Gartner Logo

Read the June 2022 Gartner Market Guide for Supplier Sustainability Applications

Learn more
SupplyShift Logo SupplyShift SupplyShift Logo SupplyShift
How It Works Expand How It Works Menu
Product Overview Starter Assessments Standard Assessments Custom Assessments See A Demo
Solutions Expand Solutions Menu
Pricing
Industries Beauty & Personal Care High Tech & Electronics Pharmaceuticals Food & Beverage Apparel Retail
Issues Climate Change Impact ESG Investing Modern Slavery COVID-19 Deforestation Diversity Plastics
Insights Expand Insights Menu
News & Blog News Blog
Resources Analyst Report Success Stories Webinars White Papers
About Us Expand About Us Menu
Get to Know us Alliances Our Mission & Story Our Values and Team Careers Contact Us
Support
/
Login Let's Talk
How It Works
Solutions
Industries Expand Solutions Menu
Beauty & Personal Care High Tech & Electronics Pharmaceuticals Food & Beverage Apparel Retail
Issues Expand Solutions Menu
Climate Change Impact ESG Investing Modern Slavery COVID-19 Deforestation Diversity Plastics
Pricing
Insights
News & Blog Expand Insights Menu
News Blog
Resources Expand Insights Menu
Analyst Report Success Stories Webinars White Papers
About Us
Get to Know us Expand About Us Menu
Alliances Our Mission & Story Our Values and Team Careers Contact Us
215 River Street Santa Cruz, CA 95060 415.935.1697 support@supplyshift.net Contact Form Support

Let's Talk

Industry Trends, Supply Chain Management

How to Set Corporate Goals for Supply Chain ESG

06 / 17 / 2021
Lauren Newton
Share
ESG takes top priority on a company’s vision for the future. But what do corporate sustainability goals look like in practice?

 

With mounting pressure from investors and consumers, corporate sustainability has continued to mature beyond measurement and reporting toward more ambitious goal-setting. For example, in 2019, 90% of companies listed on the S&P 500® index issued an annual sustainability report, compared to just under 20% in 2011. As companies get more serious about sustainability, they have also started implementing and assessing bold ESG goals.

 

Often, these sustainability goals center on a company’s internal operations. Given that suppliers account for the majority of risk in areas such as GHG emissions, human rights abuses, and gaps in corporate governance, it is critical that companies explicitly target ESG goals in their supply chain. I recommend companies take tangible action toward setting supply chain ESG goals in the following ways:

 

1. Define Your Scope

 

As we know, corporate goals don’t always translate well to local suppliers. Therefore, companies should distill their goals down to actionable performance indicators. These KPIs should target specific supply chain issues that roll up to overarching sustainability goals.

 

For example, with 13 million hectares of forests being lost each year, one of Unilever’s goals was to address deforestation. “Ending deforestation within our supply chain is one of the biggest contributions Unilever can make to create a more sustainable world and maintain our consumers’ trust,” the company stated. This ambition translated into a goal to achieve a deforestation-free supply chain by 2023.

 

Unilever then aligned its goal with two United Nations Sustainable Development Goals (SDGs): #13: Climate Action, and #15: Life on Land. This helped the company focus its sustainability strategies on key international ESG issues, as well as to target metrics that investors and consumers now track.

 

For companies struggling to prioritize or identify their overarching goals, SASB’s materiality matrix is another excellent starting place. Although primarily designed for investors, the tool gives companies an overview of financially material ESG metrics for their industry.

 

Integrate SASB's Metrics into your Supply Chain ESG Goals

Source: sasb.org

 

 

SASB’s at-a-glance view of priority ESG issues is comprised of five sustainability dimensions: Environment, Leadership and Governance, Business Model and Innovation, Social Capital, and Human Capital.

 

Once you’re able to identify the most material sustainability issues for your business, you can work to break them into tangible goals for your supply chain.

 

Next, companies must decide whether to set top-down or bottom-up ESG targets. Do you have goals that you will ask suppliers to meet, or will you work with suppliers to build personalized goals based on their abilities and needs? In its deforestation campaign, Unilever uses a mixture of carrot-and-stick measures to increase its chances for success.

