreened on a number of factors, such as country, sector, and reputational risks, including compliance with sanctions. Based on the prescreening, high-risk suppliers are further assessed, which then determines whether additional engagement is pursued to advance sustainability performance. This can include developing a company’s technological systems, scoring suppliers, making public targets, or considering an inter-industry collaboration.

However, one of the clearest barriers is the struggle to monitor complex supply chains and find the know-how to assess suppliers’ sustainability, particularly when there’s a lack of support from top management or government agencies. The companies that have applied sustainability scores, using a supplier scorecard, can distinguish and choose between suppliers with comparable quality and cost while estimating how eco-friendly the suppliers are. Firms using public targets will claim that they’ll only work with suppliers that use low-carbon technologies or have waste reduction programs. Moreover, some companies request suppliers to set their own reduction targets and urge them to, for example, deploy renewable energies or start providing biodegradable or recycled packaging materials. Finally, through industry collaboration, where a collaborative network is formed with suppliers, intermediates, or civil society, companies can help improve the broader industry.

Whatever the approach, suppliers must be encouraged to share their sustainability challenges so that both sides generate better solutions together.