Easily Navigate ESG Data Requests From Your Customers

The primary reason suppliers need to address ESG (Environmental, Social, and Governance)is due to the increasing demand from their business partners for their ESG data. As companies strive to meet their own sustainability goals and respond to consumer demand for ethical and sustainable practices they expect the businesses in their own value chains to align with these objectives.

This trend is part of a broader shift towards transparency and accountability in business in general. By preparing and providing accurate ESG data, suppliers can meet customer requirements around these topics to build trust and gain a competitive advantage, and ensure compliance with increasingly stringent global regulations. In addition to meeting partner data requests, addressing ESG also benefits suppliers by encouraging them to identify and mitigate any potential ESG risks in their own business.

Businesses today are increasingly requesting a variety of ESG data metrics and reporting from their suppliers. This trend is driven by the need to align with sustainability goals, meet regulatory requirements, and respond to growing consumer demand for ethical and sustainable practices. The specific ESG data that your customers request will largely depend on their individual sustainability and ESG goals, the industry in which they operate, and the regulatory environment.

Frequently requested environmental data encompasses information on a supplier’s carbon footprint, energy use, waste management, water usage, and impact on biodiversity. This data can include specific metrics such as greenhouse gas emissions, the proportion of energy derived from renewable sources, the effectiveness of recycling programs, and initiatives to reduce water consumption.

Requested social data can include how a supplier manages relationships with its employees, suppliers, customers, and the communities where it operates. This can involve data on labor practices, human rights, health and safety, diversity and inclusion, and community engagement. For instance, suppliers might be asked to provide information on their policies regarding fair wages, working conditions, employee benefits, as well as their initiatives aimed at supporting local communities.

Governance data is also frequently requested, as it provides insight into a supplier’s leadership structure, business ethics, and overall management of the company. This can include data on board diversity, executive compensation, anti-corruption policies, and shareholder rights. Suppliers may be asked to disclose their corporate governance structures, ethical guidelines, and measures they have in place to prevent corruption and ensure transparency.

Suppliers are asked to report on ESG metrics through various methods that typically depend on the buyer’s preferences, the nature of the supplier’s business, and the industry in which they operate.

One common approach is through surveys and questionnaires, where buyers send standardized forms to suppliers asking about their ESG practices. These forms can be developed internally or based on industry standards.

Another prevalent method is the use of globally recognized ESG reporting frameworks such as the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), Task Force on Climate-related Financial Disclosures (TCFD), or the Carbon Disclosure Project (CDP). These frameworks provide a structured way for suppliers to report on a wide range of ESG factors.

In some cases, buyers conduct audits of their suppliers to verify ESG practices. These audits can be done in-person or virtually, and they may be announced or unannounced. Certifications are also a common part of supply chain ESG reporting. Suppliers may be asked to obtain certifications related to environmental management, social responsibility, or other ESG-related areas to demonstrate their commitment to these principles.

Self-reporting is another method, where suppliers provide their own reports on their ESG practices in the form of sustainability reports, corporate social responsibility (CSR) reports, or other types of documentation. Lastly, third-party assessments or ratings, such as those provided by EcoVadis or Sedex, are often used in supply chain ESG reporting. These organizations assess a company’s ESG performance and provide a score or rating that can be shared with buyers.

Most companies operate somewhere within a complex, global supply chain. Whether your company is situated upstream or downstream, you may be asked to provide your own ESG or emissions data or require that information from suppliers in your value chain in order to pursue your own targets.

Good.Lab’s ESG experts have worked in supply chain sustainability with suppliers and large buying organizations empowering us with insights on the diverse ESG needs across the value chain. Our work with suppliers and private companies enables them to quickly and comprehensively comply with requests for their ESG data with our comprehensive ESG programming and SaaS measurement tools. Our work with leading companies includes designing a complete supplier engagement strategy from an ESG perspective and operationalizing that strategy through supplier assessment and segmentation with regard to ESG maturity and engaging suppliers around Supplier Code of Conduct, ESG data collection and collaborative emissions reduction strategies, and integrating ESG into existing supplier engagement mechanisms.