Suppliers appear to be more committed to measuring and improving their sustainability

Suppliers appear to be more committed to measuring and improving their sustainability

Suppliers appear to be more committed to measuring and improving their sustainability and building transparency into their business models – with most companies able to make a difference in just a couple of years.

One of the major findings of a recent survey, this is "a positive response to growing consumer demands and pressure as well as another endorsement of the idea that sustainability is good for business," authors say.

The 2018 Impact Report, 'Transparent Supply Chains for Better Business,' released by The Sustainability Consortium (TSC), showcases year-over-year trends in sustainability reporting based on the key performance indicators (KPIs) that drive The Sustainability Index, primarily used by Walmart and Sam's Club.

The report focuses on how well companies are using the organisation's tools to peer into their supply chains, and in 2017 secured responses from 1,683 suppliers representing over $200bn in retail sales.

Comparing data from 2016 to 2017, TSC shows that fewer organisations chose the KPI response "Unable to determine at this time," with average supplier scores increasing by 3% to 36%. The number of KPI scores between 90% and 100% has increased from 22% to 26% from 2015 to 2017.

For the majority of suppliers who are not scoring in the upper ranges, "the best way to improve their score is to improve the transparency of their supply chain," the report notes.

"Suppliers who participated in TSC's training were asked if they had done anything in the past year to improve their Sustainability Index score, and 88% answered yes – with over half of those suppliers saying that they had engaged their own suppliers around sustainability performance and relevant data.

Consumers and investors are increasing their demands for transparency in the consumer products they buy, asking the questions – how is it made, where is it made, what is it made of, and how do I properly use and dispose of it? Organisations that are more transparent with the answers to these questions have more consumer and investor trust, which leads to loyalty and positive business value.

"In 2017, we saw an unprecedented increase in the implementation of our work, and we saw more companies commit to improve their performance," explains TSC chief executive Euan Murray. This is a clear response to the demand signal from retailers, brands and other major purchasers to improve supply chain transparency, understand sustainability impacts and take action to improve. It's also a positive response to growing consumer demands, and another endorsement of the idea that sustainability is good for business."

Highest-scoring companies

TSC's Impact Report also shows that the highest-scoring companies are those that have been working on sustainability the longest. That group has the highest scores, the biggest improvements and the best track-record in transparency and sustainability. It also means there's a clear path for all other companies to follow.

"The year-to-year comparisons suggest that most companies are to be able to improve their transparency over a period of one to two years," notes TSC chief scientist Dr Kevin Dooley.

"From our experience in working with suppliers, increases in scores have occurred in part because brand manufacturers have improved the systems to increase transparency into what is happening in their factories and supply chains. This is all positive evidence that increasing transparency is happening as a measured outcome."

Formed in 2009, the Sustainability Consortium is a global organization working to help the consumer goods industry to deliver more sustainable products. Its Clothing, Footwear, and Textiles Sector Working Group launched in February 2013 and has members including Fruit of the Loom, Bonobos, Hanes, Wrangler and Cotton Inc. Retail members include Amazon, Marks & Spencer, Target and Walmart.

As the latest Impact Report notes, for most consumer-facing companies, 80-90% of the total end-to-end environmental and social impacts are embedded in the upstream supply chain. And for this reason it is critical to look up and downstream at the entire system a company operates within.

The report also shows that even although solid improvements are being made year-over-year, there is still plenty of room to improve.