 

2. Define Success

 

When high-achieving companies implement ESG strategies, they use quantitative, metrics-linked goals to measure whether they’ve reached their target. These goals fall into one of two primary types:

 

  • Absolute goals, which only take KPIs into account—for example, reducing GHG emissions 30% by 2025
  • Relative goals, which compare the KPI to a unit of output—for example, reducing Scope 1 GHG emissions per unit of company sales 25% by 2025

 

For instance, 74 Fortune Global 500 companies have set Science Based Targets (SBT), which are achieved when emissions are reduced in line with the goal of keeping warming below 2ºC. Of these, 58 have declared a target date (making it an absolute goal) for the necessary emissions reductions.

 

However, if your company wants to follow best practices, the UN SDG Compass, a business resource for achieving the SDGs, recommends that sustainability goals be linked to baseline and target dates.

 

  • Measure KPIs by a point in time—we will increase the number of ESG-compliant suppliers by 40% by 2030.
  • Measure KPIs by a period of time—we will decrease C02 emissions by 50% in the four-year period from 2021 to 2025.

 

Struggling to choose? As long as you remain realistic about your company’s abilities, set targets with clear, justifiable deadlines, and communicate the expectations to your suppliers, either method will help your company progress from scoping to the next step: strategy.

3. Specify Your Strategy

 

Which actions will you take to execute your newly-minted ESG goals? Whether you’re working with your suppliers directly or not, you cannot accomplish them alone. Here are some common first steps:

 

  1. Map your supply chain to understand high-level supplier risks.
  2. Communicate expectations about your new goals to all suppliers and solicit feedback.
  3. Begin baselining supplier performance according to their role in the supply chain.
  4. Work with high-priority suppliers to build capacity and discuss sustainability performance.
  5. Perform responsible sourcing audits on supply chain areas of deep concern.
  6. Create sustainability performance incentives and action plans with specific suppliers.
  7. Ask for help. If any of the steps above are beyond your area of expertise, seek partnerships or experts specific to your goals. For example, Earthworm Foundation helped Nestlé develop the first quantitative No Deforestation, Peat and Exploitation (NDPE) policy in the Palm Oil industry.

 

Recent technology has also made it much easier to map, audit, and collaborate with direct suppliers. At SupplyShift, for example, we help companies benefit from mapping supply chain transparency at any tier. For easy supplier tracking, companies use our Smart Assessments to instantly score supplier inputs, auto-calculate equations, and achieve more in-depth supply chain insights.

 

4. Secure Buy-In

 

Finally, companies must communicate their ESG scope, metrics, and strategies to the stakeholders who will make or break their initiatives. Three sectors of the supply chain have an outsized impact on corporate success:

 

  • Procurement—are your goals realistic for divisions to execute?
  • Leadership—do your goals reflect the strategic priorities of the organization? Are executives aligned to adequately support ESG?
  • Suppliers—will they actively participate and contribute to your goals? How will you improve supplier buy-in?

 

In conclusion, a company’s supply chain ESG goals should prioritize specific sustainability achievements (such as those listed in the UN’s SDG Report or SASB’s Sustainability Matrix). They must also follow hard deadlines and KPI targets. In order to be successful, companies must communicate strategies to suppliers and allow information  to flow both ways.

 

On a quarterly basis, for instance, Unilever regularly contacts an estimated 320 cocoa suppliers through its Global Traceability System to collect volume, sustainability, and visibility data.

 

Executives, take note: when you strive for ESG compliance and tackle global issues such as deforestation, carbon emissions, water scarcity, partnerships and collaborations are essential.

 

We’re here to help. If you’re seeking to take greater control over your supply chain visibility and ESG compliance, reach out to us to learn more about our supplier sustainability applications.

Share
Lauren Newton
Connect on LinkedIn

Lauren is the lead Sustainability Solution Advisor at SupplyShift, the world’s largest supply chain transparency network. With over a decade of sustainability experience, she has a deep understanding of supply chain transparency, product-level metrics, responsible sourcing program development and brand communications. She is uniquely equipped to advise SupplyShift customers seeking holistic solutions for complex supply chain sustainability ambitions. Lauren’s expertise in creating business value through sustainable practice is comprehensive, context-specific and reinforced with the grit of an athlete. Frequently described as a bridge builder, she strives to bring cultural competency to all of her endeavors. She holds a Masters degree in Sustainability from Wake Forest University as well as degrees in Spanish and Environmental Studies from Tulane University.

author portrait

Related Posts

Prev Slide
Labor & Human Rights
Complying with the UFLPA: How to Detect ..
Read More
Complying with the UFLPA: How to Detect Forced Labor in Your Supply Chain
Industry Trends
What Does Supplier Collaboration Mean fo..
Read More
What Does Supplier Collaboration Mean for Sustainability?
Deforestation
Addressing Deforestation in the Supply C..
Read More
Addressing Deforestation in the Supply Chain
Industry Trends
What To Do About Low Sustainability Perf..
Read More
What To Do About Low Sustainability Performers
Labor & Human Rights
Addressing Labor Issues in the Supply Ch..
Read More
Addressing Labor Issues in the Supply Chain
Industry Trends,Supply Chain Management
Supply Chain Mapping – Why and How?
Read More
Supply Chain Mapping – Why and How?
Industry Trends,Marketing
Beyond Annual Reports: Three Ways to Lev..
Read More
Beyond Annual Reports: Three Ways to Leverage Supplier Sustainability Information for Your Business
Industry Trends,Supply Chain Management
Creating Your Roadmap for Supplier Susta..
Read More
Creating Your Roadmap for Supplier Sustainability Improvement
Industry Trends,Supply Chain Management
Summit ’21 – Five Key Learni..
Read More
Summit ’21 – Five Key Learnings for your Supply Chain Sustainability Journey
Supply Chain Management
Simplifying Sustainability for Procureme..
Read More
Simplifying Sustainability for Procurement
Industry Trends,Supply Chain Management
Your Complete Guide to Supply Chain Sust..
Read More
Your Complete Guide to Supply Chain Sustainability
Supply Chain Management
How Suppliers Demonstrate Best Practices..
Read More
How Suppliers Demonstrate Best Practices to Buyers
Supply Chain Management
How Remote Assessments Can Reduce Audit ..
Read More
How Remote Assessments Can Reduce Audit Costs
Supply Chain Management
Supplier Engagement Best Practices ̵..
Read More
Supplier Engagement Best Practices – Key Takeaways From Our Webinar
Industry Trends,Supply Chain Management
Tackling Plastics and Packaging in Suppl..
Read More
Tackling Plastics and Packaging in Supply Chains
Supply Chain Management
Best Practices for Sending Supplier Sust..
Read More
Best Practices for Sending Supplier Sustainability Assessments
Supply Chain Management
Maximizing Supplier Participation in Sus..
Read More
Maximizing Supplier Participation in Sustainability Reporting
Supply Chain Management
Roadmap of Industry Groups – Your Comp..
Read More
Roadmap of Industry Groups – Your Complete Guide to Supply Chain Sustainability Collaboration
Industry Trends,Supply Chain Management
Advancing Diversity, Equity, and Inclusi..
Read More
Advancing Diversity, Equity, and Inclusion in Your Supply Chain
Supply Chain Management
How to Identify Your Supply Chain Sustai..
Read More
How to Identify Your Supply Chain Sustainability Risks and Opportunities
Supply Chain Management
How to Approach Multi-Tier Supplier Asse..
Read More
How to Approach Multi-Tier Supplier Assessments
Supply Chain Management
What is Multi-Tier and Why to Do It
Read More
What is Multi-Tier and Why to Do It
Industry Trends,Supply Chain Management
How to Set Corporate Goals for Supply Ch..
Read More
How to Set Corporate Goals for Supply Chain ESG
Industry Trends
How Industry Group Collaboration Drives ..
Read More
How Industry Group Collaboration Drives Sustainability Improvement
Industry Trends
ESG in the Public and Private Market: Pu..
Read More
ESG in the Public and Private Market: Putting the Supply Chain in Focus
Climate,Industry Trends
Supply Chain Emissions 2021 – Key ..
Read More
Supply Chain Emissions 2021 – Key Takeaways from our Webinar
Industry Trends,Supply Chain Management
Why Sustainable Supply Chains?
Read More
Why Sustainable Supply Chains?
Climate,Industry Trends
The Importance of Measuring Scope 3 Supp..
Read More
The Importance of Measuring Scope 3 Supply Chain Emissions and How to Get Started
Industry Trends,Supply Chain Management
Active Vs. Passive Supplier Sustainabili..
Read More
Active Vs. Passive Supplier Sustainability Assessments
Industry Trends,Supply Chain Management
Supplier Sustainability Assessment ─ W..
Read More
Supplier Sustainability Assessment ─ Where Do I Start?
Industry Trends,Labor & Human Rights
Forced labor in cotton supply chains ─..
Read More
Forced labor in cotton supply chains ─ Key takeaways from our webinar
Industry Trends,Supply Chain Management
Three Ways Procurement Can Drive Sustain..
Read More
Three Ways Procurement Can Drive Sustainability Through the Supply Chain
Industry Trends,Supply Chain Management
How to prepare for a transparent supply ..
Read More
How to prepare for a transparent supply chain in 2021
Climate,Industry Trends,Supply Chain Management
The emerging shape of recovery
Read More
The emerging shape of recovery
Climate,Industry Trends
Supply chain emissions: what challenges ..
Read More
Supply chain emissions: what challenges lie ahead?
Industry Trends,Supply Chain Management
Transparency is the first step to securi..
Read More
Transparency is the first step to securing global supply chains
Industry Trends,Supply Chain Management
How standardization advances supply chai..
Read More
How standardization advances supply chain responsibility
Responsible Holidays
Retail sustainability during the holiday..
Read More
Retail sustainability during the holidays
Climate
Global Climate Strike and how to achieve..
Read More
Global Climate Strike and how to achieve your Science-Based Targets
Industry Trends,Supply Chain Management
Blockchain for Responsible Sourcing – ..
Read More
Blockchain for Responsible Sourcing – Where Does It Fit?
Labor & Human Rights,Supply Chain Management
Worker Insights to Drive Action: How to ..
Read More
Worker Insights to Drive Action: How to Operationalize Worker Voice Using Technology
Labor & Human Rights,Supply Chain Management
When Worker Voice is Next on the Agenda
Read More
When Worker Voice is Next on the Agenda
Labor & Human Rights,Supply Chain Management
When Worker Voice is Only a Whisper
Read More
When Worker Voice is Only a Whisper
Industry Trends,Labor & Human Rights
How Businesses Can Address Modern Slaver..
Read More
How Businesses Can Address Modern Slavery in Supply Chains
Industry Trends,Marketing
The Sustainable CMO: 3 Values for Market..
Read More
The Sustainable CMO: 3 Values for Marketing Leadership
Responsible Holidays
Good News for Holiday Coffee Lovers — ..
Read More
Good News for Holiday Coffee Lovers — More Investment in Responsible Coffee Supply Chains
Industry Trends,Supply Chain Management
You Can’t ‘Contract Away’ Supply C..
Read More
You Can’t ‘Contract Away’ Supply Chain Problems
Responsible Holidays
Is Your Halloween Candy Responsibly Sour..
Read More
Is Your Halloween Candy Responsibly Sourced?
Supply Chain Management
Moving Beyond Spreadsheets for Responsib..
Read More
Moving Beyond Spreadsheets for Responsible Supply Chains
Deforestation,Supply Chain Management
Effective Traceability for Responsible P..
Read More
Effective Traceability for Responsible Pulp, Paper, & Packaging
Supply Chain Management
4 Elements of a Successful Supply Chain ..
Read More
4 Elements of a Successful Supply Chain Transparency Strategy
Supply Chain Management
From the Farmer to the Foil: The Cacao S..
Read More
From the Farmer to the Foil: The Cacao Supply Chain Challenge
Industry Trends,Supply Chain Management
Responsible sourcing as part of corporat..
Read More
Responsible sourcing as part of corporate governance
Deforestation,Responsible Holidays
What’s in a Box: Creating More Respons..
Read More
What’s in a Box: Creating More Responsible Holidays!
Next Slide
SupplyShift Logo SupplyShift
Terms of Use
/
Privacy Policy
Stay in the Know
How It Works
Product Overview Starter Assessments Standard Assessments Custom Assessments See A Demo
Solutions
Industries
Beauty & Personal Care High Tech & Electronics Pharmaceuticals Food & Beverage Apparel Retail
Issues
Climate Change Impact ESG Investing Modern Slavery COVID-19 Deforestation Diversity Plastics
Pricing
Insights
News Blog
Resources
Analyst Report Success Stories Webinars White Papers
About Us
Alliances Our Mission & Story Our Values and Team Careers Contact Us
Contact
215 River Street Santa Cruz, CA 95060 415.935.1697 +44 2045 251266 support@supplyshift.net Contact Form Support
All materials © SupplyShift 2022
/
All rights reserved
/
Designed by Sleepless